Hold Krishna Institute of Medical Sciences; target of Rs 2465: Asit C Mehta

Asit C Mehta report on Krishna Institute of Medical Sciences

Krishna InsƟtute of Medical Sciences (KIMS) is a corporate healthcare group in India, with hospitals in Telangana, Andhra Pradesh, and Maharashtra providing mulƟ-disciplinary integrated services. It focuses on terƟary and quaternary healthcare at an affordable cost. KIMS operates 12 mulƟ-specialiƟy hospitals under the ‘KIMS Hospitals’ brand, with an aggregate capacity of almost 4,000 beds. We like the company for the following reasons: Unique Doctor Partnership Model: KIMS has made efforts to create a culture that encourages its doctors to become stakeholders in the KIMS hospitals where they work. The strategy is to partner with a local doctor with an established hospital and acquire a majority stake in the hospital (up to 51%). The rest of the equity is offered to the founding doctors of the hospital. This allows KIMS to control its doctor costs. Since its incepƟon in 2000, it has retained over 80% of its doctors.

Outlook

We expect the incremental beds to make a meaningful contribution to the topline from FY25. Considering its expansion plans, we expect revenue/EBITDA/PAT to grow 20%/19%/17% over FY23-26E. We value the company based on an EV/EBITDA multiple of 22x, after giving a 16% premium to peers due to its expansion plans and operational efficiencies. Based on EBITDA estimates of the year ending Dec-25, we estimate the price target of ₹ 2,465.

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Krishna InsƟtute of Medical - 22022024 - ac