Mehabe score: 4 G Factor: 0 Piotski Score: 6 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 0 and Piotski score of 6.
Description
Aster DM Healthcare Limited is one of the largest integrated private healthcare service providers operating in GCC (Gulf Cooperation Council) countries and an emerging player in India. With an inherent emphasis on clinical excellence, it is one of the few entities in the world with a strong presence across primary, secondary, tertiary and quaternary healthcare.
Main Points
Portfolio
The company has a network of 26 hospitals out of which 13 are situated in Gulf Council Corporation (GCC) and the rest 13 are situated in India. It has an installed capacity of ~5,000 beds across its hospitals. It also operates a network of 115 clinics out of which 106 are situated in GCC with only 9 in India. It also operates a chain of 225 pharmacies in GCC. In GCC, the company has operations in United Arab Emirates (UAE), Oman, Qatar and Kingdom of Saudi Arabia.Site:ASTERDMMain Symbol:ASTERDM
Stock trades at 160.0, above its 50dma 155.05. It also trades above its 200dma 148.8. The stock remains bullish on techicals
The 52 week high is at 180.00 and the 52week low is at 118.35
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 10.40% over past five years.
-Tax rate seems low
– has a low return on equity of 12.43% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 43.9x. Max Healthcare trades at the industry’s max P/E of 953.28x. ASTERDM trades at a P/E of 54.0x
– Industry’s mean G-Factor is 4.4 while the mean Piotski score is 9.0. ASTERDM has a G-Factor of 0 and Piotski scoreof 6.
– Average 1 month return for industry is 6.0%. The max 1- month return was given by Apollo Hospitals: a return of 20.77 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 2391.0 cr compared to Rs 2280.0 cr for period ended Mar 2020, a rise of 4.9%
Operating Profits reported at Rs 321.0 cr for period ended Mar 2021 vis-vis 404.0 for period ended Mar 2020 .
Operating Margins contracted -429.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.11 compared to Rs 1.85 for previous quarter ended Dec 2020 and Rs 2.62 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 8608.0 cr for period ended Mar 2021 vis-vis sales of Rs 8738.0 cr for the period ended Mar 2020, a fall of 1.5%. The 3 year sales cagr stood at 8.6%.
Operating margins shrank to 12.0% for period ended Mar 2021 vis-vis 17.0% for period ended Mar 2020, contraction of 500.0 bps.
Net Profit reported at Rs 148.0 cr for period ended Mar 2021 vis-vis sales of Rs 277.0 cr for the period ended Mar 2020, falling 87.2%.
Company reported a poor Net Profit CAGR of -18.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 1569.0 cr for period ended Mar 2021 vis-vis Rs 1223.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 5.0% compared to 12.0% over the last 3 Years. – The stock has given a return of 19% on a 1 Year basis vis-vis a return of -1% over the last 3 Years. – The compounded sales growth on a TTM bassis is -1% vis-vis a compounded sales growth of 9% over the last 3 Years. – The compounded profit growth on a TTM basis is -66% vis-vis a compounded profit growth of -2% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 8.69% vis-vis 10.57% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 43.3% vis-vis 42.33% for Mar 2021
Conclusion
– has reduced debt. – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 10.40% over past five years.
-Tax rate seems low
– has a low return on equity of 12.43% for last 3 years.
– might be capitalizing the interest cost
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 155.05 and is trading at 160.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
