The shares of Krishna Institute Of Medical Sciences Ltd were trading at a market price of Rs. 1,460.85 as of 2:42 pm IST on January 17th. Krishna Institute of Medical Sciences Ltd.'s share price climbed by 10.09 percent and 12.57 percent in the last 1-month and six months, according to NSE. On January 4, 2022, the stock reached a 52-week high of Rs 1,565.00 and a 52-week low of Rs 937.55 on 01 July 2021, respectively. The stock is now trading 6.70 percent lower than its 52-week high and 55.51 percent higher than its 52-week low. HDFC Securities has given the stock a buy call rating with a target price of Rs. 1709, and expects the stock to reach that price in the next two quarters.
Q2FY22 results of Krishna Institute of Medical Sciences (KIMS) according to the brokerage
HDFC Securities has said in its latest research report that "In Q2FY22, Krishna Institute of Medical Sciences (KIMS) Ltd reported decent revenue of Rs 411.7cr (+0.5%/-13% YoY/QoQ). Covid revenues in the base period impacted revenue growth. Overall, the business exhibited normalization as Covid-19 cases (~5-7% of revenue in Q2FY22) gradually declined across India and elective surgeries picked up. Increased patient flow, new doctor additions in existing specialties, increasing normalization of business to pre-covid levels contributed to the growth during the quarter. The company saw an improvement in its gross margins; up 277bps /297 bps YoY/QoQ to 79.2%, primarily due to favourable specialty mix. Tighter control on medical consumption cost and operational leverage (higher occupancy and robust IP/OP volume) supported a healthy EBITDA margin of 31.3% as against 30.4% in Q1FY22 (34.5% in Q2FY22; mainly on account of high covid revenue share). The acquired asset reported significant improvement in EBITDA margin to 20.7% in H1FY22 (vs 16.8% in FY21). The company's EBITDA stood at Rs 128.8cr (-8.8%/- 10.4% YoY/QoQ). KIMS reported PAT of Rs 81.7cr."
According to the brokerage "KIMS's occupancy stood at 59.8% in Q2FY22 as against 55.1% in Q2FY21 (62.2% in the previous quarter). The company's occupancy rate improved by 470bps YoY due to pick-up in elective surgeries. The average revenue per operating bed (ARPOB) improved to Rs 24,887 (down 5.8%/8.8% YoY/QoQ) compared to Rs 21,591 reported in Q4FY21 (similar period due to low covid revenue) due to an increase in complex surgeries and procedures. The average length of stay (ALOS) improved from 5.06 days in Q4FY21 and 5.47 days in Q1FY22 to 4.61 days in Q2FY22. The company saw robust out-patient (OP) & in-patient (IP) growth across the hospitals during the quarter. IP discharged volume increased to 36,205 in Q2FY22 against 31,709 in the previous quarter. IP volume increased by 25.4% YoY as volume for major specialties has increased on account of normalization. OP consultation volume increased to 2.80 lakhs (+54.7%/53.6% YoY/QoQ)."
Buy With A Target Price of Rs 1709
According to the brokerage "KIMS is planning to add over 1600 beds over next three-four years with an approximate cost of Rs 9-11 million per bed marking a total outlay of Rs 1400-1500cr (annual CAPEX of Rs 300-400cr). While initial losses from newly set up hospitals are expected, operating margins may moderate over the medium term, but we expect margins to remain healthy. To offer affordable healthcare services and improve its financials, KIMS is focused on improving its occupancy rates and maximizing operating efficiencies across its network. Around 15% of bed capacity is ready to get operational, supporting healthy topline growth. Strong brand reputation in South India, extensive experience of the promoters and association of renowned doctors & experienced consultants augurs well for the company's growth and margins."
The brokerage has claimed that "We expect KIMS to clock 22.7% revenue CAGR (including Sunshine Hospitals) on the back of better bed occupancy rate, increase in operational beds and improvement in ARPOB with superior clinical case mix over FY21-24E. On account of superior margin profile and operational efficiency due to healthy topline growth, we expect the company to deliver EBITDA/PAT CAGR of 20.1%/20.4% over FY21-24E. We think the fair value of the stock is Rs 1587 (19x FY24 EV/EBITDA, 36x FY24E EPS) and the bull case fair value is Rs 1709 (20.5x FY24 EV/EBITDA, 39x FY24E EPS) over the next two quarters. Investors can buy the stock in the band of Rs 1438-1448 (17x FY24 EV/EBITDA, 32.8x FY24E EPS) and add on dips to Rs 1308-1312 band (15.5x FY24 EV/EBITDA, 29.8x FY24E EPS)."
The above stock has been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.