← Throughline · holding view Deep analysis ↗ Q2 FY26
ASTERDM Aster DM Healthcare · Other Q2 FY26 · concall
Pattern: beyond fy28 expansion plan

Kerala recovered from decline to record revenue.

2 deflections · 6 weak · 12 clean — pushback across 8 of 20 Q&A turns

Focused evidence 8 of 20

Tausif Shaikh · BNP Paribasweak

Just wanted to understand your expansion plan beyond FY28 for the merged entity. Whether you plan to pursue aggressive M&A in areas like Western India and Northern India, where we don't have much presence?

We are very clear in terms of brownfield and greenfield expansion. That's been laid out very clearly. Strategic M&A, you can't really make plans, but we'll always be open for it.

Amey Chalke · Unspecifiedweak

On the FY27 guidance on the expansion side - we have 3 greenfield units coming up. Specifically for FY27 modeling on the margin side, what EBITDA impact should we take into account? And is there a possibility of QCIL brownfield expansion helping these margins to have a lower impact?

We're not giving a guidance just for 1 year. As a combined entity, we are now at 23% for the quarter, on a YTD basis we are somewhere around 21.5%, and going post-merger we are looking at in 2-3 years to be near 24-25%. The major greenfield, Hyderabad is coming which is more of women and children. The important one is our Sarjapur, which is coming quite in the end of the year, because the brownfield just commenced the work there. The capital should come around middle of the year (H2 FY27). Wherever we have a strong cluster, we tend to do well. We expect not to have too much drag on the EBITDA margin. By then with merger on the way, we should also have synergies coming into the picture.

Amey Chalke · Unspecifiedweak

Should we assume that combined entity margin should be well maintained with accounting for the synergies during that year?

We might not be able to say exactly how much the margin will be maintained or if there's any dilution, but what's really helpful to note is how complementary this is. The Trivandrum asset, which is coming 500 beds, with the presence that KIMS has in Trivandrum, is going to really help us expand that capacity and create that cluster in Trivandrum. Even in Hyderabad, with Women & Child, with the network that CARE has in Hyderabad, once the merger is complete, you will see the network effect coming through. We see this shift should help us accelerate the performance of both these units on account of the merger as well.

Harith Ahmad · Unspecifiedweak

On Aster standalone, looking at ARPOB growth, it's quite strong. When I think of FY27, some of the drivers like Whitefield ramp up or ALOS reduction, the payor mix optimisation, these might not be as relevant or significant as we have seen in FY26. Is there guidance or some indication directionally that you can give for FY27 for ARPOB growth?

I've always never given a 1 year or 1 quarter growth, I always given on next 2-3 years where it could be. ARPOB is very camouflaged with a lot of things making that KPI move - our ALOS has come from 3.2-3.3 down to 3.1, and 5% ALOS reduction directly moves to the ARPOB. We should start moving out of ARPOB and move to ARPP (IP). In Karnataka & Maharashtra cluster scheme is very important - in Aadhar Kolhapur we stopped the scheme because we already reached around 75% occupancy. That has really moved the ARPP up. Second, Whitefield - Oncology is still driving the growth, Neuro is doing really well, Cardiac is doing well. 60% of our Oncology comes from MedOnc and in MedOnc 40-50% of revenue is derived by Immunotherapy and targeted therapies; material cost is quite high and ticket sizes are high. Third is the season - overall season impact for the 3 specialties is 12% degrowth, Karnataka impact 26% YoY. My future thing will be is look at ARPP (IP) growth somewhere between 7%-8% from a long-term point of view, like 2-3 years.

Damayanti Kerai · Unspecifieddeflection

Now you have majority stake in Dr. Ramesh hospital. So, with that, is there any change in the broader strategy for the Andhra and Telangana cluster? Although it's a small cluster, it's one of the least profitable in your network.

We are working with Dr. Ramesh to kind of build a strategy for Andhra. Probably a bit too early to say it, but we are doing some of the market studies on the potential. There are a few proposals under review. We will see - I mean, there is potential for the cluster. It's all about prioritizing where we want to put the capital. We will come back maybe in the next couple of quarters to you on that.

Damayanti Kerai · Unspecifiedweak

How do you see your medium-term EBITDA margin in view of you know very strong performance in your core clusters like Kerala and then having a great visibility on drivers like Oncology etc. So where do you see your margins say in next 3-5 years from now?

