Kovai Medical Center and Hospital - Health and Wealth

Stock Opportunities Untested - but worth a good look
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Sharing notes from AR20:

  • The greatest event that has taken place in the history of the company is the inauguration of the new Medical College in Coimbatore
  • This has been my dream to set up a world class educational and research institution in Coimbatore to ensure the quality of medical education which would match with the best centers across the globe.
  • Like @ayushmit mentioned, the management talks about a lot of “first” and “world-class” infrastructure.
  • Listing a few of them-
  1. Asia’s first hyper arc system thus allowing them to treat double the number of patients and further enabling them to perform extremely complex stereotactic radio surgeries and body treatments
  2. The only Intensive Care Unit in South India, which has been recognized for the Fellowship Program.
  3. First successful transplant in the world in a patient with deadly bleeding disorder (Haemophilia).
  4. KMCH brought the first Comprehensive Stroke Center in the region to ensure all patients with stroke could receive treatment in par the best in the country.

  • “Best Multi Specialty Hospital in South India – 2020 from “The Economic Times”.

  • One of the divisions of KMCH – its Molecular Biology Department was recent accredited by NABL for Testing of COVID-19 Virus

  • KMCH endeavors to set up a world class educational and research institution in Coimbatore to ensure the quality of medical education would match with the best centers across the globe

  • Construction of 750 Bedded Medical College Teaching Hospital is complete, to be commissioned in August 2020.

  • Long Term Borrowings- 505cr (PY 336cr) (These are mainly 12 year loans). Repayment of majority portion, 380cr, of this LTB starts in and after Sept’21.

  • Net OCF- 166cr (PY 126cr)

  • RPT- Purchase from RP- 48.4cr (PY 40.85cr)

  • Segment revenue and results-

      *Healthcare-  Revenue- 697cr (PY 626cr)
                Results- 133cr (PY 112cr)
  *Education-   Revenue- 14.57cr (PY 2.82cr)
                Results: -6.43cr (PY -6.77cr)

I had done an exercise a while ago to see the valuation across the hospital sector. I found something very interesting. Sharing a snippet-

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Kovai fares better in all aspect and yet is trading at a cheap valuation when compared to its peers. The 750-bed medical college hospital should commence operations by the end of this month as mentioned in the AR, pushing the mcap/beds valuation to the cheapest in the industry. It is yet to be seen how that investment turns out, but given the current hospital’s history and cheap valuation, there definitely is some margin of safety.

Disc: Tracking and not invested.

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