Aster DM Healthcare Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Aster DM Healthcare delivered a resilient Q2 FY26 performance characterized by a strong recovery in the Kerala cluster and significant progress toward its merger with Quality Care India Limited (QCIL). Despite softer seasonal volumes in North India/Bangalore, the company improved profitability through a richer specialty mix (Oncology) and cost-optimization initiatives like renewable energy. Management is pivoting toward a massive capacity expansion phase, targeting over 10,000 beds post-merger.

Highlights

  • Consolidated Revenue grew 10% YoY to ₹1,197 crore, driven by a 10% increase in ARPP (IP).

  • Operating EBITDA increased 13% YoY to ₹263 crore with margins expanding 100bps to 22.0%.

  • Kerala cluster delivered record quarterly revenue of ₹620 crore (+11% YoY) with 26.8% EBITDA margins.

  • Combined proforma platform (Aster + QCIL) reported revenue of ₹2,390 crore and 23% EBITDA margin.

  • Total bed capacity reached 5,199 beds; merger with QCIL will create a platform with 10,360+ beds.

  • Aster Labs (Diagnostics) achieved a turnaround with EBITDA margins expanding to 17.8% from 11.0% YoY.

  • Oncology revenue grew 26% YoY, now contributing 11% of total revenue.

  • Net Debt remains moderate at ₹639 crore against cash equivalents of ₹1,276 crore.

Key financials

  1. Revenue ₹1,197 Cr +10%YoY
  2. Operating EBITDA ₹263 Cr +13%YoY
  3. EBITDA Margin 22%
  4. Normalised PAT ₹110 Cr +14%YoY
  5. ARPP (IP) Growth 10% +10%YoY
  6. ROCE 20.9%

What they filed

Q1 FY27: revenue up 21.6%, net profit down 69.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,086 1,050 1,000 1,078 1,197 +10%1,186 +13%1,182 +18%1,311 +22%
EBITDA217 186 182 202 236 +9%202 +9%224 +23%256 +27%
Net profit106 64 86 94 121 +14%59 −8%154 +79%29 −69%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Kerala Cluster
    ₹620 Cr Revenue26.8% EBITDA Margin11% Revenue Growth
  • Karnataka & Maharashtra
    10% Revenue Growth6% EBITDA Growth
  • Aster Labs (Diagnostics)
    17.8% EBITDA Margin31% External Business Growth
  • Quality Care (QCIL - Proforma)
    ₹1,193 Cr Revenue24.1% EBITDA Margin₹44,000 ARPOB

Guidance & targets

Margin

  • Combined Entity EBITDA Margin Margin · next 2-3 years · Medium confidence 24-25%
    as a combined entity... we are looking at in 2-3 years to be near 24-25%.

    — Sunil Kumar, CFO

Capacity

  • Bed Addition (Aster Standalone) Capacity · coming years · High confidence 2,300+
    we plan to add another 2,300+ beds, through both greenfield and brownfield projects, taking our capacity beyond 7,800 beds.

    — Alisha Moopen, Deputy MD

  • Renewable Energy Commissioning Capacity · H2 FY26 · High confidence 21 MW
    We are on track to go live with an additional 21 MW across 7 more hospitals during the second half of this year and early next year.

    — Sunil Kumar, CFO

Capex

  • QCIL Expansion Investment Capex · next 3-4 years · High confidence ₹2,000 crore
    Our enhanced near- to medium-term growth plan includes an investment of around INR 2,000 Crore to add over 1,700 beds in the next 3-4 years.

    — Varun Khanna, Group MD & CEO, QCIL

Volume

  • ARPP (IP) Growth Volume · next 2-3 years · Medium confidence 7-8%
    look at ARPP (IP) growth somewhere between 7%-8% from a long-term point of view, like 2-3 years.

    — Sunil Kumar, CFO

Risks & concerns

  • Material Cost Inflation in Oncology

    medium

    Shift toward medical oncology and immunotherapy led to an ~80 bps increase in material costs, partially offsetting manpower efficiencies.

