ASTER DM HEALTHCARE

Kerala’s undisputed healthcare king

Aster DM Healthcare is one of the largest integrated healthcare service providers in the Middle East and an emerging player in India. It has op erations in seven countries, including GCC and India. Its integrated model covers the entire life cycle of healthcare — from primary to quaternary — through its state-of-the art hospitals, clinics and pharma ceuticals. The company is focused on expansion via an asset-light model (1,000 beds through O&M) in India. The management is tar geting an India expansion with low capex investment but high poten tial opportunity.

Aster’s network consists of 13 hospitals, 109 clinics and 240 retail pharmacies in the GCC states, and 14 hospitals, 11 clinics, 131 phar macies and 141 laboratories in In dia, with total bed capacity being 460 in GCC and 3,905 in India.

The company is doing quite well on the financial front. During the last 12 years, sales have almost doubled from Rs 7,922 crore in fiscal 2013 to Rs 3,699 crore in fiscal 2024, with operating profit more than doubling from Rs 261 crore to Rs 575 crore, and the profit at net level inching up from Rs 149 crore to Rs 212 crore. What is more, prospects for the company going ahead are all the more promising. Con sider:

KOCHI EXPANSION

• The company is in expansion mode. Recently, As ter Medicity at Kochi inaugurated its fourth tower, which added 100 beds to the hospital in order to meet rising de mand. With the launch of this fourth tower, Aster Medicity, which is Kerala’s first JCI-accredited quaternary care and multi-speciality hospital, marked a significant milestone. This tower spans 1 lakh sq ft with 100 new beds, meeting the growing needs of the region.
• Since its inception, the 40-acre waterfront campus has played a pivotal role in transforming medical value tour ism in Kerala, including high-precision robotic surgery us ing the da Vinci surgery system.
• Expansion of beds by 34% in FY27: The com pany plans to add beds capacity of 1677 beds over a span of 3 years which will increase the number of beds by 34% from 4,867 beds in FY24 to 6,544 beds in FY27E with total capex spend of Rs. 11 Bn. Aster DM will be adding 959 beds through brownfield expansion across its hospitals in Kerala, Karnataka, and Andhra Pradesh hospitals with capex of Rs 4.8n over FY24 27E. Further company is looking to add additional 718 beds through greenfield in Kasaragod and Trivandrum (Kerala) with expected capex spend of Rs. 5.7 Bn. Since, Aster already has strong presence in all three regions it won't be difficult for them to attract patients due to strong regional connect. This will help to boost revenue growth going forward. The capex will largely be funded by internal accruals as the company has healthy cash flows. Despite large capex cycle, the returns ratios are expected to improve for the company with ROE and ROCE of 12% and 13% respectively in FY27E.
• Aster DM Healthcare has taken a major decision to merge with Quality Care backed by Blackstone. The merger makes the combined entity the third largest healthcare chain by revenue and bed capacity in India. Little wonder that the news of the merger pushed up the stock price as the merger will boost the topline as well as bottomline of the company. The combined entity will have a network of 38 hospitals and 10,150+ beds, spread across 27 cities. Research analysts at Elara Securities be lieve that the transaction will position the combined en tity as the undisputed leader in corpo rate healthcare in Kerala. Little wonder that leading brokerages have rated the scrip a ‘BUY’ with a target price of Rs 550. Prabhudas has recommended ‘BUY’ with a target price of Rs 620. The stock is quoted today around Rs 396.

PERFORMANCE INDICATORS (Rs. in crore)

SIGNPOST INDIA

Pole player in outdoor advertising

Mumbai-headquartered Signpost India is a small cap player providing both static and digital OOH (out of house) advertising services. Since inception in 2008, it has emerged as a leading outdoor advertising solutions provider that cre ates advertising properties around public convenience utili ties, including airports, metros, bus shelters and city roads, and uses them for display of advertisements through design, technology, data analytics and content provision. With demon strable experience, the company engi neers end-to-end mega projects to build public places that ensure com muters’ convenience, ergonomic and transparent roofing and priority seat ing, tactile flooring, accessibility ramp, charging stations, SOS integration, mapped surrounding lavatories, au thority notifications of upcoming buses, and much more. The company has re ceived awards in numerous categories, including 57 gold, 43 silver and 28 bronze, including prestigious ones like ABBYs, ENVIEs, Lon don Digital Signage, and Kyoorius Dragon of Asia.

Signpost has clients in multiple industries, including con sumer goods and services, BFSI, lifestyle, real estate and con struction, media, entertainment, education, pharma, telecom, automobiles and hospitality, as well as in government minis tries.

It has steadily grown on the financial front since incep tion in 2008 and after its listing in 2021. During the last three years (after it got listed on BSE and NSE), revenues have expanded from Rs 168 crore in fiscal 2022 to Rs 338 crore in fiscal 2023 and further to Rs 387 crore in fiscal 2024, with the profit at net level shooting up from Rs 8 crore in fiscal 2022 to Rs 3 crore in fiscal 2023 and further to Rs 44 crore in fiscal 2024. Signpst’s financial position is very strong, with reserves at the end of March 2024 standing at Rs 205 crore — over 18 times its tiny equity capital of Rs 11 crore. What is more, prospects going ahead are all the more promising. Consider:

VETERAN TEAM

• The company has a strong standing in its field on account of the extensive experience of its promoters and management team. The two decade-long experience of the promoters in outdoor media publicity has helped the com pany establish strong relationships with large advertisers on a pan-India basis and garner a strong market position. The Signpost group is expected to con tinue receiving strategic guidance from the promoters, while it also has a professional management team for overseeing various functions. All the directors are veterans with over two decades of experience in the indus try.
• Signpost’s strong mar ket position is well reflected in its established position across several formats and consistent growth. The company has been expanding its presence across locations, including Mumbai, Delhi, Bangalore, Chennai, Kolkata, Nagpur, Pune, Nashik and Aurangabad.
• The company is known for its healthy operating effi ciency. Signpost has economical advertising properties in prime locations across various places such as skywalks, BQs, foot overbridges, sell-service bicycle systems, city information pan els, mobile charging terminals, digital innovations at airports, and prominent public places. This provides an edge over the competition for better pricing and occupancy. Little wonder, it recently won several new contracts, such as Mumbai BQs, Mumbai Metro and Delhi Aerocity. It is also focusing on digital assets, which have a higher margin, and on reducing its share of the trading business, which has lower margin. This practice has resulted in improvement in the overall operating margin to 23 per cent in fiscal 2023, against 14 per cent in fiscal 2022. Margins are expected to be healthy going ahead. The Signpost stock had going strong at around Rs 450 of late. But on account of the distinctly bearish trend it has fallen back to around Rs 247. Observers strongly feel that once the market turns steady, Signpost will be among the first stocks to resume its upward journey.

PERFORMANCE INDICATORS (Rs. in crore)