Rs 110-120/Share Dividend Coming Up Soon: Aster DM Share Price Rises 13%, Hits New All-Time High - Explained!

Dubai-headquartered Aster DM Healthcare which debuted Indian market a few years ago, is planning to reward traders with hefty dividend payout. The dividend in focus is a staggering Rs 110 to Rs 120 per share. The company will pay this award from the proceeds of its sale of gulf business. Following this, on Tuesday, Aster DM shares rallied by nearly 13% to hit a new all-time high.

Aster DM Healthcare Share Price:

There was frenzy buying in Aster DM Healthcare on Tuesday with stock price rising by as much as 12.8% on BSE to hit a new record high of Rs 449.75 apiece. {image-stock-dividends600-1705392815.jpg www.goodreturns.in

From its 52-week low of Rs 201.45 apiece, Aster DM has more than doubled and given more than 123% returns.

Aster DM was listed on BSE and NSE on February 26, 2018, after its IPO fully subscribed between February 12 to February 15 of the said year. Aster's listing day was broadly on a discount level compared to the IPO issue price of Rs 190 per share.

However, the latest rally takes Aster DM to new heights. The stock is up by 137% from its IPO issue price, and higher by a huge 150% from its listing day ending price of Rs 179.85 on BSE.

Aster DM Healthcare Upcoming Dividend:

As per the regulatory filing, the company's board of directors held a meeting on January 15 to discuss the transaction between Affinity Holdings and Alpha GCC Holdings for segregation of the company's GCC business. It said, "The Board was briefed that there has been satisfactory progress on conditions precedent for the transaction and Affinity and the Buyer are aiming to complete the transaction soon."

Following the meeting, it has been decided by Aster's board that the consideration receivable from the transaction is $1.01 billion for the sale of GCC business. The board discussed ways to utilise the proceeds from this transaction.

Of the total $1.1 billion deal, about $903 million is subject to customary adjustments and is payable at closing, and the rest of $98.8 million may be received subsequently subject to certain contingent events.

Aster highlighted that this includes an earnout of up to $70 million based on EBITDA achieved by the GCC business for the Financial Year ending 31 March 2024.

Accordingly, Aster added, "Following deliberations regarding future expansion plans, capex requirements, cash reserves, the Board is desirous to consider the distribution of 70%-80% of the upfront consideration of $903 million, as dividend to its shareholders i.e. in the range of Rs
110/- to Rs 120/- per share."

It said, "The proposed declaration of dividend by the Company is subject to completion of the transaction including receipt of shareholder approval for the transaction, approval of Affinity to distribute the transaction proceeds to the Company and receipt of approvals required under corporate laws for dividend distribution, including Board approval."

Hence, the details of the dividend record and payment dates will be known in due course.

The reason behind selling its GCC business is that the move allows shareholders to realise the true value of the Company's shares, and the Company's management believes that the transaction will be value accretive to shareholders. The market has considered the news of the transaction favourably as is evidenced by the Company's stock price after the announcement of the transaction, supporting this assessment. This assessment is also borne out in various investor interactions following the announcement of the transaction.

Affinity and Aster DM's intention has been and continues to be, that they shall distribute most of the proceeds from the transaction as a dividend. Only a limited portion of the transaction proceeds will be retained, including to cover potential indemnity obligations under the transaction and attend to certain statutory limitations on retained earnings at the Company's level. The board of directors of the Company will decide about the utilisation of the retained amounts (including utilisation for growth purposes) at the relevant time.

Owing to the different business mix, Aster's GCC business underperforms when compared with the listed hospital companies in the GCC region (which are largely pure-play hospitals) and hence attracts a different multiple as compared to these companies.

For the transaction, Ernst & Young Merchant Banking Services LLP ("EY"), and (ii) PwC Business Consulting Services LLP ("PwC) were appointed to determine the fair valuation for the sale of GCC business. The equity value ranges given by EY and PwC in their fair valuation reports were $881mn to US$1,093mn and US$886mn to US$1,051, respectively. Basis the same, the transaction equity value of $1002 million is on the higher side of the valuation ranges given by both the reputed independent valuers.

Lastly, it said, considering that Aster India has been operating for several growth years with a separate professional management team under the supervision of an exemplary Board of Directors, Promoters' continued shareholding in the GCC business is not expected to affect the company's operations in any manner.

Aster is expecting to complete the sale of GCC business by March 2024 end.

About Aster DM Healthcare:

Headquartered in Dubai, the Aster DM network now encompasses 17,594 employees, and 2860 doctors with several JCI accredited Hospitals, clinics and Diagnostic Centres. Never content to rest on its laurels, Aster DM Healthcare is constantly seeking opportunities to set new yardsticks with advanced developments.