At a Glance
Aster DM Healthcare’s FY25 results look like a classic Bollywood hospital scene — the patient wakes up, miraculously cured… but wait, it was all a dream (or in this case, “Other Income”). Despite shrinking revenues, the PAT shows a mind-bending ₹5,408 Cr, thanks to a one-time accounting injection. The India business is real, but the valuation is… on ventilator support.
1. 💉 Shareholder Health Check: Stock Ka BP High Hai
- 🧾 Price Now: ₹559
- 📈 5-Year CAGR: 36%
- 🚀 1-Year Return: 52%
- 💸 P/E Ratio: 72.6x
- 🏦 P/B Ratio: 8.14x
The stock’s moving like it just got a shot of adrenaline. But does it have the fundamentals of a marathon runner or a sprinter with steroids?
2. 🧾 Revenue vs PAT: The Doctor Ordered… a Magic Trick?
| Metric | FY20 | FY25 | 5-Year Trend |
|---|---|---|---|
| Revenue | ₹8,652 Cr | ₹4,138 Cr | –14% CAGR 📉 |
| EBITDA | ₹1,465 Cr | ₹746 Cr | –12% CAGR 😷 |
| Net Profit (Reported) | ₹315 Cr | ₹5,408 Cr | 🤯 |
| OPM % | 17% | 18% | 👍 Stable |
Revenue halved. But PAT jumped 17x. That’s not healthcare… that’s Harry Potter.
3. 🕵️♂️ ₹5,169 Cr “Other Income” = CPR for Earnings
- 💰 FY25 Other Income: ₹5,169 Cr
- ⚠️ Share of Total PAT: 95%
- 🧮 Real Business PAT: ₹212 Cr (not ₹5,408 Cr)
Translation: The hospital wing didn’t earn this. The balance sheet did.
Likely sources:
- GCC business restructuring
- Land or asset sales
- Internal group transactions
It’s not recurring. It’s not core. It’s not comforting.
4. 🏥 Business Operations: Clinics > Clinics?
🏥 India Biz Snapshot (Post-Split):
- 19 hospitals
- 550 new beds added in FY24
- 94% of revenue from hospitals + clinics
- Material costs dropped from 25% to 22%
- OPM now ~18%
So the India piece is improving — slowly but steadily.
BUT…
- Sales growth TTM: just 2.7%
- EBITDA margin bump: good, not great
- PAT volatility: wild
📉 Flatlining growth + flashy accounting = ICU stock story.
5. 🧮 Key Metrics & Financials
| Metric | FY20 | FY25 |
|---|---|---|
| ROCE | 12% | 10.7% |
| ROE | 5.5% | 10.5% |
| Debt/Equity | 1.1x | 0.7x |
| Cash Flow Ops | ₹1,223 Cr | ₹425 Cr |
Positive:
- Debtor Days: Down from 285 to 23
- Inventory Days: Down from 612 to 36
- Cash Conversion Cycle: Now –107 days
Operations getting tighter. But not enough to justify 70x P/E.
6. 📉 Promoter Pledging + Shareholding Drama
| Holder | FY23 | FY25 |
|---|---|---|
| Promoters | 41.88% | 40.38% 🔻 |
| FIIs | 38.6% | 23.6% 🔻 |
| DIIs | 8.9% | 24.6% 🔼 |
| Public | 10.1% | 11.1% |
🚨 Promoters have pledged 40.7% of their holding.
🚨 Preferential shares issued recently.
🚨 FIIs quietly leaving the OT (operating theatre).
Investor ka BP normal nahi hai.
7. 🎯 Valuation & Fair Value Range
| Scenario | P/E | EPS (Adj) | Target Price |
|---|---|---|---|
| Bear Case | 25x | ₹6 | ₹150 |
| Base Case | 30x | ₹6.5 | ₹195 |
| Bull Case | 35x | ₹7.5 | ₹260 |
- Current EPS (w/o Other Income): ₹5–7 range
- Current Price: ₹559 😵
- Implied Overvaluation: 2x 🚨
This isn’t a PE ratio. This is a hospital bill in Dubai.
🧠 Final Prescription
✅ Pros:
- Improving operational metrics
- Growing India footprint
- Working capital efficiency up
❌ Cons:
- Revenue decline post-GCC separation
- Unreal PAT from “Other Income”
- 70x P/E for 10% ROE
- Promoter pledging + preferential issues
🧾 Bottom Line:
This isn’t Apollo Hospitals. It’s Aster-damus — predicting profits that don’t exist. Stock’s in ICU, and unless it gets real earnings rehab, the next 52% return might need divine intervention.
Tags: Aster DM, Healthcare Stocks, Other Income, Promoter Pledging, Valuation Bubble, India Hospitals, GCC Business
✍️ Written by Prashant | 📅 June 22, 2025