We would like to resist on the cluster wise EBITDA margins, but we already given a broad guidance on a merged entity post-merger, we're looking at 24-25%. Margins are indirectly linked to the ARPP for the IP patients - the higher the ARPP, because the material cost is going where we get the leverage. Kerala cluster has done really well because of the capacity - both Aster Medcity and Kannur. Kannur used to be in high teens, has gone beyond 20% of the margins. Medcity around 750 beds, we added another 100 beds, margins have gone beyond 30%. We're inching towards more than INR 90-100 Crores of revenue per month. It's all about the brownfield expansion and how we can bring the efficiency. With the Oncology happening, with material cost being higher, there could be some stress. We are also interested to grow across the CONGO-T specialties. We will be able to manage the EBITDA margins better.

Damayanti Kerai · Unspecifieddeflection

Could it be higher because Oncology although there is high material cost but the realisation, I understand it is better than many specialties. So, I was just thinking like more than 24-25% if you can achieve.

Even if you look at just the last quarter with the GST change, with the CGHS price change, so many things keep happening in the sector. Our commitment is to always look at each lever constantly, dynamically, seeing what can be optimised, what are the options that we have. Even with the merger, there'd be a lot of synergies that comes in. But we maintain this balance of which clinical programs to run, what makes sense for the different clusters for each unit, detailing out what clinical programs to focus on, and making sure at the same time, we are able to improve the efficiency and the margins as well. It's really hard to then say specifically this will improve by 100 basis points or 200 basis points.

Gaurav · Unspecifiedweak

If I look at Aster and Quality Care, all the parameters are comparable. In fact, Quality Care is doing better. But if you look at the ALOS, Aster is at 3.2 and Quality Care is at 3.9. I just wanted to understand why this delta is there? Is it because of the case mix or something? How can this go and how will that help our capacity in the future?

If I start defining as to why the 3.9, I think it may not be fair. It's driven by multiple factors - the specialty that you focus on, what kind of surgical mix you have, how much is the medical mix. A lot of the way I'd look at it is not really compared to. The second part of your question, is there scope to enhance it? Yes. Our focus will be to continue enhancing that. We've bettered over the last year by 6%. We were in excess of 4, we've come down to about 3.85. Will this continue to improve? My sense is yes.

▸ Other Q&A (12)
Tausif Shaikh · BNP Paribas

Can you give us some qualitative update on the Kerala business, especially when Aster DM has focused at last 1 year in the clinical program and also this quarter where the growth which you have seen in Kerala business, whether it pertains to your flagship hospital Medcity or the growth was a broad based?

Kerala has been performing very well. It is not only Medcity alone, but also across the board. As far as the case mix is concerned, it is all high-end and CONGO-T mix is really doing very well. The MVT business has grown by 49%. In Medcity, robotic procedures have been doing exceedingly well, and in some months we have crossed even 80 numbers per month. Oncology has been doing exceedingly well across the board, and especially in Medcity. The leadership we have hired, especially in MVT, and the unit-wise leadership is stabilized; efficiency is settled, especially when it comes to manpower optimization or cost optimization. Unlike FY25, we had some vector-borne disease at that time when volumes were very high as far as pulmonology, internal medicine, and pediatric is concerned. But Q2 FY26, you'll find that quality electives, surgical numbers have really gone up.

Tausif Shaikh · BNP Paribas

Anything on the MVT patient footfall - the growth of 26% which you have seen YoY?

Especially Middle East, especially from Oman, we had a significant growth. Maldives, we have refocused on Maldives, and have brought in a lot of attraction of patients. We have a pan India focus, with cluster wise focus. African countries have also been one of the good number of patients have been coming from the African belt as well. Overall MVT business, you'll find a good growth of 23% across the board across India.

Amey Chalke · Unspecified

On the Karnataka and Maharashtra cluster, which is showing around 10% growth. Whitefield you have written in the PPT is doing well, delivering 25%+ growth during the quarter. Which is the hospital which is overall affecting the performance here and the reason for the same?

The main unit which is giving us the growth in Karnataka right now is still Whitefield, because it's obviously a newer unit. There's almost 27% growth that we're seeing. (Ramesh Kumar added): Whitefield is concerned with 27% growth happening there, especially oncology has grown very well. The contribution from oncology is almost 17% towards the total revenue of Karnataka. Aster CMI has slightly single digit growth, but it is also growing as for the market. (Sunil Kumar added): Overall India, the internal medicine, Pulmonology and Pediatrician have a 12% de-growth across India. Kerala impact is only 6% but Karnataka Bangalore impact is almost 26% - that's a huge impact, that's where on the year-on-year we used to go to the mid-teens or higher teen growth that is not visible.

