Revenue Growth Will Be In High Teens Over The Next 2-3 Years: Aster DM Healthcare | CNBC TV18

Summary

In this interview, Alicia Mupen, Deputy Managing Director at Asra DM Healthcare, discusses the company's recent efforts to reduce the promoter's share pledge from 99% to 41% following a successful debt refinancing. The company is optimistic about growth prospects, citing plans to expand bed capacity from 5,000 to 14,000 beds over the next few years. Alicia also highlights the expected margin expansion due to synergies from a merger and increasing revenue per bed. Despite competition, the company remains confident in its market position and long-term commitment to growth without plans for a stake sale.

Takeaways

• 😀 Aster DM Healthcare successfully reduced the promoter's share pledge from 99% to 41% following debt refinancing.
• 😀 The refinancing was carried out with JP Morgan and HSBC at competitive rates of around 6%+.
• 😀 The remaining 41% pledge is expected to reduce further over the next 12-24 months, potentially aided by a merger.
• 😀 The promoters are not planning to reduce their shareholding via a stake sale but anticipate a gradual reduction due to business expansion.
• 😀 Aster aims to expand its margins to the mid-20s over the next 3-5 years.
• 😀 Revenue growth for the company is expected to be in the late teens over the medium term.
• 😀 Average revenue per occupied bed (ARPOB) is expected to grow by 7-8% annually in the coming years.
• 😀 Merger synergies are anticipated to begin delivering financial benefits starting from early FY 2026.
• 😀 Despite new competitors, like Adani, entering the market, Aster views competition positively as it enhances industry standards and talent acquisition.
• 😀 Aster is committed to long-term growth, with no plans to sell hospitals unless there is a strategic opportunity.
• 😀 Aster's current bed capacity is around 5,000, with plans to expand to 7,500 beds in the near future, and a post-merger capacity of 14,000 beds in 3-4 years.

Q & A

What was the reason behind the reduction in the promoter's share pledge from 99% to 41%?

The reduction in the promoter's share pledge was a result of a refinancing of debt with JP Morgan, HSBC, and others, which allowed DM Healthcare to significantly change its financial structure. Initially, the large pledge was required during the GCC transaction, but with the refinancing, the pledge was reduced.

When does the company plan to reduce the remaining 41% of the promoter's share pledge?

DM Healthcare plans to further reduce the remaining 41% share pledge over the next 12 to 24 months, with the merger being a key factor in this process.

What are the terms of the refinancing deal that DM Healthcare has secured?

The refinancing has been secured at competitive rates, around 6% plus spread, which is significantly better than the previous terms.

What is the current strategy of DM Healthcare regarding the promoter's ownership and share pledging?

DM Healthcare has no intention of selling or further reducing promoter ownership through stake sales. Instead, the reduction in shares is mainly due to the company’s expansion and the merger process.

What is the projected margin expansion for DM Healthcare in the coming years?

DM Healthcare is expecting margin expansion to the mid-20s over the next 3 to 5 years, driven by synergies from the merger and other operational improvements.

What factors are driving the expected revenue growth for DM Healthcare in the medium-term?

DM Healthcare expects revenue growth in the late teens over the next 2 to 3 years, driven by factors such as the merger synergies, an increase in average revenue per bed, and the growth in specialized services like transplants and robotic surgeries.

How does DM Healthcare plan to maintain its competitive edge in the market?

DM Healthcare believes that competition is beneficial for the industry, as it improves outcomes and attracts talent. They maintain a strong market leadership in Kerala, and the upcoming merger is expected to solidify their position further.

What is DM Healthcare's perspective on the new competitors entering the market, such as Adani's potential entry?

DM Healthcare welcomes competition as it enhances the market and improves the overall healthcare industry. They are not concerned about Adani’s potential entry but believe that it will help drive better outcomes and service quality.

Is DM Healthcare open to selling any of its assets if the right opportunity arises?

DM Healthcare is fully committed to long-term growth and has no intention of selling assets unless it aligns with a strategic opportunity to strengthen the company.

What is the current bed capacity of DM Healthcare, and what are their expansion plans?

DM Healthcare currently operates close to 5,000 beds and plans to add 2,500 more in the coming years. Following the merger with Cil, the company expects to have a total bed capacity of 14,000 in the next 3 to 4 years.