Target: ₹2,370

CMP: ₹2,231.30

Surpassing the consensus and our estimates, Krishna Institute Of Medical Sciences Ltd (KIMS) reported a healthy Q1 with strong revenue and profits. Revenue/EBITDA/PAT rose 14/14/10 per cent y-o-y. Growth was largely led by more patient footfalls and strong performances of flagship units, along with robust improvements in newer hospitals. average revenue per occupied bed (ARPOB) for the group grew 21 per cent y-o-y to ₹38,458/day, aided by a better payor mix and lower ALOS. IP volumes rose 8 per cent y-o-y and OP volumes, 10 per cent y-o-y.

The company had guided to 70-80 beds operational at the new 300-bed Nashik unit in Q2 as OC was soon due with slight losses in FY25. Further, new units in Mumbai and Bengaluru are set to be launched in Q4.

Robust cost control, a low capital-intensive set-up and value-accretive acquisitions ensured sound profitability with a 56 per cent EBITDA CAGR over FY18-23. This, and brownfield/greenfield expansions of about 1,700 beds over the next 3-4 years would aid growth. We expect 17/21% revenue/EBIDTA CAGRs over FY24-26. We maintain a Buy with an unchanged TP of ₹2,370/share, 24x FY26 EV/EBITDA for KIMS and Sunshine.

Risks: Delay in project execution, price control, decline in international business due to global challenges.

Published on August 9, 2024