Upcoming IPO: Aster DM Healthcare IPO Review, Should you Invest?

Aster DM Healthcare Ltd. is going to launch an Initial public offer (IPO), which is opening on 12^th Feb. 2018. The upcoming IPO comprises fresh issue of equity shares worth Rs. 725 crore and an offer for sale of 1,34,28,251 scrips worth Rs. 255.14 crore. The price band of the IPO is Rs. 180- 190 per equity share with face value of Rs. 10 each. Aster DM Healthcare IPO will be listing at BSE and NSE.

Aster DM Healthcare Ltd. Profile

Aster DM healthcare is Kochi, Kerala based company, which was incorporated in the year 1987. The company has its operation in GCC states (United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait and Bahrain), India and Philippines.

Company’s GCC operations are headquartered in Dubai, UAE and their Indian operations are in Kochi, Kerala. Aster DM healthcare operates in many segments of healthcare industry including hospitals, clinics and retail pharmacies.

Company provides healthcare services to patients across economic segment under brand names including “Aster”, “Medcare” and “Access”. Aster’s hospitals in India are located at Kochi, Kolhapur, Bengaluru, Vijaywada, Hyderabad etc.

Key dates of Aster DM Healthcare IPO

Aster DM healthcare IPO opens on 12^th of Feb.2018 and will close on 15^th of Feb 2018.

Face value is Rs 10 and minimum order lot is 78.

Finalization of basis of allotment – On or about Feb 22, 2018

Starting of refunds- on or about Feb. 22, 2018

Transfer of shares in Demat account- On or about Feb.23, 2018

Commencement of trading of equity shares on stock exchanges or Listing Date- On or about Feb 26, 2018.

Purpose of Aster DM IPO

Aster DM Healthcare proposes to utilize the net proceeds from the IPO towards the funding of the following.

• Repayment of debt.
• Purchase of medical equipment, and
• Other general corporate expenses

Valuation Parameters

If we talk about the financial strength of the company, then we can see Total revenue for FY 2015 is Rs. 38,990 Million, for FY 2016 Rs.52,751, for FY 2017 it is Rs.59,679. On the other hand profit after tax for FY 2015 is Rs. 2,721 Million, for FY 2016 Rs.82, for FY 2017 it is Rs.2,268.

It shows there is consistency or steady growth in revenue of the company but company fails in maintaining its profit in recent years.

P/E ratio of the company is around 44, while the peers Forties health care ltd. has 19.6 P/E, Apollo Hospitals Ltd. has 73.5 P/E.

Should you invest?

Considering all above points including company’s financial parameters, peers performance and current market situation, I would personally suggest investors to think once again before taking step for this company. Yes, if in future, performance of the company improves, will again review it. So, as of now my recommendation is neutral for long term investors.