Buy Krishna Institute of Medical Sciences; target of Rs 1600: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Krishna Institute of Medical Sciences

We hosted Dr. Bhaskar Rao (MD), Dr. Abhinay (CEO) and Mr. Vikas (CFO) of Krishna Institute of Medical Sciences (KIMS), for 2 day NDR at Mumbai. Management indicated that KIMS will continue to grow at double digit. In near term Sunshine acquisition will aid growth. Further KIMS intends to create cluster based investment approach in Karnataka and Maharashtra region. KIMS have lean cost structure and given it is partnering with local doctors outside AP & Telangana region, management remains confident of achieving faster break even and +25% OPM across these new clusters over next 4-5 years. KIMS will be generating Rs8-10bn of operating cash flow over FY22-24 which will utilized to set up new units across Maharashtra and Karnataka region.

Outlook

EBITDA has grown at 40% CAGR over FY18-22. Our FY23E & FY24E EBITDA stands marginally cut by 1-3%. We expect 20% EBIDTA CAGR over FY22-24E, with one of best in class return ratios at 22%/31% RoE/RoCE. Recommend Buy with target price of Rs1600/share, valuing at 20x EV/EBIDTA on FY24E.

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