Anand Rathi has given Buy recommendation for Krishna Institute of Medical Sciences with a target price of Rs. 1520 in its research report issued on Sep 12, 2022

Anand Rathi’s research report on Krishna Institute of Medical Sciences

Krishna Institute of Medical Sciences Ltd (KIMS) reported consolidated revenues of ₹4,955.1 million, a growth of 4.7% year over year. On Consolidated basis, during Q1 FY23 ARPOB was ₹30,192 as compared to ₹27,289 during Q1 FY22. The Occupancy ratio based on Operational Census Beds stood at 65.5% during Q1 FY23 of which KIMS occupancy ratio was 71% while Sunshine had an occupancy ratio of 39.5%. Overall occupancy was lower in April and May month however June and July have normalized with occupancy back to 74%-75%. Consolidated EBITDA came in at ₹1,371.6 million, a de-growth of 4.5% YoY. EBITDA margin during Q1FY23 was 27.68%. KIMS saw ~268 basis points contraction YoY in margin during Q1 FY23. EBITDA margins contraction was primarily because of consolidation of Sunshine hospitals which is operating at 17.8% EBITDA margin and also increased cost of employees, doctor and power and fuel cost at existing KIMS hospitals. On the bottom-line front, PAT stood at ₹699.6 million for the quarter, a de-growth of 21.5%. On Standalone basis, the average revenue per operating bed (ARPOB) improved to ₹26,341 during the Q1FY23 as compared to ₹25,144 during Q4FY22. On consolidated basis, the average length of stay (ALOS) has improved to 4.14 days during Q1FY22 from 4.59 days on QoQ basis. The average revenue per patient (ARPP) had decreased from ₹1,49,000 in Q1FY22 to ₹1,25,000 in Q1FY23, registering a de-growth of ~16% YoY. This was on account of muted volumesin the month of April and mid of May. Out of 3,666 bed capacity, 3,222 beds are currently operational.

Outlook

KIMS provides regional leadership driven clinical excellence and affordable healthcare. It has good track record of operational and financial performance. With successful Acquisition and planned Capex in pipeline, KIMS is well positioned to consolidate in India’s large, unorganized yet rapidly growing and underserved affordable healthcare market. We recommend BUY on the stock with a revised target price of ₹1,520 per share.

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