IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Started by renowned cardiothoracic surgeon Dr Bhaskara Rao Bollineni in 2000, Krishna Institute of Medical Sciences (KIMS) is one of the largest corporate healthcare groups in Andhra Pradesh and Telangana. As of FY21, KIMS operates nine multi-specialty hospitals with a bed capacity of 3,064, including over 2,500 operational beds. It offers a comprehensive range of healthcare services across 25 specialties and super specialties. The company has a strategic focus on the southern India healthcare market where it has a strong understanding of regional nuances, customer culture and the mindset of medical professionals and where there is significant and growing need for quality and affordable healthcare services. In FY21, KIMS recorded ARPOB of Rs. 20,609, a bed occupancy rate of 78.60% and an ALOS of 5.53 days, on an aggregate basis.

Investment Rationale

Strong hospital chain pedigree in AP, Telangana

KIMS owns one of the largest hospital chains in AP and Telangana. It reported Rs. 1340.1 crore of revenues and Rs. 381.0 crore of adjusted EBITDA in FY21, the highest in AP and Telangana. It has 3,064 beds as of 9MFY21, which is 2.2x more beds than the second largest provider in these regions.

Strong financial track record

KIMS has achieved healthy profitability in both Tier I and Tier II, III markets by identifying markets with significant underserved healthcare demand and delivering quality healthcare services at affordable prices, which, in turn, drives patient volumes. As of FY21, KIMS' debt-to-adjusted EBITDA ratio was 0.71x and gearing ratio was 0.31x compared to industry range of 0.1-5.2x. It has achieved strong free cash flow by effectively managing capex. KIMS is one of only three hospitals in India that are rated AA by Crisil.

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Source : Equity Bulls

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