Following on from previous posts, one goal in this thread has been to chart out the landscape of tenders that are currently being floated by the government. @Deenar_Toraskar has done fantastic work on finding a number of them.
Key points:
The current tender landscape is around 600 Cr. conservatively. These tenders close by the end of the month, and should be awarded in 2023.
Rajasthan is the largest tender at 200-300 Cr. Following this is a large pathology contract in Odisha worth around 100 Cr., and a couple of smaller tenders worth 50 Cr. each.
Cancellations of tenders and subsequent re-tendering happens all the time for various reasons. We found 3 tenders on this list that are up for re-tendering. One in particular has been in the works since 2020.
Therefore even if things are up for re-tendering, it’s fine. There are many on the table at any given moment.
There are lots of smaller tenders in the 5-25 Cr. range that individually add up to around 100 Cr.
This is a work-in progress sheet. It will be updated when we find more details.
Assumptions in value: I’ve assumed each CT scanner gives around 3 Cr. of revenue, and each MRI gives around 2.5 Cr. of revenue. Pathology tenders are harder to ballpark, but have been done by reasonably extrapolating from Rajasthan data that we had above, and comparing the number of district hospitals in each contract, and the population of each state.
Tenders won in 2022, to be implemented
Largest win has been the operation of 39 CT scanners in Maharasthra, providing around 100 Cr. of revenue.
Uttar Pradesh contract is second largest at around 20 Cr.
Himachal Pradesh path contract is statewide, but I assume revenue is not very high as HP is not a populous state.
I have found Krsnaa’s yearly throughput for some existing CT scan centres, along with dates of when contracts end.
The median number of tests done per year is around 13,500. At Rs. 2000 per test, this comes out to around 2.7 Cr. of revenue per CT machine, and around 36 scans per day. (Further points to my assumption on CT revenues being in line.)
Note Q3FY23 data is current, as of 3rd December 2022, and therefore the quarter looks weak. At this run rate, quarter will end at around 300,000 tests.
District
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Q3FY22
Q4FY22
Q1FY23
Q2FY23
Q3FY23
Total
7604
41901
57211
75959
100016
142688
133476
178694
263327
188033
AHMEDNAGAR
8
888
1050
1400
2238
2524
2484
3569
4633
2936
AKOLA
1
1013
1170
1700
3621
4359
3341
3680
7943
3755
AMRAWATI
5
1677
3139
3624
5587
6776
6259
8113
11078
6161
AURANGABAD
3
3190
2662
2336
3724
3992
3929
5984
9504
6597
BEED
7
225
576
686
1569
3307
3346
5502
8254
5706
BHANDARA
19
36
265
537
1486
4213
1622
1858
2799
2262
BULDHANA
9
475
984
1128
2410
2690
3101
2926
7397
6212
CHANDRAPUR
313
1981
906
1423
3372
6763
4817
7206
9023
6212
DHULE
1
206
427
433
1275
1847
2276
2983
3394
2388
GADCHIROLI
305
653
1287
2180
2934
4169
3129
3650
7209
6053
GONDIA
118
439
543
594
1629
2960
2015
2796
3120
2153
HINGOLI
6
383
472
724
783
1429
1198
1484
5009
3515
JALGAON
16
850
1034
981
1324
1457
1249
2054
3299
2594
JALNA
2
3732
2114
2433
2248
4228
3730
4997
8089
6561
KOLHAPUR
11
3670
3707
3717
4231
7593
7208
8984
14078
9853
LATUR
2
895
1626
2451
3928
4923
3918
6005
8498
4011
NAGPUR
2
461
885
904
1862
4154
4006
5334
6894
4310
NANDED
126
997
1578
1698
2016
4354
4100
4854
6853
4589
NANDURBAR
19
121
1040
844
1410
2012
1512
1458
1885
2250
NASHIK
1738
2519
3051
3200
6791
8151
8888
11931
16079
13522
OSMANABAD
4
513
907
1799
2745
4346
2581
3796
7122
5551
PALGHAR
2
133
869
752
1190
2842
3374
3859
5625
4433
PARBHANI
2
66
341
1930
998
2153
1728
2336
4095
3069
PUNE
18
2257
4232
6337
5518
7236
9512
13262
18708
12823
RAIGAD
1227
1557
3205
3852
3662
4197
3271
4270
6125
4934
RATNAGIRI
2009
1834
2020
2572
1752
1674
1846
2441
3554
3167
SANGLI
0
1060
843
2508
2524
5587
4341
8060
13611
4940
SATARA
2
988
1753
4109
4184
3838
3210
6634
11946
9685
SINDHUDURG
1243
3514
3925
4985
4439
4426
5350
5400
6968
5632
SOLAPUR
3
571
700
410
870
2872
3711
6324
8593
6337
THANE
345
3116
6056
6917
7692
9162
10677
12341
13985
11872
WARDHA
36
898
2025
2723
4962
6404
4649
5927
7563
5907
WASHIM
1
703
718
1907
2723
2896
3300
3996
4641
3680
YAVATMAL
1
280
1101
2165
2319
3154
3798
4680
5753
4363
I have found teleradiology data for 8 states, will compile and upload when I work on this again.
