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    Krishna Institute of Medical Sciences Limited

    KIMSGood
    Healthcare·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

    7

    • 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.

    What Changed2

    vs Q4 FY25

    Guidance items6 → 5 (-1)Risks discussed3 → 4 (+1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue from Operations₹772 Cr+27.5%YoY
    2. 02EBITDA₹205 Cr+36.4%YoY
    3. 03EBITDA Margin25.9%
    4. 04PAT₹93 Cr+20.8%YoY
    5. 05ARPOB Growth25.2%+25.2%YoY

    Segment breakdown

    Sunshine Hospitals
    ₹150 Cr Revenue₹40 Cr EBITDA
    Maharashtra Cluster (Nagpur & Nashik)
    ₹-5 Cr Nashik EBITDA Loss34,500 Rs Nagpur ARPOB
    Kerala Cluster
    ₹8.5 Cr Kannur Revenue Breakeven
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Profitability
    Nashik Unit EBITDA Breakeven
    Breakeven
    		High
    Capacity
    New Hospital Launches (Thane & Bangalore)
    3 Projects
    		Medium
    Debt
    Debt to EBITDA Ratio
    < 2.0x
    		High
    Margin
    Andhra Pradesh Cluster Margin
    30%
    		Medium
    Other
    Loss Funding for New Assets
    ₹10-15 crores per facility
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Loss Funding for New Projects

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

    medium

    Seasonal Weakness in Q3

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

    low

    Brand Confusion in Kerala

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

    low

    Nashik Oncology Restriction

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

    low

    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

    “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

    2 min read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.