KIMS: Ramping-up Oncology and M&C specialty

15 Feb 2024 , 02:47 PM

Analysts of IIFL Capital Services hosted KIMS at IIFL’s Investor Conference in Mumbai. KIMS is focusing to ramp-up Oncology and Mother & Child specialty across its hospitals which should enable it to improve the case mix in AP, thereby leading to improvement in ARPOBs as well as reducing the dependency on other specialties by hiring new clinical talent. KIMS remains committed to set up Thane Hospital and will fund the asset itself if the deal is further delayed by end-Feb’24. KIMS remains on track to add 25% incremental bed capacities (1,000 beds) in FY25 across Nashik, Thane and Bangalore. These capacity expansions, along with double digit revenue Cagr in TG/AP hospitals and further margin improvement in Sunshine/Nagpur hospitals, should drive 18/21% overall revenue/Ebitda Cagr over the next 3 years. 

Ramping-up Oncology and Mother & Child specialty: 

With increased awareness and increase in the population of 40+ age group, Oncology segment has a huge potential in India and mgmt is preparing itself to capture this opportunity. The company has ordered 18 LINAC equipment for its 14 hospitals and have negotiated & fixed the price at Rs180mn per equipment (vs market rate of Rs250mn) which will be delivered over the next 24-48 months. KIMS M&C revenue contribution is 9% vs 6% three years ago and mgmt expects to increase its contribution to 15% over the next 2 years. KIMS being an adult multi-specialty hospital, will dedicate one floor/area for M&C under Cuddles brand. 

KIMS is committed to set up Thane hospital: 

The ground work is ongoing at Thane hospital and the only part that is pending is investor’s funding which KIMS expects to be completed by end-Feb or else the company will fund the project on its own. The total cost of the Hospital is Rs5.15bn, out of which Rs1.15bn will be borne by KIMS which is related to medical equipment and the balance Rs4bn will be borne by the investor. The deal is structured in such a way that KIMS can buy Thane asset after 7 years and giving an exit to the investor. Mgmt believes that the payback period of Thane hospital is going to be 8-8.5 years with RoCE of 18%. 

25% bed capacities to be added in FY25, through commissioning of the Nashik hospital (300 beds) in May’24, Thane (300)/Bangalore (415) hospitals in Q4FY25. KIMS expects doctors from smaller practices/organised competition to join them in Nashik. Mgmt is hopeful that Nashik hospital will achieve Ebitda breakeven within 12 months.