Amey Chalke · Unspecified

On QCIL - 700-bed expansion, 300 beds are in Tier 2. Just wanted to understand the thought process here when we have to choose the expansion between metros and Tier 2. Metros typically have quicker turnaround timelines as well as higher EBITDA per bed. Tier 2 typically have a longer timelines as well as lower EBITDA per bed. So ROCE might be better, but it takes time. How should we think about it?

The numbers are 1,700, 1,300. We're looking at those many beds add over the next 3-4 years. On the point that Tier 2 markets take longer - we opened Nagercoil, our hospital in Tamil Nadu in October 2024. We were profitable from an EBITDA standpoint in the 3rd month. 1 year into the hospital, our current margins are in excess of 20%. So Tier 2 markets, if done right, the opportunity to scale them up fast is, in my opinion, better than many Tier 1 markets. We are expanding where we are already present - Indore, Bhubaneswar, where we are constrained for capacity. We are adding Oncology capabilities across Raipur, Indore, Bhubaneswar. We had initially planned that we will expand beds in Nagercoil probably in FY28, but the way we've grown, we will be adding beds in FY27.

Harith Ahmad · Unspecified

On QCIL margin profile - currently around 20-23%, if I look at on H1 basis. Varun if you could talk about some of the additional levers that we have to take this further up keeping the synergies aside. And what were the levels before you took over at the beginning of FY25 or towards the end of FY24, what was the margin level that we were operating at on a pro-forma basis for all the 3 platforms within QCIL put together?

Margin has been a good story. We were at 24.1% for the last quarter. At some point we had given that as guidance as well. We have a synergy wheel - 10 initiatives that we focus on. From a margin expansion standpoint, there are 3-4 things. One is the procurement side - we've been able to create efficiency outside of what the planned efficiencies are post merger as well. KIMS as a network had F&B insourced and we've started to insource F&B in QCIL across the network. We are working on Capex procurement, on enhancing group strength, AMCs. The second part is the payor mix - we've been able to move the payor mix by 280 basis points. Our cash and insurance payor is doing extremely well. We are today at about 81%. The 3rd part is the mature/focus/emerging categorization - mature 60% of business growing 15%, focus 25-27% of business with significant turnaround in Hyderabad assets. We've been able to launch our new hospitals well and get to 25% profitability in the third or fourth quarter.

Bino Pathiparampil · Unspecified

On GST - in your opening remarks, you mentioned that the production GST augurs well for the cost of service. Have you tried to quantify the benefit to margins that this can accrue?

There's no impact in the OP services because we always choose to take the input and pay output to the department. Only in case of IP very specifically open cases where you have seen the benefit because with the MRP going down GST is coming down both in sales and cost - so the both-way impact is there. From Aster's point of view, the top-line impact, overall top-line impact on a monthly basis is around 1.1%. And out of that, 35-40 basis points impacts our EBITDA. At the same time, recently in October, we've also seen the CGHS price increase after more than a decade, more than 2,000 procedures pricing has happened. We do approximately INR 20 Crores of revenue every month from CGHS/ESI/ECHS - there we see a positive INR 2 Crore impact in the revenue. And EBITDA out of that incremental revenue, around 75%-80% should flow to EBITDA. Whatever the negative impact what we're seeing in the GST should get compensated by the CGHS EBITDA increase.

Bino Pathiparampil · Unspecified

Why would there be a negative impact from the GST? I would assume that your cost will come down, and it will positively benefit the EBITDA.

Specifically in the open billing, on the MRP is what we used to sell. For example, all the medicines used to be approximate 12%, now it has come down to 5%. On the MRP, the GST has come down by 12% (effective). We used to have a margin of approximately 50% in the medicines specifically. So whatever the revenue or loss what we are seeing on the MRP, only the 50% has come down. So balance 50% is the one who's going to hit your P&L. We can offline give you the mathematics to explain to you how it's impacting our data.

Bino Pathiparampil · Unspecified

What is the thought behind shifting of the headquarters from Bangalore to Hyderabad?

As part of the merger, we just felt it's better to have the NCLT application for approval going from one state so that the process timelines can be better. That was the key reason because the head offices currently are in two different states. We just felt it's better to have happening so the process will be more efficient.

Sumit Gupta · Unspecified

What is the ARPOB of QCIL?

Sometimes ARPOB is a misnomer and Sunil mentioned about it. We've released the number which is the ARPP number. The ARPP growth is 10% for this quarter. The ARPOB number would be about INR 44,000 for Q2, for QCIL.

