Quarterly Update Q2FY22
Krishna Institute of Medical Sciences Ltd




Sustained higher margins, robust volume growth
KIMS’ reported decent set of numbers with Revenue (INR 412cr up 1% YoY) miss our
estimates by ~3%, however, EBITDA/PAT reported ahead of our estimates by 2%/10%
to INR129cr/INR84cr. KIMS saw normalization of business as COVID related cases
came down and elective surgeries picked up. Increased Patient flow, new doctor
additions in existing specialties, consistent growth in Heart and Lung transplant
programme & increasing normalization of business to pre-COVID levels resulted flat
revenue.
Gross profit grew 4% YoY & down 10% QoQ to INR 326cr in Q2FY22 with gross margin
expanded by 280bps YoY to 79.2%.
EBITDA margin came in at record level of 31.3% (v/s est. of 29.7%), mainly on account
of tighter control on medical consumption cost, high occupancy and robust IP/OP
volume. The acquired asset reported significant improvement in EBITDA margin to
20.7% in H1FY22 (vs 16.8% in FY21).
KIMS reported record PAT of INR 84cr, on account of higher EBITDA margin and lower
finance cost (down 58% YoY). Maintain ‘BUY’.
Revenue sustained with higher volume
KIMS’ Q2FY22 revenue was flat YoY even after significant reduction in COVID business,
mainly on account of increase in volume and occupancy. IP/OP volume increased by
25%/55% YoY and 14%/54% QoQ and also occupancy increased to 59.8% from 55% in
Q2FY21, mainly on account of increase in specialized treatment with the normalization,
which was visible with the higher occupancy in its matured facilities. Revenue contribution
from cash & insurance patients coming back to normal level of 60%/18% in Q2FY22 against
64%/23% in Q1FY22, which also impacted ARPOB as corporate/Arogyasri contribution
increased to 11%/10% from 6%/8% in Q1FY22. KIMS reported ARPOB of INR 24,877 (down
6% YoY & 9% QoQ) and ARPP to INR 114,644 (down 19% YoY & 23% QoQ) mainly due to
reduction in COVID cases. However, H1FY21 ARPOB was INR 25,460 (up 24% from FY21).
Further, KIMS has guided for ARPOB to sustain around INR24,000-25,000, with
improvement in volume. Average length of stay decreased to 4.6 days in Q2FY22 (v/s 5.5
days in Q1FY22 and 5.1 days in Q4FY21) with the normalization in business, which restricted
the fall in ARPOB, and expected to come back to pre-COVID level of 4.3 days.
Praveen Sahay
Research Analyst
praveen.sahay@edelweissfin.com
Ajit Sahu
Research Analyst
ajit.sahu@edelweissfin.com
CMP: INR 1,218
Rating: BUY
Target Price: INR 1,651
Upside: 36%
Bloomberg:
52-week
range (INR):
M cap (INR cr):
Promoter
Holding (%)
KIMS:IN
938 / 1,398
9,401
38,84
Higher EBITDA margin to sustain with the pickup in non-COVID business
KIMS recorded higher EBITDA margin of 31.3% in Q2FY22 and expected to maintain it in
coming quarters. Non-Covid revenue/EBITDA stood at ~INR383cr/INR121cr (v/s est.
INR380cr/INR118cr). EBITDA margin of KIMS’ matured/acquired assets in tier-II and III cities
reached 24.1%/20.7% in H1FY22.
Valuation and outlook: Maintain ‘BUY’ rating
KIMS reported good improvement in non-COVID business in Q2FY22. We maintain our
positive view on KIMS, on account of robust growth in non-COVID volume & improvement
in occupancy, maintained higher margins with sustained focus on operational efficiency and
strong expansion plans. The net cash at the end of quarter stood at INR 395cr (gross debt
of INR 50cr). KIMS expected to pay INR 230cr (first tranche of acquisition cost) for Sunshine
Hospitals acquisition in near term, even after that company has net cash. KIMS’s strong
expansion plan for addition of ~2,300 beds over 36-48 months will be funded through mix
of internal accrual and borrowing, with maintaining D/E at restricted level. Maintain ‘BUY’
with a target price of INR1,651/share.
Year to March (Consol)
Net Revenues
EBITDA
Net profit
EPS (INR)
EBITDA margin (%)
PAT margin (%)
Q2FY22
412
129
84
10.5
31.3%
20.5%
Edelweiss Wealth Research
Q2FY21 %Chg. YoY
410
141
90
11.6
34.5%
22.0%
0.5
-8.8
-6.5
-9.4
Q1FY22
473
144
92
11.5
30.4%
19.4%
%Chg.
QoQ
-13.0
-10.4
-8.4
-8.4
H1FY22
885
272
176
22.0
30.8%
19.9%
H1FY21 % Change
611
177
99
12.8
29.0%
16.2%
44.9
53.9
77.9
Date: November 11, 2021
1
Krishna Institute of Medical Sciences Ltd
Q2FY22 Result Highlights
Q2FY22
Q2FY21
%Chg.
YoY
Q1FY22
%Chg.
