Release Date: November 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Krishna Institute of Medical Sciences Ltd (BOM:543308, Financial) reported a strong financial performance with a gross revenue of INR782 crores, marking a 19.4% year-on-year growth.
- The company achieved an EBITDA of INR223 crores, reflecting a 23.8% increase year-on-year, with an improved EBITDA margin of 28.5%.
- Significant expansion plans are underway, including the acquisition of Queen's NRI Hospital in Vizag and new operations in Kerala, indicating strategic growth in Tier 2 and Tier 3 towns.
- The company is focusing on asset-light models for expansion, which minimizes capital expenditure and leverages existing infrastructure.
- Krishna Institute of Medical Sciences Ltd (BOM:543308) has successfully integrated advanced medical technologies, such as robotic-assisted surgeries, enhancing its service offerings and operational efficiency.
Negative Points
- The occupied beds in the Telangana cluster have decreased, raising concerns about utilization despite revenue growth.
- There is a notable EBITDA loss expected from new operations in Nashik, with an anticipated loss of INR5 crores to INR10 crores in the first year.
- The company's expansion into Kerala faces competition from established local healthcare providers, which may impact market penetration.
- The promoter pledge issue remains unresolved, with ongoing queries from SEBI, potentially affecting investor confidence.
- The Andhra Pradesh cluster has seen a decline in occupancy rates, which could impact future revenue growth if not addressed.
Q & A Highlights
Q: The occupied beds in Telangana have decreased, but revenues have increased significantly. Is this due to a change in case mix, and is it structural?
A: Abhinay Bollineni, CEO & Executive Director, explained that there are no structural changes. The increase is likely due to a change in case mix or a decrease in Average Length of Stay (ALOS), with a significant reduction in ALOS from H1 last year to H1 this year.
Q: How many months of operations for Nashik and Vizag are included in this quarter's results?
A: Abhinay Bollineni stated that Nashik contributed less than INR10 lakhs, while Vizag contributed one month's revenue.
Q: Can you provide a timeline for achieving the 3,000-bed target in the Kerala cluster, and how will it be achieved?
A: Sreenath Reddy, Director - Business Strategy and M&A, mentioned that the 3,000-bed target is expected over five to six years, using a mix of asset-light models and greenfield projects. Initial expansions will focus on asset-light models, with potential greenfield projects in major cities like Kochi and Calicut.
Q: What is the expected impact on operating costs and margins with the addition of new units, especially in Kerala where costs are higher?
A: Abhinay Bollineni noted that the new assets, except Nashik, are already operational with minimal EBITDA loss. Nashik is expected to break even within 12 months, with a potential EBITDA loss of INR5 crores to INR10 crores. Overall, the impact on margins is expected to be minimal.
Q: What is the rationale behind selecting Kerala as a focus market, given its higher costs and existing competition?
A: Bhaskara Bollineni, Executive Chairman, highlighted Kerala's mature healthcare market, high insurance penetration, and gaps in tertiary care. Nitish Shetty, CEO - Karnataka Cluster, added that Kerala's acceptance of private hospitals and availability of clinical talent make it an attractive market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
