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News: Sri Sainatha Multispecialty Hospitals Private Limited, a wholly owned subsidiary of Aster DM has entered into Lease Agreement for 30 years with Aparna Constructions and Estates Private Limited for setting up new Aster Woman and Children Hospital in Hyderabad. The company will also pay an interest free refundable security deposit of Rs 9.70 crores. Aster plans to add 275 – 300 beds in 2 phases at the facility with an investment of around Rs. 220 crore.
View: The deal looks fair on the valuation front being an asset light model (rental model with less than Rs 1 crore capital cost per bed). However, in the woman and children category, Rainbow has a strong brand loyalty in Hyderabad with a network of 8 hospitals. Apollo also has one hospital in the same category in Hyderabad. Hence the competitive scenario remains tough for Aster in this category.
Impact: Neutral