Brokerage firm Motilal Oswal Financial Services has turned bullish on a hospital stock that has gained almost 24% year-to-date (YTD) despite weak stock market sentiment due to the US-Iran conflict and elevated crude oil prices.
The brokerage firm expects a 20% upside in the stock in a base case, while in a bull case, it can jump as much as 46% from the current level. In a bear case, however, Motilal sees an 8% downside in the stock.
The stock is Aster DM Quality Care – one of India’s leading integrated healthcare providers, formed after the merger of Aster DM Healthcare and Quality Care India.
Aster DM Quality Care share price trend
Year-to-date, the stock is up nearly 24% compared to an over 14% drop in the Sensex. Over the last one year, the stock has jumped 20%, hitting a 52-week high of ₹890.95 on 10 August after hitting a 52-week low of ₹519.80 on 4 February this year.
On a monthly scale, the stock is down about 1% so far in September after an 8% fall in August.
However, on longer timeframes of three and five years, the stock has delivered multibagger returns of 130% and 250%, respectively, as per the BSE data.
On Monday, 28 September, the stock declined 2.5% to hit an intraday low of ₹740.05.
Motilal Oswal says buy
Brokerage firm Motilal Oswal Financial Services has initiated coverage on the stock with a buy recommendation, pegging the target price of ₹910, implying a 20% upside potential from the stock’s close of ₹759.25 on the BSE on Friday, 25 September.
“We initiate coverage with a ‘buy’ rating, valuing Aster DM at 27 times 12-month forward EBITDA ( ₹2,770 crore) to arrive at a target price of ₹910 (20% upside from ₹759), with bull and bear scenarios of ₹1,110 and ₹735, hinging on the pace of Quality Care synergy realisation and capacity ramp-up,” said Motilal Oswal.
In a bull case scenario, Motilal expects faster Quality Care integration, stronger synergies, occupancy or ARPOB (average revenue per occupied bed) gains, and a higher MVT (medical value travel) or complex-care share.
On the other hand, a base case will reflect slower synergies, delayed capacity ramp-up, weaker occupancy, and continued post-merger cost pressures, as per the brokerage firm.
Motilal expects Aster DM’s revenue, EBITDA, and PAT (profit after tax) to deliver 19.5%, 25%, and 33% CAGR, respectively, over FY26-28, reaching ₹13,200 crore, ₹3,070 crore, and 1,560 crore, respectively. Return on capital employed (RoCE) and return on equity (RoE) may expand by 430 basis points and 540 basis points to 13.6% and 15.9%, respectively, over FY26-28, said Motilal Oswal.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the broking firm, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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