QoQ
H1FY22
H1FY21
% Change
412
410
0.5
473
-13.0
885
611
44.9
86
96
-11.3
112
-23.9
198
139
41.9
Gross Profit
326
313
4.2
361
-9.6
687
471
45.8
Operating expenses
197
172
14.8
217
-9.1
415
294
40.8
EBITDA
129
141
-8.8
144
-10.4
272
177
53.9
31
34
-9.3
30
3.0
31
52
-41.1
Particulars (INR cr)
Net Revenues
Cost of goods sold
EBITDA margin
Depreciation and amortization
18
16
10.5
17
6.2
35
33
5.6
111
125
-11.4
127
-12.6
237
144
65.2
Interest expenses
3
7
-58.2
6
-54.3
9
16
-42.6
Other income
5
2
254.7
4
26.5
10
6
64.2
EBIT
PBT
113
119
-5.3
125
-9.1
238
133
78.1
Provision for tax
29
29
-1.4
33
-11.1
61
34
78.5
Core profit
84
90
-6.5
92
-8.4
176
99
77.9
0
0
176
99
Extraordinary Items
Profit after tax
84
90
-6.5
92
-8.4
COGS
20.8
23.5
23.7
22.4
22.8
Operating expenses
48.0
42.0
45.9
46.9
48.2
EBITDA
31.3
34.5
30.4
30.8
29.0
Reported net profit
20.5
22.0
19.4
19.9
16.2
Tax rate (%)
25.5
24.5
26.1
25.8
25.8
Q2FY22
Q2FY21
Chg. YoY
Q1FY22
%Chg. QoQ
24,877
26,404
-5.8%
27,289
-8.8%
ARPP (INR)
114,644
142,025
-19.3%
149,132
-23.1%
IP volume
36,205
28,865
25.4%
31,709
14.2%
OP volume
280,385
181,201
54.7%
182,499
53.6%
4.6
NA
5.5
-0.9
77.9
As % of net revenues
Particulars
ARPOB (INR)
ALOS (days)
Edelweiss Wealth Research
2
Krishna Institute of Medical Sciences Ltd
Q2FY22 Result Highlights
Previous Outlook
Acquisition Update: KIMS has communicated earlier for its inorganic expansion plans which will be adjacent to its core markets
of AP and Telangana and this acquisition is fully in-line with the company’s strategy, which will further strengthen its position in
its core market (AP & Telangana). KIMS acquired 51% stake in Sunshine in similar line to its earlier acquisitions, to maintain a
culture of ownership of doctors and also doctors’ equity participation in the company keep the cost restricted. We believe that
the acquisition was at reasonable valuation and will accelerate the growth momentum for the company. However, lower
operating margins is cause of concern which we believe KIMS will improve in future with the consolidation. Overall, the acquisition
deal is expected to be EPS accretive. We have consolidated Sunshine financials from FY23 onwards and also introduced FY24
estimates for KIMS. At CMP, the stock is trading at 19x/14x/13x FY22E/FY23E/FY24E EV/EBITDA. Maintain BUY.
Q1FY22: KIMS reported strong Q1FY22 numbers on the back of Covid/vaccination businesses. KIMS will continue to benefit from
its regional market leadership, strong cash flow generation and sustained focus on operational efficiency and capacity expansion.
We believe KIMS is an attractive play in the booming healthcare services market due to its (a) planned capex for addition of 1,500
beds over 15-48 months, (b) growth in core revenue, (c) industry leading margins, and (d) reasonable valuations. Maintain ‘BUY’
with a revised target price of INR1,535/share, valuing it at 23x FY23E EV/EBITDA.
Acquisition Update
Edelweiss Wealth Research
Q1FY22
3
Krishna Institute of Medical Sciences Ltd
Financials
Income statement (Consolidated)
(₹ cr.)
FY20
FY21
FY22E
FY23E
FY24E
Income from operations
1123
1330
1640
2323
2423
Direct costs
278
289
371
525
548
Employee costs
198
220
271
395
412
Other expenses
595
670
812
1208
1241
Total operating expenses
873
959
1183
1733
1788
EBITDA
249
371
458
590
635
71
70
72
95
115
179
301
386
495
520
44
32
20
31
49
Depreciation and amortisation
EBIT
Interest expenses
Other income
Profit before tax
Provision for tax
6
10
6
11
20
141
279
372
475
491
25
70
94
120
124
Core profit
Extraordinary items
115
1
209
0
278
0
356
0
367
0
Profit after tax
Minority Interest
116
4
209
-4
278
-3
356
-11
367
-13
Share from associates
Adjusted net profit
0
120
0
205
0
275
0
345
0
354
7
8
8
8
8
16
26
34
43
44
7
8
8
8
8
Equity shares outstanding (mn)
EPS (INR) basic
Diluted shares (Cr)
EPS (INR) fully diluted
16
26
34
43
44
Dividend per share
0
0
0
0
0
Dividend payout (%)
0
0
0
0
0
Common size metrics- as % of net revenues
(INR crs)
Year to March
FY20
FY21
FY22E
FY23E
FY24E
Operating expenses
77.8
72.1
72.1
74.6
73.8
6.3
5.2
4.4
4.1
4.7
Depreciation
Interest expenditure
4.0
2.4
1.2
1.3
2.0
EBITDA margins
22.2
27.9
27.9
25.4
26.2
Net profit margins
10.7
15.4
16.8
14.8
14.6
Year to March
FY20
FY21
FY22E
FY23E
FY24E
Revenues
22.3
18.5
23.3
41.6
4.3
194.9
48.7
23.4
28.9
7.6
Growth metrics (%)
EBITDA
PBT
-1033.8
98.5
33.2
27.8
3.3
Net profit
-336.8
81.4
33.2
27.8
3.3
EPS
-351.9
63.5
30.4
25.3
2.8
Edelweiss Wealth Research
4
Krishna Institute of Medical Sciences Ltd
Financials
Balance sheet
(INR Cr.)
