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Shares of listed hospital companies were in focus on Monday, surging up to 11 per cent on the BSE, in an otherwise subdued market after they reported a strong operational performance in the September quarter (Q2FY23).
Individually, Fortis Healthcare surged 11 per cent to Rs 313.75, while Krishna Institute of Medical Sciences (KIMS) rallied 8 per cent to Rs 1,570 on the BSE in tody’s intra-day trade. Apollo Hospitals Enterprise and Narayana Hrudayalaya, too, were up 3 per cent eeach, as compared to 0.31 per cent decline in the S&P BSE Sensex at 01:01 PM.
In Q2FY23, KIMS’ earnings before interest, taxes, depreciation, and amortization (Ebitda) grew 20.5 per cent year-on-year (YoY) and 13.4 per cent quarter-on-quarter (QoQ) at Rs 162 crore. Consolidated revenue grew 37 per cent YoY and 13.8 per cent QoQ at Rs 564 crore.
KIMS said the group continues to have a very strong balance sheet along with healthy operating cash flow, and has built a strong financial foundation for the next phase of growth.
“The company’s robust cost control, low capital intensive set-up, and value accretive acquisitions have ensured good profitability in the past with Ebitda growth of 40 per cent CAGR over FY18-22. Also, recent acquisitions of Sunshine, Nashik, and Nagpur are value accretive which will continue to aid growth momentum, in our view,” analysts at Prabhudas Lilladher said.
The brokerage firm maintains a ‘Buy’ rating on the stock with a revised target price of Rs 1,660 per share from Rs 1,550 earlier.
Meanwhile, Fortis Healthcare posted 9.9 per cent growth in revenues to Rs 1,607 crore and a 27.9 per cent rise in profit after tax (before exceptional items) to Rs 166 crore in the second quarter of the fiscal year. Reported profit after tax showed a higher growth of 67 per cent to Rs 218 crore. Q2FY23 and H1FY23 included an exceptional gain of Rs 51.6 crore, which pertains to reversal of impairment in an associate Company.
Hospital revenues increased 18.1 per cent versus the corresponding quarter led by higher occupancy, a better product mix and a 164 percent increase in international patient revenues versus the corresponding previous quarter. Hospital Business EBITDA up 30 per cent YoY to Rs 246 crore. Hospital business EBITDA contribution to consolidated EBITDA increased to around 77 per cent versus 65 per cent in Q2FY22.
Narayana Hrudayalaya, too, reported highest-ever profitability in Q2FY23 from its both Cayman & India biz. The company reported a 71 per cent YoY increase in consolidated profit after tax at Rs 169 crore for Q2FY23, riding on the back of robust performance across units. Consolidated total operating income jumped 21 per cent YoY at Rs 1,142 crore.
Building upon the momentum of the previous quarter and backed by continued strong performance across our units, the company has delivered record profitability for the group during the quarter gone by, the management said.
Analysts at Prabhudas Lilladher expect this growth momentum to sustain. The company plans to continue with its aggressive capex plan for next 2-3 years, which will aid in enhancing growth visibility beyond FY24. However, it may increase debt and impact return ratios in near term too, the brokerage firm said in result update.
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