    Management acknowledged

  • Seasonality and High Base Effect

    medium

    Lower incidence of vector-borne diseases compared to an unusually high Q2 FY25 base impacted volume growth in specific clusters like Bangalore.

    Management acknowledged

  • Regulatory Pricing Pressure (GST)

    low

    GST reduction on medicines impacts top-line by 1.1% and EBITDA by 35-40 bps, though management expects offset from CGHS rate hikes.

    Both acknowledged

Q&A highlights

3 direct
Kerala Cluster Growth Drivers Direct
It is not only Medcity alone, but also across the board... robotic procedures... doing exceedingly well, and in fact, some months we have crossed even 80 numbers per month.

Confirms that the recovery in Kerala is structural and broad-based across units, not just limited to the flagship hospital.

Asked by Tausif Shaikh, BNP Paribas

Impact of GST Rate Reductions Direct
35-40 basis points impacts our EBITDA... whatever the negative impact what we're seeing in the GST should get compensated by the CGHS EBITDA increase.

Quantifies a specific regulatory headwind and explains how a recent CGHS price hike will act as a natural hedge.

Asked by Bino Pathiparampil

Bangalore Cluster Performance Drag Direct
Overall, India, the internal medicine, Pulmonology and Pediatrician... we have got a 12% de-growth... Bangalore impact is almost 26% right so that's a huge impact.

Reveals that the lower YoY growth in Karnataka was due to a high base of seasonal infections last year, masking strong underlying growth in specialties like Oncology.

Asked by Amey Chalke

2 min read 5 chapters

Detailed narrative

Kerala Cluster's Record Performance and Recovery

The Kerala cluster re-established itself as a primary growth engine, delivering its highest-ever quarterly revenue of ₹620 crore, a 24% increase over Q4 FY25. This recovery was driven by a 13% sequential increase in inpatient volumes and a massive 67% QoQ rebound in Medical Value Travel (MVT). Operating EBITDA margins in the cluster expanded to 26.8%, supported by a stronger specialty mix and disciplined cost control following leadership transitions earlier in the year.

Strategic Merger with Quality Care India (QCIL)

The merger process with QCIL has advanced significantly, receiving no-objection letters from BSE and NSE. The combined proforma platform already demonstrates strong unit economics with a 23% operating EBITDA margin and ROCE exceeding 22%. Upon completion, the merged entity will operate 38 hospitals across 27 cities with a combined capacity of over 10,360 beds, positioning Aster among India's top healthcare providers.

Aggressive Capacity Expansion Roadmap

Aster is entering a phase of accelerated scale, with plans to add over 4,000 beds in the coming years. Aster standalone will add 2,300+ beds (including the recently commissioned 264-bed Kasaragod facility), while QCIL plans a ₹2,000 crore investment to add 1,700 beds. Notably, ~1,300 of the QCIL beds will be added in Tier-2 markets, where management has seen faster scale-up and profitability, as evidenced by the Nagercoil unit becoming EBITDA positive in just three months.

Operational Efficiency and Margin Levers

Management highlighted multiple strategic levers for margin expansion, including a 100-basis-point reduction in overhead costs through centralized procurement and renewable energy. The company has commissioned 13 MW of renewable energy projects and plans an additional 21 MW by early next year. Furthermore, the turnaround of Aster Labs, which saw margins jump to 17.8% from 11.0% YoY, contributes to the overall improvement in consolidated profitability.

Specialty Mix Shift Toward High-Acuity Care

A deliberate shift toward complex, high-value care is evident in the 26% YoY growth of Oncology revenue. Oncology's share of total revenue rose to 11%, up from 9% a year ago. While this shift increases material costs due to expensive immunotherapy drugs, it significantly boosts ARPP (IP) and long-term patient retention. Management expects ARPP to continue growing at a 7-8% CAGR over the next 2-3 years as the specialty mix further matures.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Healthcare earnings calls