Thankful for the detailed analysis and notes mentioned above. Had done a small analysis on various hospitals during Yatharth’s IPO.
Considering the run-up of various hospitals, Kovai is the only one that seems reasonably priced. Indraprastha is stuck in legal issues considering their agreement with Delhi govt. for providing free-of-cost treatment in lieu of lease of hospital land.
Note: Data is from early Aug for other hospitals
The only issues I can see are:
- The company doesn’t seem to have geographical expansion plans. It’s a good stable business that appears to be undervalued but no amazing story
- Medical college is impacting PAT margins and the company has high interest costs
- Lack of institutional interest and low market vol. depth
- The Google reviews (not sure how reliable they are) are not favourable. Usually they’re above 4 for major hospitals in most cities, see Royal Care is 4.3. This might impact patient inflow
- Lack of medical tourism, which is a very high margin business for most hospitals. They don’t have MTQUA certification (only NABH) which Sri Ramakrishna Hospital in Coimbatore has
- From annual report, their Inpatient nos. increased 25% while revenue only increased 5% (decrease in ARPOB) which they need to pass on
Pros:
- Promoter holding has increased this quarter
- Cheaper valuation (P/E, EV to EBITDA, CFO to EBITDA) compared to other hospitals (see KIMS) considering the no. of beds and strong brand image (as per their AGM and comments from people above)
- Most of Coimbatore population is in urban areas and it is growing at 2.65% rate per annum (same as Delhi)
- In Tamil Nadu, IPD per 1000 is double that of India, implying people are more inclined towards hospitalization services in the state
Happy to get feedback, insights from other people
Disc: Invested and averaging down