Motilal Oswal sees Aster DM EBITDA rising 25% CAGR through FY28; sets Rs 910 target

Motilal Oswal has initiated coverage on Aster DM Quality Care with a Buy rating and a target price of Rs 910. This implies a potential upside of up to 22%. The brokerage expects the co's recent merger with Quality Care India to unlock synergies, expand scale and drive stronger earnings growth.

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QCIL merger opens up synergy potential

The merger, effective July 1, 2026, brought Aster, CARE Hospitals, KIMSHEALTH and Evercare together to create a 39-hospital network across 28 cities. The combined entity has around 10,900 beds, of which 10,559 are operational.


For Motilal Oswal, the opportunity goes beyond the larger hospital network. It expects centralised procurement, supply-chain optimisation, shared clinical resources and corporate cost rationalisation to create room for further margin expansion. Management has indicated that the merger could deliver a 10-15% uplift in EBITDA through these initiatives.

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The early numbers also point to improving operating performance. On a combined basis, 1QFY27 revenue rose 20% year-on-year to Rs 26 billion, while EBITDA increased 30% to Rs 5.8 billion. EBITDA margin expanded 170 basis points to 22.2%, while patient volumes rose 13% and occupancy improved 510 basis points to 64%.

Expansion pipeline adds to growth visibility

The merged entity is also pursuing an aggressive capacity expansion programme, with plans to add more than 4,150 beds and take total capacity beyond 15,000 beds. More than half of the planned additions are through brownfield projects, according to the brokerage.

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Motilal Oswal expects revenue, EBITDA and PAT to grow at CAGRs of 19.5%, 25% and 33%, respectively, over FY26-28. Revenue is projected to reach Rs 132 billion and EBITDA Rs 30.7 billion by FY28, supported by higher patient volumes, improving occupancy, case mix and merger synergies.

The brokerage values Aster DM at 27 times its 12-month forward EBITDA estimate of Rs 27.7 billion, arriving at a target price of Rs 910. Based on its report price of Rs 759, this represents a 20% upside.

Key risks include delays in QCIL integration and synergy realisation, slower capacity ramp-up, regulatory changes and pricing pressure.

Aster DM Quality Care shares were trading at Rs 745.65, down 0.23% on Tuesday. The stock has gained 22.98% so far this year and 19.69% over the past year.

Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.