Virinchi... A bet not to be missed

(Tolaha) #110

While poaching is indeed present in every industry, doctors are different than many others, say IT professionals. Hospitals spend a lot of effort in growing theirs doctors. End of the day, public doesn’t develop stickiness to the hospitals but to the doctors. Star hospitals charge a ransom but a lot of that goes to the Star doctors.If a hospital wants more footfalls, it has to poach one of the stars at a better remuneration. Well-managed hospitals are a very profitable business, but I feel tends to plateau based on the limited supply of star doctors. Need more growth, then hire more such folks.

(Vijayk) #111

Not really. In real life- doctors grow at top govt hospitals- become a senior prof there- then shift to top pvt hospitals as a top dr…then shift to another pvt hosp at 1.5x salary + a jaguar. Pvt hospitals are not MNC cos that they will grow their drs. Most of them are lala cos in india.

(J2EE Professional) #112

yes, this happens is quite a few cases but is not the norm.

Here is the link to the virinchi interview that validates the theory which i was stating over price caps and for business growth. I think the market with back to back 10% circuit has also given a thumbs up to the results.

(J2EE Professional) #116

The AR of virinchi.

(Vivek Mashrani, CFA) #117

Attached are my notes from annual report:

Interesting part is in cashflow statement: They have increased net operating cashflow from 22 Cr last year to 79 Cr on consolidated basis. Enterprise value of the stock is 410 Cr. (~250 Cr Mcap + 160 Cr.Debt). And this is a lower occupancy levels of new Banjara Hills hospital. If operating leverage kicks in due to higher occupancy, then improvement of cashflows will surprise everyone.

Disclosure: Invested

(rvetri) #118

Good work Vivek. Thanks…

(ASPN) #119

Mudar Patherya has also recommended this Stock (along with a couple of others).

(J2EE Professional) #120

the management has indicated, that they want to ultimately go to 5000 beds. They did not give a timeframe but one thing that i believe would be the direct outcome of this is that, ultimately the hospital entity would be demerged and that would be one additional kicker for shareholders.

(Shivam) #121

On page 22 of the annual report they have mentioned that 5000 bed capacity will be achieved within 5 years.

(Alphin) #122

Where did u get this report from? I have checked bse site but not uploaded there…

(J2EE Professional) #123

oh ok. thanks for that. 5 yrs is pretty ambitious. hopefully they make it.

(J2EE Professional) #124

as mentioned in the URL, its from their own website. BSE uploads normally take time. dont rely on that.

(Alphin) #125

Ok checked the link… its from site . but still they have not listed in official annual reports page…

Thanks for sharing… very detailed annual report this tine…

(J2EE Professional) #126

it is listed in annual reports page itself. Check this ->

(Amit Mehta) #127

Few questions:

  • Do we know what is the current capacity utilization of the hospital?
  • What will be the EBITDA from the hospital at full capacity utilization?


(Alphin) #128

Current capacity utilisation is around 20%. Break even point will be 35%. And max utilisation 80%. Opm will be 20%. As per my calculations…

(Vivek Mashrani, CFA) #129

From discussion with CS, the current utilization of banjara hills is 20-30% since its new. BCH is 70%+. Now you can do the math.

On chain of hosital they mentioned potential locations in investor presentation and also annual report mentions it (see my AR notes which I posted)

(Mahesh C) #130

Vivek, I listned to one of the 2016-June interview of one executive Mr Vishal Ranjan, he claims they have 1000 software proffessionals in India and 300 in US. Considering an avg (conservative) 100k USD for those 300 and 50k USD for the 1000 people in Indi, they should have done topline of aleast a USD 80m in 2016. But the numbers including Hospital business by March 2016 were lower than half of that.
And, is it now more of a hospital chain story?


(Vivek Mashrani, CFA) #131

Yes, the IT business is saturated and acts as cashflow generating segment. The play is on hospital capex and execution. Execution is very important here.

(Anil jain) #132

Well. In fact, contrary to the sector dynamics Virinchi has been growing IT business and I believe given trends in US they will continue to grow at least 15% over 2017-2019. The cash flow from IT will help contain or even reduce the debt while cash flow from hospital can support capex. I hope management deters from taking fresh debt at least for 2 years.