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Prabhudas Lilladher Report
We hosted Dr. Abhinay Bollineni, CEO of Krishna Institute of Medical Sciences Ltd., for two days NDR at Mumbai. The management indicated that KIMS will continue to grow at double digits with Sunshine and Nagpur units driving growth in the near term.
Though FY24 witnessed muted Ebitda growth, new clinical talent hiring and addition of sub-specialties across Telangana units will help ramp up revenues and profitability from FY25.
Further, the company is exploring greenfield expansions in Bengaluru and Maharashtra. Given its lean cost structure and partnership with local doctors outside Andhra Pradesh and Telangana region, the management remains confident of achieving faster breakeven and +25% operating profit margin across these new clusters over the next four-five years.
We expect KIMS to generate Rs 12-13 billion of operating cash flow over FY24-26E, which will be utilised to set up new units across Maharashtra and Karnataka.
KIMS Ebitda has grown at 21% CAGR over FY21-24. We increase our FY25E and FY26E Ebitda projections marginally by 2-3%. We expect 20% Ebitda CAGR over FY24-27E, with healthy return ratios at ~20% return on equity/return on capital employed. We continue to recommend ‘Buy' with a target price of Rs 2,200/share, valuing at 23 times EV/Ebitda on FY26E.
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