IPO Note - Krishna Institute of Medical Sciences Ltd By Religare Broking
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About the Company
Incorporated in 1973, Krishna Institute of Medical Sciences Ltd. (KIMS) is one of the largest corporate healthcare groups in AP and Telangana in terms of the number of patients treated and treatments offered. It provides multi-disciplinary integrated healthcare services, with a focus on primary, secondary & tertiary care in Tier 2-3 cities and primary, secondary, tertiary and quaternary healthcare in Tier 1 cities. KIMS operates 9 multi-specialty hospitals under the “KIMS Hospitals” brand, with an aggregate bed capacity of 3,064, including over 2,500 operational beds as of March 31, 2021, which are 2.2 times more beds than the second-largest provider in AP and Telangana. It offers a comprehensive range of healthcare services across over 25 specialties and super specialties including cardiac sciences, oncology, neurosciences, gastric sciences, orthopedics, organ transplantation, renal sciences and mother & child care. KIMS has grown from a single hospital to a chain of multi-specialty hospitals through organic growth and strategic acquisitions under the leadership of its founder and Managing Director Dr. Bhaskara Rao Bollineni, and Dr. Abhinay Bollineni, its Executive Director and CEO.
Objects of the Issue
* Repayment and/or pre-payment of debt of its company or its subsidiaries
* General corporate purposes
Valuation
The Indian healthcare industry is expected to log a CAGR of 17-18% and Rs. 7.1 trillion by FY24. This would be led by renewed impetus on Pradhan Mantri Jan Arogya Yojana (PMJAY). Also, changing demographics, increasing health awareness, medical tourism, health insurance coverage and rising income levels would be key drivers of growth for the healthcare industry. Further, 68% of hospital treatments in terms of value were carried out by private hospitals in FY20 which is expected to increase to 72% in FY24. All these factors bodes well for players like KIMS.
KIMS is well-positioned to consolidate India’s large, unorganized and yet rapidly growing and underserved affordable healthcare market. Additionally, it maintains a standard of high-quality healthcare by consistently employing a diverse pool of talented doctors, nurses and paramedical professionals. The company’s financial performance has been quite encouraging with healthy growth in revenue and profitability. Moreover, it has diversified revenue streams with no single specialty accounting for more than 25% of its total income in the last 3 years. Going forward, the company intends to strengthen its existing hospitals and specialties and also strategically grow its presence in adjacent markets. Further, it has also planned initiatives that would help the company achieve higher operational efficiencies. Considering healthy industry growth prospects and KIMS strong track record, we have a positive view on the company for the long term.
Key risks:
* The pandemic has affected regular business operations which may continue if the duration and severity increases
* Unfavorable government policy could impact profitability
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