January 22, 2015
Mumbai
Aster DM Healthcare Limited
 
'CRISIL A-/Stable' assigned to bank debt
 
Total Bank Loan Facilities Rated Rs.3500 Million
Long Term Rating CRISIL A-/Stable (Assigned)
(Refer to Annexure 1 for Facility-wise details)

CRISIL has assigned its 'CRISIL A-/Stable' rating to the long term bank facilities of Aster DM Healthcare Ltd (ADMHL; a part of the Aster group).
 
The rating reflects the Aster group's established market position in the healthcare segment aided by its promoters' extensive industry experience and diversified revenue stream. The rating also factors in the group's healthy financial risk profile supported by its healthy capital structure, comfortable debt protection metrics and adequate liquidity. These rating strengths are partially offset by Aster group's exposure to stretched receivables and to regulatory risks in the gulf cooperation council (GCC) region. The ratings also factors in risks related to stabilisation and ramping of operations at its Medcity hospital in Kochi (Kerala) and to intense competition in the healthcare industry.
 
For arriving at its rating, CRISIL has combined the business and financial risk profiles of ADMHL with its subsidiaries, step-down subsidiaries, and joint ventures (JVs) in India and the GCC region as they have a common management, are in the same line of business, and have strong business and financial linkages between them.
 
Aster group operates through network of eight hospitals, 63 clinics and 152 pharmacies in the in the GCC region and India. Aster group has a healthy brand recall with its 'Aster', 'Medcare' and 'Access' brands; with GCC contributing around 90 per cent of revenues and the remaining from the domestic market. The Aster group has capex plans of around Rs.12 billion over the medium term, towards expansion of its operations.

Outlook: Stable

CRISIL believes that the Aster group will benefit over the medium term from its established market position in the healthcare sector, diversified revenue profile and robust financial risk profile. The outlook may be revised to 'Positive' if the group reports a significant increase in its revenue and operating margin, while improving its revenue diversity and capital structure. Conversely, the outlook may be revised to 'Negative' if the group's cash accruals decline or if it undertakes a large debt-funded capex programme or acquisition leading to a deterioration of its financial risk profile or in case of further deterioration of its receivables cycle leading to deterioration in its liquidity profile.

About the Group

Established in 1987, ADMHL (formerly DM Healthcare Pvt Ltd) is the holding company of the Aster group. The company holds around 100 subsidiaries and JV entities through which the Aster group operates its hospitals, clinics, and pharmacies in the GCC region and India. ADMHL has also set up a 540-bed quaternary super speciality hospital, Aster Medcity, near Kochi (Kerala); this commenced commercial operations during October 2014. The group is promoted by Dr. Azad Moopen
 
For 2013-14, the Aster group, on a provisional basis, reported profit after tax (PAT) of Rs.2 billion on net sales of Rs.28 billion; it had reported PAT of Rs.1.2 billion on net sales of Rs.19 billion for 2012-13.

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Long Term Bank Facility 3500 CRISIL A-/Stable -- 0 --
Total 3500 -- Total 0 --
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January 22, 2015

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