Buy Inventurus Knowledge Solutions Ltd for the Target Rs 2,075 by Motilal Oswal Financial Services Ltd
Revenue in line; miss on margin and PAT
Inventurus Knowledge Solutions’ (IKS) 1QFY27 USD revenue was up 12% YoY at USD97m (est. USD97m). INR revenue rose 21% YoY to INR8.9b (est. INR8.1b), with EBITDA of INR2.9b (est. INR3.1b) and margin of 33.0%, up 24% YoY (est. 35%), led by strong traction in top accounts. EBITDA margin was impacted by Trubridge acquisition-related costs. Adjusted margin was ~35% (flat QoQ and in line with estimate). PAT at INR1.9b was up 28% YoY (est. INR2.1b). The miss was mainly due to a slightly higher tax rate and lower EBITDA amid acquisition-related costs. We expect a CAGR of 17%/19%/20% in organic revenue/EBITDA/PAT over FY26-28. We value the stock at 34x FY28E EPS to arrive at a TP of INR2,075 and reiterate our BUY rating on the stock.
Our view: US healthcare cost pressure remains a structural tailwind
* Management reiterated that IKS is evolving from a healthcare outsourcing company into an AI-enabled healthcare operating platform by combining workflow automation (System of Action) with electronic health records (System of Record) through the Trubridge acquisition.
* Trubridge acquisition was transformational rather than just revenueaccretive. It gives IKS access to over 2,100 rural and community hospitals, expands its addressable market, and enables cross-selling of its existing solutions into Trubridge's customer base.
* Focus remains on developing proprietary healthcare-specific AI models.
* Management reaffirmed its FY30 EBITDA target of INR30b, with minimal equity dilution and a return to pre-acquisition leverage levels.
* Management expects organic business to outperform the industry’s outsourcing growth rate (~12%).
* After completing the acquisition, management revised Trubridge's expected annual revenue to ~USD300m from the earlier estimate of USD340m.
* Combined EBITDA margins are expected to moderate to 26-27% in the near term.
Key deal wins
* Strategic partnership with premier integrated health system in California for a comprehensive clinical data migration for an acquired hospital
* Reuniting with one of the leaders in musculoskeletal space; this collaboration focuses on modernizing end-to-end RCM functions
* Advocate Health, an existing client expanding its partnership across RCM, including coding in volume and value efforts across its entire network in the acute and ambulatory space
* StrideCare, an existing client, extended RCM services for its acquired business (deals largely come from land and expand approach)
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