Sumit Gupta · Unspecified

What was the performance of the mature and the focus units in this quarter? And have you witnessed any margin improvement in the focus units?

Our mature units, actually from a top standpoint, grew 14.5% YoY. Our emerging units grew 85% YoY, and our focus units grew 9% YoY.

Sumit Gupta · Unspecified

How should we look at it, look at the units over the next 3-4 years? And is there any kind of margin improvement in the at least the focus units and the mature units?

In the emerging and the focus units, margin expansion is the reason why they are in that category. And that certainly will happen. A couple of units, or more in our focus group, have started to do extremely well. Our Hyderabad units were a bit challenged last year. In fact, the last month of the 2nd quarter, our numbers were mid-double-digit growth rate for our Hyderabad assets. There's a significant turnaround underway in the focus units. Another hospital in Perinthalmanna, where we had challenges around it, was a part of the focus unit, is doing extremely well now. We are now looking at adding complexity there. One of the linear accelerators is getting into Perinthalmanna. We've just ordered a robot for Perinthalmanna. The strategy continues to be the same - bring in more complexity, more modalities, ensure that anything and everything that the patients want are delivered in our centers. You will continue to see patient retention, and therefore complexity, payor mix, etc., growing, leading to an evolved margin condition.

▸ Prepared remarks (5 blocks)
Good afternoon, everyone, and thank you for joining us today. Let me begin with a brief look at the broader environment. The Indian economy continues to show remarkable resilience amid global uncertainties, underpinned by strong domestic demand and prudent fiscal management. Within this macro environment, the hospital sector stands out as a key beneficiary. The Indian hospital services market is poised for healthy growth, driven by higher insurance penetration, expanding medical infrastructure, and growing demand for specialty and acute care services. The government's recent GST rate reduction on select healthcare consumables and diagnostics is a constructive step towards making quality healthcare more affordable, while simultaneously improving cost efficiency for providers. This environment creates strong tailwinds for organized private hospital networks such as Aster. Amid this backdrop, Q2 FY26 has been a period of meaningful progress for Aster, marked by steady financial performance, recovery in a key market i.e. Kerala, and continued advancement of our long-term strategic priorities. For the last 20 consecutive quarters, Aster has delivered year-on-year revenue growth - a reflection of our strategic foresight, disciplined execution, and enduring resilience through varying market conditions. This consistent upward trend has translated into a 20% revenue CAGR and a 38% CAGR in Operating EBITDA over the past 5 years. The combined platform, on a proforma basis, delivered a healthy performance this quarter, with proforma revenues organically growing 13% YoY to INR 2,390 Crore on back of 8% growth in total patient volumes and 10% growth in ARPP (IP), with operating EBITDA growing 17% to INR 550 Crore and Normalised PAT growing 22% to INR 258 Crore, translating into a robust 23% operating EBITDA margin and a ROCE exceeding 22%. Coming to the Kerala cluster - the Kerala cluster's journey over the past year has been one of transformation and resilience. The true inflection came in Q2 FY26, when Kerala delivered its highest-ever quarterly revenue of INR 620 Crore, growing 24% increase over INR 499 Crore in Q4 FY25. This was supported by a 13% sequential increase in inpatient volumes and a strong rebound in MVT, which grew 67% QoQ and 49% YoY. Occupancy improved to 69% in Q2 FY26 from 64% last quarter. ARPP (IP) grew 5% YoY. Operating EBITDA margins expanded to 26.8% from 22.3% in Q4 FY25. Now coming to the consolidated performance for the quarter. Revenue grew by 10% YoY to INR 1,197 Crore.
