Buy Krishna Institute of Medical Sciences; target of Rs 885: ICICI Securities
Moneycontrol • 4 days ago
Key Investment Pillars
- Ramp-up at new hospitals: KIMS' recently commissioned hospitals are witnessing a robust improvement in operating performance, with hospitals in new clusters recording a positive EBITDA.
- Brownfield expansion: The company plans to operationalise the remaining beds over the next couple of quarters, ahead of its earlier schedule, supported by strong traction at the new facility.
- New clinical programs: Introduction of high-value surgeries in transplant and oncology has boosted revenue growth at most of its new hospitals.
- Operating leverage: With revenue run-rate at these hospitals to pick up ahead, KIMS will likely be on course for margin improvement in the quarters ahead.
Thesis Validation Checklist
- Occupancy improvement: Watch for occupancy to improve led by ramp-up of new hospitals.
- Margin expansion: Expect margins to expand by ~600bps led by improvement in profitability of new units.
- Revenue growth: Monitor revenue growth, which is expected to be driven by healthy traction across clusters and ramp-up at new hospitals.
- New hospital commissioning: Track the commissioning of new hospitals, which will likely drive growth ahead.