Aster DM's Indian IPO set to receive lukewarm welcome

Company hopes to raise around $150m to pay off debt and finance expansion projects
Aster DM's Indian IPO set to receive lukewarm welcome
Aster DM’s IPO at the Bombay Stock Exchange and the National Stock will open for subscription within a band of INR 180-190 per share (AED 10.281-10.852).
By Shayan Shakeel
Mon 12 Feb 2018 09:48 AM

A quick skim of analyst opinions show UAE-based healthcare services provider Aster DM’s IPO, set to debut in India today, will be met with cautious interest at best.

Aster DM’s IPO at the Bombay Stock Exchange and the National Stock will open for subscription within a band of INR 180-190 per share (AED 10.281-10.852). The company hopes to sell 51.5 million shares and raise $152 million (AED559.8m) in a three day issue that ends on  February 15.

BloombergQuint estimates the company’s expected share price at the upper end of the price band is over 48 times its earnings, and over five times its book value. The company’s return on equity rate trends higher than other competitors in its field, but it lags in terms of returns on capital and assets.

Finance Blog MoneyControl, which also issues risks and concerns with new issues on Indian stock exchanges, points to the company’s operations in an oil-dependent Middle East as a strategic risk to its expectations for future returns.

Aster also needs to raise its bed occupancy rates to continue generating increasing returns, something its financial statements show it has been having trouble doing.

Aster DM operates in nine countries across the Middle East, India and the Philippines, and is growing to add 10 more hospitals to its network of 19 hospitals. With the initial offering, it aims to pay off debt with which it is financing expansion, buy medical equipment as well as support general corporate expenditure.

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Last Updated: Mon 12 Feb 2018 09:50 AM GST

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