Aster DM expected to contain debt levels despite lower profitability: ICRA

The stable outlook reflects ICRA's expectations that the group's track record besides diversification across segments and geographies will aid in mitigating the impact of external circumstances like Covid-19 to some extent.

Moreover, the group is undertaking various cost-containment measures and reducing capital expenditure which is expected to contain debt levels despite the lower profitability anticipated in FY21.

The ratings take into account Aster DM's established market position in the healthcare industry across the Gulf Cooperation Council (GCC) countries and growing presence in India. They are also supported by the group's diversified revenue sources from various healthcare segments like hospitals, clinics, and pharmacies, said ICRA.

Also Read: Hospitals May Face More Pricing Restrictions: Rating Agency ICRA

In FY20, operating income grew by 10 percent whereas adjusted operating profit before interest, tax, depreciation, and amortization (OPBITDA) margin increased to 11.1 percent from 10.8 percent in FY19 despite the impact of Covid-19 on operations of the group in March.

As on March 31, total debt by adjusted OPBDITA stood at 3.3 times as against 3.2 times as on the same day last year. The group continues to witness steady improvement in revenue across segments, backed by the ramp-up of new facilities and improving operations in the existing facilities, said ICRA.

The group's capital expenditure plans in FY21 have been curtailed in light of the Covid-19 pandemic and consequently, debt drawdown towards capital expenditure is expected to be limited to certain ongoing projects in India.

ICRA said Aster DM had unencumbered cash and bank balances of Rs 168 crore as on March 31. It reported an operating income of Rs 8,738 crore in FY20 as compared to Rs 7,963 crore in FY19.

Also Read: Aster DM India, Gulf Revenue Falls By 35 Percent Amid COVID Crisis