Aster DM Health share price jumps over 5% as JM Financial upgrades stock to ’buy’, predicts 34% upside

Aster DM Healthcare share price jumped by over 5% during Wednesday's trading session after JM Financial upgraded the stock rating from HOLD to BUY, setting a target price of ₹532, which suggests a potential upside of 34%.

In its report, the brokerage mentioned that, following its merger with Quality Care India Limited (QCIL), the company is set to become one of the top three hospital chains in India in terms of bed capacity. However, the stock has seen a decline of approximately 24% year-to-date due to a broader market downturn. Similar to its competitors, the company is projected to achieve strong revenue growth supported by a double-digit increase in bed capacity and enhancing ARPOBS.

Around two-thirds of the new bed additions will come from brownfield projects, which are expected to enhance the EBITDA margins for the merged entity. Furthermore, the merger's synergies are likely to lead to a 2-3% improvement in operational efficiency.

“We believe that increasing presence in metro cities, expanding EBITDA per occupied bed and improving RoIC will drive a higher multiple for the company. This presents a compelling opportunity for investors to acquire the stock at 16x EV/EBITDA (adjusted for both Minority interest and lease) for FY27. Overall the merger will enable the company to expand its presence in new markets, benefit for cost synergies and accelerate EBITDA growth,” the brokerage said.

Aster DM Healthcare share price today

Aster DM Healthcare share price today opened at ₹404.90 apiece on BSE, the stock touched an intraday high of ₹417.35 per share, and an intraday low of ₹403.35 apiece. According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, along with broader markets, stock prices have seen strong surge in today's session up more than 4% ,Prices have now approached a key resistance of 200 AND 20 DAILY SIMPLE moving average coinciding around 420 levels. A further move beyond 420 can extend rally towards 450. Immediate support is at 395.

Further, Riyank Arora, Technical Analyst, Mehta Equities Ltd added that Aster DM Healthcare is moving in a sideways to slightly positive trend. It has resistance at 420, and if it crosses this level, it could rise to 427 and 440. On the lower side, support is at 400, with a stronger support at 390. As long as the stock stays above these levels, it has a chance to move higher, especially if it breaks past key resistance points.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.