Krishna Institute of Medical Sciences Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

KIMS delivered strong year-on-year growth across revenue and EBITDA, driven by robust performance in its core Telangana and Andhra Pradesh clusters. While the quarter saw some sequential margin compression due to seasonal factors and initial losses from the Nashik facility, management remains aggressive on its expansion strategy. The company is successfully scaling its presence in Kerala and Maharashtra while maintaining a healthy balance sheet with debt-to-EBITDA targets below 2x.

Highlights

  • Gross revenue reached ₹790 crores, representing a 29.7% YoY growth and 1% QoQ increase.

  • Consolidated EBITDA stood at ₹205 crores with a margin of 25.9%, compared to 24.7% in Q3 FY24.

  • PAT reported at ₹93 crores, impacted by seasonal weakness and a ₹5 crore loss in the new Nashik unit.

  • ARPOB (Average Revenue Per Operating Bed) grew significantly by 25.2% YoY to approximately ₹34,000-35,000 in mature clusters.

  • The company announced a major expansion in Kerala with the acquisition of a 300-bed hospital in Kollam.

  • Management maintained CAPEX guidance of ₹500-600 crores for the next year.

  • Nashik unit is expected to achieve EBITDA breakeven by Q2 or Q3 of FY26.

Key financials

  1. Revenue from Operations ₹772 Cr +27.5%YoY
  2. EBITDA ₹205 Cr +36.4%YoY
  3. EBITDA Margin 25.9%
  4. PAT ₹93 Cr +20.8%YoY
  5. ARPOB Growth 25.2% +25.2%YoY
  6. Net Debt ₹1,550 Cr

What they filed

Q1 FY27: revenue up 29.8%, net profit up 11.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue363 348 346 373 430 +18%442 +27%456 +32%484 +30%
EBITDA111 103 109 98 112 +1%128 +24%130 +19%118 +20%
Net profit72 76 94 59 64 −11%72 −5%66 −30%66 +12%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Sunshine Hospitals
    ₹150 Cr Revenue₹40 Cr EBITDA
  • Maharashtra Cluster (Nagpur & Nashik)
    ₹-5 Cr Nashik EBITDA Loss₹34,500 Nagpur ARPOB
  • Kerala Cluster
    ₹8.5 Cr Kannur Revenue Breakeven

Guidance & targets

Profitability

  • Nashik Unit EBITDA Breakeven Profitability · Q2-Q3 FY26 · High confidence Breakeven
    Nashik will break even by then [Q2, Q3 of next year].

    — Abhinay Bollineni, CEO

Capacity

  • New Hospital Launches (Thane & Bangalore) Capacity · Q2 FY26 · Medium confidence 3 Projects

    Previously Q4 FY25 → 3 Projects

    we may able to start full-fledged in quarter 2 all the 3 projects in Thane and Bangalore... maybe early in Quarter 1.

    — Bhaskara Rao Bollineni, MD

Debt

  • Debt to EBITDA Ratio Debt · Next 2 years · High confidence < 2.0x
    outstanding debts would be somewhere in the range of INR 1,750 crores... below 2:1 in terms of debt to EBITDA.

    — Sachin Ashok Salvi, CFO

Margin

  • Andhra Pradesh Cluster Margin Margin · FY27-FY28 · Medium confidence 30%

    From 24-26% today

    in FY '26 and FY '27, maybe 3 years from there we should get to a 30% kind of a margin [for AP].

    — Abhinay Bollineni, CEO

Other

  • Loss Funding for New Assets Other · FY26 · Medium confidence ₹10-15 crores per facility
    for '26 for each of these facilities, we have factored around INR 10 crores to INR 15 crores [loss funding].

    — Abhinay Bollineni, CEO

Risks & concerns

  • Loss Funding for New Projects

    medium

    Management expects a ₹30-45 crore total EBITDA drag in FY26 from three new hospitals in Thane and Bangalore.

