| Initial Public Offer (IPO) Krishna Institute of Medical Sciences (KIMS IPO), Angel Broking has Subscribe rating on KIMS IPO, IPO Opens 16th June – Closes 18th June 2021 |
| Angel Broking has SUBSCRIBE rating on this issue |
| IPO Details Minimum Application for Retail 18 Shares Price Band ₹815 – ₹825 Minimum Bid Amount ₹14,670 – ₹14,850 Issue Size ₹2143.74 Cr. |
| ASBA Bank List (as per SEBI) |
| Company Background: Krishna Institute of Medical Sciences Limited is one of the largest corporate healthcare groups in South India especially in Andhra Pradesh and Telangana. It provides multi-disciplinary integrated healthcare services, with a focus on primary, secondary, tertiary care and quaternary healthcare. The company operates 9 multi-specialty hospitals under the “KIMS Hospitals” brand, with an aggregate bed capacity of 3,064, including over 2,500 operational beds as of March 31, 2021. |
| Investment Rationale: Positives: (a) They have a good track record of retaining high quality doctors, consultants and medical support staff. (b) They have a negative Debt/Equity ratio, which is one of the lowest ratios amongst its peers. (c) They have a very high ROCE of 24% in FY2021 along with one of the highest EBITDA growth in the last 3 years.Investment concerns: (a) The business is highly dependent on our healthcare professionals, including doctors that the company engages with on a consultancy basis; business and financial results could be impacted if it is unable to attract and retain such healthcare professionals. (b) The company’s dependence on their flagship hospital at Secunderabad in Telangana is at 33%; any geopolitical changes can impact the company’s business.Outlook & Valuation: Based on FY-2021PE of 31.2X and EV/EBITDA of 17.8X at upper band of the IPO price and are slightly better than the peer companies. Similarly, the company has one of the best ROE & ROCE of 23.8% and 24.8% respectively. The company has a very healthy balance sheet with negative Net Debt/Equity. We expect the upcoming expansion plan in Bangalore & Chennai can be funded through internal accruals and minimum amount of debt. We are assigning a “SUBSCRIBE” recommendation to the issue. |
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