Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aster DM Healthcare Ltd (BOM:540975, Financial) reported robust growth in the Indian healthcare sector, driven by rising healthcare demand and increased government focus on infrastructure.
- The company achieved a 23% CAGR in revenue and a 38% CAGR in operating EBITDA over the last five years in India.
- Aster DM Healthcare Ltd (BOM:540975) recorded an 18% revenue growth in H1 FY25, with a significant increase in operating EBITDA margins from 16.1% to 19.6%.
- The company is expanding its capacity with plans to add approximately 1,800 beds by FY27, enhancing its ability to meet growing healthcare demands.
- Aster DM Healthcare Ltd (BOM:540975) is making significant progress in oncology services, introducing advanced cancer care technologies like interoperative electron radiation therapy.
Negative Points
- The company faces risks and uncertainties related to government actions, local political or economic developments, and technological risks.
- Despite strong performance, there is a potential risk of not meeting demand due to high occupancy rates and limited immediate bed expansion.
- The wholesale pharmacy segment has been restructured due to logistical challenges, impacting revenue but reducing EBITDA losses.
- The company has seen senior-level attrition in Kerala and Karnataka, though it claims this is not impacting performance.
- Aster DM Healthcare Ltd (BOM:540975) has a high level of pledged shares due to technical reasons, which it plans to address by the end of the year.
Q & A Highlights
Q: Can you highlight the CapEx required for the planned addition of 1,800 beds and the geographies where this expansion will occur?
A: Sunil Kumar, Joint Chief Financial Officer, explained that the expansion will cost approximately INR1,450 crore, with INR215 crore already spent. The expansion will occur across various locations, including Calicut, Kochi, and Karnataka, with both greenfield and brownfield projects.
Q: How is the ARPU growth trajectory, especially in Kerala and Karnataka, and what factors are contributing to this growth?
A: Sunil Kumar noted that ARPU growth is driven by a combination of price increases, revenue measures, and a decrease in scheme patients. The company expects ARPU to grow at 7% to 8% over the medium term.
Q: What are the margin expectations for the Andhra and Telangana clusters, and how do you see this sector evolving?
A: Sunil Kumar stated that the Andhra and Telangana clusters have shown improvement, with margins expected to reach mid-20s in the next two to three years. The focus is on expanding multispecialty services and improving occupancy rates.
Q: Can you discuss the restructuring of the wholesale pharmacy segment and its future outlook?
A: Sunil Kumar explained that the B2B segment of the wholesale pharmacy has been outsourced to improve efficiency. The focus will remain on the B2C segment, with expected growth of 10% to 12% year on year.
Q: Are there plans to hire a new CEO for India operations, and how is the current leadership structure functioning?
A: Alisha Moopen, Deputy Managing Director, mentioned that while the current team is performing well, the company may consider hiring a CEO in the future. The focus is on strategic oversight and supporting the existing leadership.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