    Management acknowledged

  • Seasonal Weakness in Q3

    low

    Q3 is traditionally a weak season for Northern Andhra and Nagpur, impacting sequential growth.

    Management acknowledged

  • Brand Confusion in Kerala

    low

    Presence of another 'KIMS' in Kerala; management is using co-branding (e.g., KIMS Valiyath) to mitigate confusion.

    Analyst acknowledged

  • Nashik Oncology Restriction

    low

    Contractual obligations prevent the Nashik unit from offering oncology services, which typically are high-margin.

    Management acknowledged

Areas of evasion (1)

  • Slightly vague on the exact timeline for entering the Kochi and Calicut markets beyond 'looking at transactions'.

Q&A highlights

3 direct
Nashik Unit Performance and Breakeven Direct
Nashik is on course to breakeven within 1 year of commencement... we have incurred a loss of INR 5 crores for the quarter.

Investors were concerned about the sharp decline in Maharashtra margins; management clarified the specific loss and provided a clear breakeven timeline.

Asked by Anshul Agrawal, Emkay

One-time Write-offs and Provisions Direct
There has been a one-time expenditure towards the tune of INR 8 crores to INR 9 crores, largely due because of provisions of PBDD and general dues write-off.

Explains the discrepancy between operating performance and reported EBITDA, confirming these are non-recurring legacy issues from acquisitions.

Asked by Rahul Jeewani, IIFL Capital

Competitive Intensity in Thane Market Direct
It just reinforces our thought process that there is a lot of opportunity in Thane... there is a good 4, 5-year window before these hospitals get commissioned.

Management views peer entry as validation of the market rather than a threat, citing a significant lead time before competitors become operational.

Asked by Rahul Jeewani, IIFL Capital

2 min read 5 chapters

Detailed narrative

Core Cluster Strength Offsets New Unit Drag

KIMS' core clusters in Telangana and Andhra Pradesh continue to show exceptional operational efficiency, with ARPOB growing 25.2% YoY. This strength is helping absorb the initial ₹5 crore quarterly loss from the newly commissioned Nashik facility. Management expects the AP cluster margins to eventually catch up to Telangana's 30%+ levels as high-margin oncology and mother-and-child services are rolled out over the next 2-3 years.

Aggressive Kerala Expansion Strategy

The company is rapidly building a third cluster in Kerala, following its successful entry into Kannur, which broke even in just three months. The new 300-bed agreement in Kollam and the upcoming Thrissur project (12-18 months away) aim to establish a 2,500-3,000 bed presence in the state. Management noted that Kerala has the highest percentage of people seeking hospitalization in India, justifying the aggressive capital allocation.

Maharashtra Cluster Stabilization

While the Maharashtra cluster saw a margin decline this quarter, it was attributed to seasonal impacts in Nagpur and the ramp-up phase in Nashik. Nagpur's ARPOB remains healthy at ₹34,000-35,000. In Nashik, 50% of doctors are yet to be onboarded (expected by March 2025), which should drive occupancy from the current 10% to breakeven levels by the middle of FY26.

Financial Discipline Amidst High Growth

Despite a heavy expansion pipeline including Thane and two Bangalore hospitals, KIMS is maintaining strict financial guardrails. The CFO guided for a peak debt of ₹1,750 crores, ensuring the Debt/EBITDA ratio remains below 2x and Debt/Equity stays under 1x (currently 0.8-0.9). This discipline is supported by non-core asset monetization, such as the ₹12.5 crore land sale in Chennai during the quarter.

Medical Tourism as a Future Lever

Management identified medical tourism as a significant untapped opportunity, particularly for the upcoming Thane and Bangalore facilities. While currently contributing only ₹40-50 crores in revenue from the Telangana cluster, they expect this to double to ₹100-150 crores over time. The new locations are better positioned geographically to attract international patients compared to the current Hyderabad hub.

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