Buy Krishna Institute of Medical Sciences Ltd for the Target Rs 800 by Prabhudas Liladhar Ltd
Growth momentum intact
Krishna Institute of Medical Sciences (KIMS) reported 28% YoY EBITDA growth, in line with our estimates; aided by ramp up across Mahadevapura and Thane unit. 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 ramp-up 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 5-15% due to higher depreciation and interest charges. We expect 28% EBITDA CAGR over FY26-29E. Maintain ‘Buy’ rating with TP of INR800/share based on 26x Sept 2028E EV/EBITDA.
In line EBITDA; Bengaluru & Thane unit ramping up well:
KIMS reported EBITDA of INR 2.6bn; up 28% YoY; in line with our estimates. OPM declined by 190bps YoY to ~19.4%. H1 EBITDA stood at INR 4.8bn (up 22% YoY), with OPM at 19.2%. Telangana cluster adjusted for other income reported flat YoY EBITDA of INR 1.7bn with OPM declined by 550bps YoY to 25%. AP units EBITDA decreased by 17% YoY with OPM of 19.3% (down 840 bps YoY). Maharashtra cluster reported INR 1.8bn (INR1.5bn QoQ) of revenues and INR 290mn positive EBITDA (INR 113mn QoQ). Growth was aided by Thane unit, which turned EBITDA positive at INR 30mn vs loss of INR 80mn in Q1; Nashik unit reported EBITDA of INR 22mn (up 103% YoY). The combined units at Bangalore reported INR 1.1bn of revenues with EBITDA loss of INR 54mn in Q2 (INR 192mn QoQ). Kerala cluster reported EBITDA of INR 105mn vs INR 75mn in Q1. PAT came in at INR 750mn; up 12% YoY; in line with our estimates
Strong ARPOB growth of 15% YoY:
Revenues grew 40% YoY to INR 13.4bn, vs our estimate of INR 12.8bn; led by strong ARPOB growth across the clusters. KIMS consol occupancy (on operational beds) was at 54.3% in Q2 vs 50.2% in Q1. Consolidated ARBOB improved 15% YoY to INR 48.3k/day in Q2, while the ARPP grew 10% YoY to INR 165k. For Q2FY27, there was a reduction in ALOS to 3.43 days from 3.58 days in Q2FY26. IP/OP volumes grew by 27%/23% YoY in Q2.
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SEBI Registration number is INH000000933
