Krishna Institu.

KIMS Hospitals reported a Q4 FY26 revenue of INR 1,084 crore, marking a 35.3% YoY growth, and an EBITDA of INR 216 crore, up 6.8% YoY. However, EBITDA margin compressed to 19.9% from 25.3% in Q4 FY25. For the full FY26, revenue grew 28.2% YoY to INR 3,931 crore, but EBITDA growth was modest at 1.6% YoY, reaching INR 828 crore, with margin declining to 21.1% from 26.6% in FY25. PAT for Q4 FY26 was INR 33 crores, significantly lower than INR 106 crores in Q4 FY25, and FY26 PAT stood at INR 242 crores, down from INR 415 crores in FY25, leading to a 37.2% YoY decline in EPS to INR 6.03.

The company's expansion strategy, including new units in Bangalore, Thane, Kerala, Nashik, and Vizag, significantly contributed to top-line growth. In Q4 FY26, newer units generated INR 224 crores in revenue, while mature units contributed INR 862 crores. However, these new units collectively resulted in an EBITDA erosion of INR 32 crores in Q4 FY26 and INR 128 crores for the full FY26, impacting overall profitability. Management expects this drag to reduce significantly in FY27, projecting combined losses to be less than half of the FY26 figure.

Operational parameters showed consistent upward trends. In Q4 FY26, average revenue per operating bed (ARPOB) grew 13.7% YoY, and average revenue per patient grew 14% YoY. Inpatient (IP) volumes increased by 17.9% YoY, and outpatient (OP) volumes grew by 30.1% YoY. For the full FY26, ARPOB grew 14% YoY, and IP and OP volumes increased by 15.4% and 25.4% YoY, respectively. Management guided for Bangalore ARPOB to stabilize around INR 75,000 annually and Andhra ARPOB around INR 26,000-27,000, with Maharashtra occupancy at 60.5% as a new base.

KIMS Hospitals plans a QIP of INR 1,500 crore, primarily to retire approximately INR 1,000 crore of its current debt, which stands at over INR 3,000 crore. The goal is to bring the net debt to EBITDA ratio down to a healthy 1:2 from its current 'slightly higher' level. The remaining funds and future cash flows will be used for greenfield expansions, which typically take 3-5 years to commission, and potential small acquisitions (400-500 beds combined) in existing home markets over the next two quarters.

A significant challenge for the ramp-up of new hospitals, particularly in Karnataka, has been delays in insurance empanelment. Management admitted to underestimating the time required, attributing it to confusion surrounding the new GIC (General Insurance Council) initiative and the process of empanelling multiple new facilities simultaneously. While Thane has achieved EBITDA neutrality with GIPSA and Medi Assist empanelments, Bangalore units are expected to take another 3-4 months for full empanelment, impacting their profitability trajectory.

The recently acquired 300-bedded Palakkad hospital is currently generating INR 6.5-7 crores/month with a 5% negative EBITDA, but is projected to break even by June/July 2026. The new Kondapur facility, an 800-bed hospital, will commence operations in June 2026, with 400-500 beds initially commissioned. Additional CAPEX of INR 50-75 crores for two more floors at Kondapur is planned for FY28/29. Mahadevapura, a Bangalore unit, is expected to become EBITDA positive before October 2026, and PES by March 2027.