Shares of Aster DM Healthcare tanked nearly 25 percent in just 3 sessions after the company's net profit more than halved in the September quarter (Q2FY23).
The net profit of the firm declined 57 percent to ₹46.21 crore in the quarter ended September 2022 as against ₹106.91 crore in the year-ago period. Meanwhile, its revenue from operations rose 12.46 percent to ₹2,816.30 crore in the quarter under review versus ₹2,504.34 crore during the previous quarter ended September 2021.
Since announcing earnings on Friday, the stock has shed nearly 25 percent in 3 sessions. Just in today's trade, the scrip fell as much as 14.5 percent to its day's low of ₹200. It lost 4.5 percent yesterday following a 7.5 percent loss in Friday's session. Just in November, it declined 12 percent.
However, in the last year, the scrip is up around 18 percent and 25 percent in 2022 YTD.
The company's EBITDA (excluding other income) came in at ₹319 crore in Q2FY23 as compared to ₹343 crore in Q2 FY22. Excluding losses due to new hospitals, EBITDA stands at ₹342 crore, the company stated.
It also informed that PAT for India business surged multifold - 119 percent year-on-year (YoY) to ₹50 crore and revenue from operations for the same was also up 24 percent YoY at ₹757 crore.
It also reported half-yearly performance for H1FY23. The operational revenue for H1 increased jumped 12 percent YoY to ₹5,478 crores from ₹4,876 crore in H1 FY22.
However, EBITDA for the same period fell to ₹611 crore as compared to ₹624 crore in H1FY22, whereas the company's PAT also fell 28 percent to ₹134 crore in H1 versus ₹187 crore in the year-ago period. Adjusting for losses due to new hospitals and one-time other income, PAT was at ₹184 crore, said the firm.
“In Q2, we had a revenue growth of 12 percent on a consolidated basis. Revenue in the Gulf Cooperation Council (GCC) increased 9 percent over the last year while strong growth momentum in India continued, with revenues growing 24 percent over Q2 FY22. In the GCC region, we have inaugurated the 101- bed Aster Hospital in Sharjah in October 2022, the soft launch of which was done in May 2022. The hospital has a team of experienced doctors with proven clinical excellence and support staff to offer exceptional patient care and medical outcomes," Dr. Azad Moopen, Founder Chairman and Managing Director, of Aster DM Healthcare, said in a statement.
He added that the newest facility has all the core specialties like Obstetrics and Gynaecology, Orthopedics, Neurology, Cardiology, Paediatrics, General Surgery, and Urology. "The plan is to add many tertiary care treatments to the bouquet of services in the future,” stated Moopen.
The firm also announced that it has launched its pharmacy operations in Saudi Arabia through a tie-up with the Al Hokair Holding Group. The partners will create a network of 250 plus Aster pharmacies in the Kingdom in the next 5 years, it said.
Post the earnings, brokerage house JM Financial retained its buy call on the stock with a target price of ₹270, indicating a 15 percent upside.
"Aster DM reported in-line revenues but a significant bottom line miss due to new hospitals weighing on margins. GCC reported a loss of ₹4 crore as new hospital operations were delayed due to inspections, elective surgeries were deferred in GCC and Covid revenues dwindled. However, India business is performing consistently ahead of other business segments," noted the brokerage.
The management expects India business to continue the momentum as (1) the
Kerala cluster has been operating at 80 percent occupancies despite festivals; (2) AP-Telangana cluster occupancies have improved to 55-60 percent, and (3) O&M (operation and management) hospital additions will add incremental revenue.
It further noted that Aster’s India diagnostic business has been growing well with breakeven expected in FY24 while pharmacies could break even in FY25. Reverting to the pre-pandemic trend, Aster’s H2 EBITDA will be 60-65 percent of the full year due to GCC seasonality (1H weaker), it predicted.
Aster’s consistent India outperformance, 2H profitability skew, Saudi turnaround and GCC progress give us comfort in our positive stance, explained the brokerage.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.