Equity share capital
Preference Share Capital
(INR Cr)
FY20
FY21
FY22E
FY23E
FY24E
74
78
80
80
80
0
0
0
0
0
Reserves & surplus
523
786
1261
1606
1960
Shareholders funds
598
864
1341
1686
2040
Borrowings (including lease)
369
240
90
380
380
Minority interest
13
12
12
12
12
Sources of funds
980
1116
1443
2078
2433
Gross block
1103
1188
1188
1538
1988
Depreciation
187
257
329
424
539
Net block
916
931
859
1114
1449
2
9
82
50
50
Total fixed assets
918
940
941
1164
1499
Unrealised profit
0
0
0
0
0
Investments
0
0
0
0
0
Capital work in progress
Inventories
30
24
44
95
100
132
110
225
318
332
Cash and equivalents
46
284
506
886
904
Loans and advances
11
19
19
19
19
Sundry debtors
Other current assets
0
0
0
0
0
Total current assets
220
437
794
1319
1354
Sundry creditors and others
157
231
270
382
398
7
27
27
27
27
Provisions
Total CL & provisions
164
258
296
408
425
Net current assets
55
179
498
910
929
Net Deferred tax
-34
5
5
5
5
Misc expenditure
41
-8
0
0
0
980
1116
1443
2078
2433
80
111
168
211
255
FY20
FY21
FY22E
FY23E
FY24E
114
209
278
356
367
Add: Depreciation
71
70
72
95
115
Add: Misc expenses written off
24
49
-8
0
0
-12
-39
0
0
0
4
-4
-3
-11
-13
200
284
339
440
469
-1
-115
97
32
1
Operating cash flow
202
399
242
408
468
Less: Capex
126
92
73
318
450
76
307
170
90
18
Uses of funds
Book value per share (INR)
Cash flow statement
Year to March
Net profit
Add: Deferred tax
Add: Others
Gross cash flow
Less: Changes in W. C.
Free cash flow
Edelweiss Wealth Research
(INR crs)
5
Krishna Institute of Medical Sciences Ltd
Financials
Ratios
Year to March
ROAE (%)
ROACE (%)
FY20
FY21
FY22E
FY23E
FY24E
21
28
25
23
19
18.2
28.4
30.2
28.2
23
Debtors (days)
43
30
50
50
50
Current ratio
1.3
1.7
2.7
3.2
3
Debt/Equity
0.6
0.3
0.1
0.2
0
Inventory (days)
10
7
10
15
15
Payable (days)
Cash conversion cycle
(days)
Debt/EBITDA
51
63
60
60
60
2
-27
0
5
5
1
1
0
1
1
Adjusted debt/Equity
1
0
0
0
0
FY20
FY21
FY22E
FY23E
FY24E
Valuation parameters
Year to March
Diluted EPS (INR)
16
26
34
43
44
-352
64
30
25
3
CEPS (INR)
25
35
43
55
59
Diluted P/E (x)
76
46
35
28
28
Price/BV(x)
15
11
7
6
5
EV/Sales (x)
8
7
6
4
4
38
25
20
16
15
7
8
8
8
8
Y-o-Y growth (%)
EV/EBITDA (x)
Diluted shares O/S
Basic EPS
Basic PE (x)
Dividend yield (%)
Edelweiss Wealth Research
16
26
34
43
44
75.6
46.2
35.5
28.3
28
0
0
0
0
0
6
Edelweiss Broking Limited, 1st Floor, Tower 3, Wing B, Kohinoor City Mall, Kohinoor City, Kirol Road, Kurla(W)
Board: (91-22) 4272 2200
Vinay Khattar
Head Research
vinay.khattar@edelweissfin.com
VINAY KHATTAR
Rating
Expected to
Buy
appreciate more than 15% over a 12-month period
Hold
appreciate between 5-15% over a 12-month period
Reduce
Return below 5% over a 12-month period
Digitally signed by VINAY
KHATTAR
Date: 2021.11.11 22:22:09
+05'30'
160
140
(Indexed)
120
100
80
60
40
20
KIMS
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Disclosures under the provisions of SEBI (Research Analysts) Regulations 2014 (Regulations)
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Edelweiss Wealth Research
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