Buy Krishna Institute of Medical Sciences Ltd For Target Rs.800 by Prabhudas Liladhar Capital Ltd
New clusters to drive growth
Krishna Institute of Medical Sciences (KIMS) reported 4% YoY EBITDA growth, impacted by losses from new greenfield units, particularly the Electronic City unit which was fully commercialized in Q4. The turnaround time for greenfield units in new clusters has been impressive and thereby demonstrates strong execution. New leadership team hiring across Karnataka and Kerala provides comfort for faster rampup in these clusters. Given its lean cost structure and partnership with local doctors/ leadership outside Andhra Pradesh (AP) and Telangana, we remain confident of achieving faster breakeven and +25% OPM across Maharashtra, Karnataka and Kerala clusters over the next 3-4 years. Our FY27E and FY28E EBITDA broadly remain unchanged however PAT stands reduced by 7-10% due to higher depreciation and interest charges. We expect 32% EBITDA CAGR over FY26-28E. Maintain ‘Buy’ rating with TP of Rs800/share based on 28x FY28E EV/EBITDA.
In line EBITDA; new units losses increased QoQ as E-city unit fully commercialised:
KIMS reported EBITDA of Rs2.1bn; in line with our estimates. OPM declined by 70bps QoQ to 19.2%; due to losses from new units. Adjusted for losses from new units and certain one offs in Q4FY25, EBITDA was up by 17% YoY. Telangana cluster adjusted for other income reported 10% YoY growth in EBITDA, whereas AP units grew by 26% YoY. Maharashtra cluster reported Rs 1.4bn (INR1.3bn QoQ) of revenues and Rs. 68mn positive EBITDA (INR50mn QoQ). Electronic city unit was fully operational in Q4 with total bed capacity of 350. The combined units at Bangalore reported INR653mn of revenues (INR344mn QoQ) with EBITDA loss of INR 395mn in Q4 (INR 260mn QoQ). Kerala cluster reported positive EBITDA of INR 99mn vs losses of Rs 4mn in Q3.
Strong ARPOB; occupancy declines due to new bed addition:
KIMS consol occupancy (on operational beds) was at 50.5% in FY26 vs 50.1% in FY25. Overall, KIMS added 1285 in FY26 beds across Bangalore, Thane, Vizag, Kannur, Kollam and Nashik over the past one year. Consolidated ARBOB improved 14% YoY to Rs47,132/day in Q4. For FY26, ARPOB was up 14% YoY to Rs 44,644/day. For FY26, there was a reduction in ALOS to 3.57 days from 3.66 days in FY25. IP/OP volumes grew by 18%/30% YoY in Q4.
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