Adjusting for the temporary seasonal effect, our underlying revenue growth stood at a healthy mid-teen i.e. 13%. The ARPP IP increased by 10% YoY driven by a richer specialty mix with stronger contributions from Oncology and also the discontinuation of low-yield schemes. Oncology revenue growing 26% YoY, and its share of total revenue rising to 11%, compared to 9% just a year ago. On a sequential basis, total patient volume grew by 15% QoQ with Inpatient volume growing by 12% QoQ and Outpatient volume growing by 15% QoQ. Occupancy grew to 64% in Q2 FY26 from 59% in Q1 FY26. Operating EBITDA margin expanded 200 basis points to 22% in Q2 FY26, compared with 20% in Q1 FY26. Andhra & Telangana Operating EBITDA nearly doubled QoQ with margins expanding significantly to 13.2% in Q2 FY26 from 7.9% in Q1 FY26. Labs' operating margins significantly improved to 17.8% in Q2 FY26 as compared to 7.6% in Q1 FY26. On a Normalised basis, PAT rose 23% sequentially to INR 110 Crore. Moving on to our capex - Over the past year, we have added more than 200 beds, bringing our total capacity to 5,199 beds as of September 30, 2025. The Kerala cluster is also set for expanding its footprint in Q3 FY26 with the commissioning of our new 264-bed hospital in Kasaragod on October 2, 2025, taking our network to 20 hospitals across India, including over 2,900 beds in Kerala. Apart from Kasargod, in the coming years, we plan to add another 2,300+ beds, through both greenfield and brownfield projects, taking our capacity beyond 7,800 beds. During the quarter, we further strengthened our presence in Andhra Pradesh by acquiring an additional 13% stake in Aster Ramesh Hospitals bringing Aster's stake to over 70%. Now moving over to the merger - The merger has now received no-objection letters with no adverse observations from both BSE and NSE, following earlier approvals. Shareholders have approved the preferential share issuance. The Competition Commission of India has granted its approval. We completed a strategic share swap, acquiring a 5% stake in QCIL in exchange for a 3.6% preferential allotment in Aster. The Company will now approach the NCLT to initiate the final approval phase. Upon completion, the merged platform will have 38 hospitals across 27 cities, with a combined capacity of over 10,360 beds.
Overall performance in Q2 has been strong, with revenue growing by <strong>15.1%</strong> YoY to INR 1,193 Crore, while post-Ind AS EBITDA rose by 21.6% YoY to INR 287 Crore. The EBITDA margin (post-Ind AS) improved by 130 basis points YoY to reach 24.1% in Q2 FY26. ARPP grew by 10% YoY to approximately INR 125k in Q2 FY26, supported by an improved specialty mix - with CONGO-T share increasing by 80 basis points to 58.5% - and a favorable shift in payor mix, as the share of cash and insurance business rose by 240 basis points to 81%. Our mature units (accounting for ~60% of revenue) delivered a 14.4% YoY revenue growth and 27.4% YoY EBITDA growth, achieving a 33.2% margin. Our emerging units reported 16.3% QoQ revenue growth and 90.1% QoQ EBITDA growth. Our focus units recorded a robust 30.4% QoQ EBITDA growth. With the Monthly Recurring Revenue Run Rate (MRR) from the newly hired cohort of clinicians reaching INR 20 Crore.
the first robotic-assisted CABG in Andhra Pradesh, the first TAVI with real-time CT integration at KIMS, the first buccal cell culture urethral re-implantation in Central India. Our continued focus on clinical protocols has also enabled us to reduce our ALOS by 6% YoY, decreasing from 4.08 to 3.85 days. 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. ~1,300 of the 1,700+ beds will be added in non-Metro / Tier-2 markets. We are also expanding our robotic programs.
For the quarter ended 30th Sep 25, revenues have increased to INR <strong>1,197 Cr</strong>, up by 10% from INR 1,086 Cr in Q2 FY25 and Operating EBITDA has increased to INR 263 Cr with a margin of 22.0% compared to INR 233 Cr in Q2 FY25 with a growth of 13%. Normalised PAT (Post NCI) for Q2 FY26 is at INR 110 Cr compared to INR 97 Cr in Q2 FY25 with growth of 14% YoY. For the half year ended 30th September 2025, India revenues have increased to INR 2,275 Cr, up by 9% from INR 2,088 Cr in H1 FY25 and Operating EBITDA has increased to INR 478 Cr with the margin of 21.0% compared to INR 410 Cr in H1 FY25 with a growth of 17%. PAT (Post NCI) for H1 FY26 is at INR 200 Cr compared to INR 171 Cr in H1 FY25 with growth of 17% YoY. Despite lower incidence of vector-borne diseases - which typically carry higher margins - I'm pleased to share that our Operating EBITDA improved by 13% YoY. It's important to note that Q2 FY25 had an unusually high base, driven by elevated seasonal medical admissions. In contrast, Q2 FY26 saw a softer medical case mix. Yet, even against this backdrop, we achieved an EBITDA margin improvement of 53 basis points. In line with our focus on driving sustainable profitability, we have continued to execute on our cost optimization and operational efficiencies. During the quarter, we made meaningful progress through initiatives such as centralized procurement of services and non-medical consumables, as well as the adoption of renewable energy across our hospitals.
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