Krishna Institute of Medical Sciences Limited — Q4 FY25 earnings call

Call held 13 May 2025

Management summary

KIMS delivered a strong performance in FY25, characterized by robust revenue growth and margin expansion despite the drag from newly commissioned units. The company is in a heavy expansion phase, entering new markets like Maharashtra and Kerala while consolidating its lead in Telangana and Andhra Pradesh. Management is leveraging high-end medical technology (Gamma Knife, TULSA-PRO) to drive ARPOB and expects new units to reach EBITDA break-even within 12 months of commissioning.

Highlights

  • Full Year FY25 Revenue reached ₹3,067 crores, representing a 22% YoY growth.

  • Q4 FY25 Revenue stood at ₹801 crores, up 25.7% YoY and 1.4% QoQ.

  • FY25 EBITDA Margin improved to 26.6% compared to 26% in FY24.

  • PAT for FY25 increased to ₹415 crores from ₹336 crores in the previous year.

  • Average Revenue Per Operating Bed (ARPOB) grew significantly by 22.7% YoY in FY25.

  • Net Debt as of March 31, 2025, was ₹1,805 crores, with a target to maintain Net Debt to EBITDA at 1:2.

  • Aggressive expansion continues with new units in Nashik, Sangli, Kannur, Kollam, and Guntur now operational.

  • Management noted a unique operational challenge: beefing up security and painting Red Cross symbols on terraces due to national tensions following a massacre in Pahalgam.

Key financials

  1. Revenue ₹801 Cr +25.7%YoY
  2. EBITDA Margin 25.3% -0.2%YoY
  3. PAT ₹106 Cr +47.2%YoY
  4. EPS ₹9.6 +24%YoY
  5. Net Debt ₹1,805 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

  • Telangana Cluster
    ₹65,000 ARPOB50% Occupancy32% EBITDA Margin
  • Andhra Pradesh Cluster
    ₹23,500 ARPOB6% IP Volume Growth
  • Sunshine Hospitals
    ₹600 Cr FY25 Revenue₹170 Cr FY25 EBITDA
  • Nagpur Unit
    ₹100 Cr FY25 Revenue₹40 Cr FY25 EBITDA

Guidance & targets

Debt

  • Net Debt Debt · FY26 · Medium confidence ₹2,100 crores

    From ₹1,805 crores today

    So at the most, this INR1,800 crores is anticipated to reach to about some INR2,100-odd crores at the end of this financial -- the current financial year.

    — Sachin Ashok Salvi, CFO

  • Net Debt to EBITDA Ratio Debt · Ongoing · High confidence 1:2
    I think we'll continue to maintain the net debt to EBITDA at 1:2.

    — Abhinay Bollineni, CEO

Capex

  • Total Capex Spend Capex · next 2 financial years · Medium confidence ₹600-700 crores
    So at the most, the total capex spend in the next 2 financial year would be to the tune of -- totally it will be to the tune of about some INR600 crores, INR700 crores.

    — Sachin Ashok Salvi, CFO

Margin

  • ARPOB Growth (Mature Clusters) Margin · Annual · Medium confidence 4-5%
    I think on a cluster basis, Andhra and Telangana, pure ARPOB growth should be 4% to 5%.

    — Abhinay Bollineni, CEO

Capacity

  • Occupancy (Telangana Cluster) Capacity · next 4-5 years · Medium confidence 65-75%

    From 50% today

    Our occupancy, we're at 50%, we should get to probably 65%, 75%.

    — Abhinay Bollineni, CEO

Market context

  • EBITDA Break-even for Nashik and Kerala units Profitability · next 2 quarters · High confidence Positive
    Nashik, Kerala both will turn EBITDA positive in 2 quarters.

    — Abhinay Bollineni, CEO

Risks & concerns

  • Geopolitical/Security Tensions

    medium

    Chairman noted the 'war situation' following the Pahalgam massacre, leading to increased security and emergency measures at hospital units.

    Management acknowledged

  • Insurance Empanelment Delays

    medium

    Nashik and Thane units are currently seeing slower ramp-ups because insurance empanelment is pending, forcing a reliance on cash business.

    Both acknowledged

  • Rising Debt Levels

    low

    Net debt is expected to peak at ₹2,100 crores, but management is confident in maintaining a 1:2 Net Debt/EBITDA ratio.

    Analyst downplayed

Areas of evasion (1)

  • Specific breakdown of tariff hike vs. mix in the 20% ARPOB growth was slightly generalized.

Q&A highlights

2 direct
Telangana Cluster Margin Jump Direct
The margin expansion is on account of revenue growth... We onboarded a new liver transplant team in Secunderabad because of which there has been significant growth.

Explains how high-end specialty mix is driving profitability in mature clusters to offset new unit losses.

Asked by Amey Chalke, JM Financial

EBITDA Drag from New Units in FY26 Direct
I think this INR18 crores drag will expand a little further given the size of the 3 new hospitals that are getting commissioned. But by end of Q1 next financial year, FY26, I think we should be done with all the negative EBITDA.

Management admits short-term margin pressure from the Thane and Bangalore launches but provides a clear sunset date for the losses.

Asked by Rahul Jeewani, IIFL Capital Services

ARPOB Sustainability and Tariff Hikes Partial
On a cluster basis, Andhra and Telangana, pure ARPOB growth should be 4% to 5%... There's no price hike that we plan to do in these [new] clusters.

Clarifies that future ARPOB growth will be driven by efficiency and case mix rather than aggressive tariff hikes in new markets.

Asked by Gagan Thareja, ASK Investment Managers

2 min read 5 chapters

Detailed narrative

Aggressive Expansion into High-Potential Markets

KIMS is executing a rapid expansion strategy, having recently opened units in Nashik, Sangli, Kannur, Kollam, and Guntur. The company is also preparing for a major entry into Mumbai (Thane) and Bangalore, with three large hospitals expected to be operational by Q1 FY26. While these new units contributed an EBITDA loss of ₹18.31 crores in FY25, management expects this drag to end by Q1 FY27 as units reach break-even within 12 months.

Technology and Specialty Mix Driving ARPOB

The company reported a massive 22.7% growth in ARPOB for FY25, driven by a shift toward high-end specialties like liver transplants and the introduction of advanced medical technology. KIMS is the first in India to introduce TULSA-PRO for prostate treatment and the first in South India to install the Gamma Knife for neurosurgery. These non-invasive, OP-based technologies are expected to drive future ARPOB growth with minimal operational costs.

Cluster Performance Divergence

There is a significant gap between the Telangana and Andhra Pradesh clusters. Telangana is a mature, high-margin market with an ARPOB of ₹65,000 and EBITDA margins exceeding 30%. In contrast, the Andhra cluster operates at an ARPOB of ₹23,000-₹24,000 due to a higher component of government schemes. Management aims to improve Andhra's ARPOB to ₹30,000 over the next 3-4 years through better case mix and efficiency.

Financial Discipline Amidst High Capex

Despite a planned capex of ₹600-700 crores over the next two years and net debt projected to rise to ₹2,100 crores, KIMS remains committed to financial prudence. The management intends to maintain a Net Debt to EBITDA ratio of 1:2. The CFO noted that most capex for the large Bangalore and Thane projects has already been incurred, and future spending will focus on maintenance and smaller expansions in Srikakulam and Ongole.

Operational Resilience and Security

A unique highlight of the call was the management's response to national security tensions. Following the Pahalgam massacre, KIMS implemented emergency protocols, including painting Red Cross symbols on hospital terraces and beefing up security. This demonstrates a high level of operational readiness and sensitivity to external risks that could impact patient safety and facility integrity.

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