Aster Healthcare: Moopen plans to demerge Gulf ops, focus on India – ET HealthWorld

Dubai-based hospital chain Aster DM Healthcare, which is among the largest private sector healthcare chains in the Gulf region as well as in the country, is increasing its focus on India with a target of netting half of the revenue from here over the next five years and plans to hive off its GCC operations into a separate entity, the chairman has said. The 35-year-old and publicly-listed hospital began operations in December 1987 from Dubai and, today gets almost 80 per cent of revenue from the GCC markets though it offers only 1,000 beds there, and the rest come from India where it has 4,000 beds.

The NRK (non-resident Keralite)-owned group, which operates 455 establishments–27 hospitals offering 5,000 beds (4,000 in India across 14 hospitals in five states), 126 clinics and around 300 pharmacies (around 80 in South India), had a group topline of around Rs 10,000 crore in FY21 of which Rs 2,500 crore came from India.

Under the new plans, which the group founder-chairman Dr Azad Moopen is planning–it’s yet to go to the board, he insisted during a conversation earlier this week from Dubai–he wants to hive off the GCC operations to help investors and analysts understand its businesses better on one hand, and on the other more than double India revenue to 50 per cent of the total topline over the next five years, when he expects sales to top Rs 25,000 crore.

“Currently we get 80 per cent of our revenue from the six GCC (Gulf cooperation council) nations. But the GCC business has many challenges. I want to demerge it into a separate entity so as to make it more attractive to investors and analysts.

“Even after the demerger there will not be any changes in the shareholding pattern but operations will be separate with own P&L. It’s just my thinking now and I have not formally taken the plans to the board which will take the final call,” Moopen told PTI in an interview from Dubai.

“Once this hive-off is complete, I want to increase the India focus especially from the revenue perspective. From the 20-25 per cent revenue share of India now where I have most of my assets, I want this to be over or around 50 per cent over the next five years, by when I hope the plans are implemented.”

And going forward, India expansion will be driven by asset light model wherein we will be taking over the operational and management control of existing hospitals, explained Moopen who hails from northern Kerala.

Of the total healthcare revenue of Rs 8,608 crore in FY21, GCC contributed Rs 6,954 crore and India just Rs 1,654 crore and the same trend has continued in the first half of FY22 when GCC operations fetched Rs 3,717 crore of the total Rs 4,876 crore total income and India chipped in with Rs 1,159 crore.

It can be noted that the Aster stocks have been missing the market rally for years now– while the indices have gained close to 170 per cent since the pandemic-driven crash in March 2020– its stock was tepid all through.

Last Friday, its stocks closed 3.75 per cent down on the BSE at Rs 171.90. Even at the peak of the market rally the stock made a high of only Rs 237.25 and its market cap stood at Rs 8,546.6 crore last Friday. Aster went public in February 2018 with a Rs 980-crore IPO.

Aster Medcity in Kochi is the flagship hospital of the group and was opened in 2014 with a 670-bed quaternary care healthcare centre on a 40-acre campus. It has added 500 beds in the second phase of expansion.

Its 14 hospitals in the country are spread across Kerala, Karnataka, Andhra, Telengana and Maharashtra–offering 4,000 beds, of which 1,000 beds were during the pandemic period. Of the total India capacity, 3,000 are in Kerala.

Moopen, who and his family own 37.8 per cent in the group and private equity fund Olympus Capital 23 per cent, ruled out more equity dilution. The first PE investor True North has around 3.4 per cent now having sold 7 per cent last June.

The Aster group is one of the few hospitals with a strong presence across primary, secondary, tertiary and quaternary healthcare across its 27 hospitals, 126 clinics and around 300 pharmacies in eight countries–in six Gulf nations, the Philippines, and India– and is among the largest private healthcare service providers in the GCC markets and in India. Its employs over 22,000, of them over 3,000 are doctors and over 6,700 are nurses.

Its India facilities include 14 hospitals, nine each Aster clinics and labs, and 77 Aster pharmacies.