All the data we have is compiled at the following sheet:
Disclosure: Invested, Krsnaa forms 10% of my portfolio.
Thanks for this detailed research. The last concall, management mentioned that the combined optimal revenue for Maharastra + HP + Punjab is 100 Cr. annually. Do you think it is conservative guidance, or are we missing anything?
I think investors need to ignore management guidance and just look at the data. This is a company for which there is quite a lot of data publicly available, but not many people are working on it.
Punjab has 25 CT centres. In general, mature CT centres give around 3 Cr. of revenue. This adds up to 75 Cr. potentially from these centres.
An MRI machine adds around 2-2.5 Cr. of revenue. Punjab has 6 of these machines. That’s around 12-15 Cr. of revenue.
Adding all of this up, 100 Cr. from Punjab + HP Pathology + Maharashtra is very reasonable. By my own calculations, I think it is conservative, and they should be able to do 130 Cr. from these 3.
Teleradiology is where X-rays or other scans (like CT, MRI, etc.) are done at local hospitals by technicians. These are then scanned and digitally transmitted over the internet to a central server usually on the cloud. Then the radiologists at Krsnaa’s teleradiology hub (or working remotely) analyse and interpret the images and prepare a report. The report is then sent back to the patient/prescribing doctor.
Usually in this model Krsnaa provides the imaging equipment, scanning operators, and connectivity to their hub at each tele-reporting centre. The scans are the responsibility of the local hospital.
For tele-reporting contracts, the MRIs, CT, X-ray equipment, and their scan operators are the responsibility of the hospital, not Krsnaa. Only the image/scan digitisation equipment and the operator of this equipment are the responsibility of Krsnaa.
Great input.
Right now I understood Krsnaa made 10% of their revenue via Tele reporting.
However, this has the potential to grow as more Private / government hospitals go towards this model.
One of the interesting thing to note is the number of radiologists (2087) , Total colleges- 329 coming out every year in the country.
The NEET score for Post Doc Radiology is very high and most likely the students who pursue that will prefer to stay in cities. From my point of view the TeleRadiology can act as a operating leverage due to the shortage of doctors
Source: MD Radiodiagnosis - MBBSCouncil
I have just starting analysing Krsnaa diagnostics. Can you please let me know where to get data on revenue for FY23 and expected revenue for FY24 from different states?
Hi Bhavana,
Till Q2FY23 quarter wise revenue, you can get it in screener / Quarter results published by the company.
For the expected revenue you can go through the concalls where the management provides some information
Regards
Gourab
Currently the stock appears to be undervalued at ca. Rs.460 and can be bought for long term. The company is making the right moves. All of the diagnostic sector is under pressure. Time to accommodate in large quantities if possible.
The equipment is owned by Krsnaa and the long term AMCs are awarded respectively almost immediate. The downside of equipment is limited as all the machines are from high end branded players with long term warranty- where available.
I know some of the operators are on Krsnaa payroll, but I am not sure if that’s the case for every operator.
the ramp-up of operations in the new centres shall remain a key monitorable.
capex plans of over Rs. 100.0 crore in FY2023 for setting up new centres.KDL is also exploring asset-light expansion (pay-per-use or deferred credit from original equipment manufacturers) over the near to medium term.
KDL’s high debtor days with ~70% of its debtors being receivables from various Government entities. The debtor days improved to 46 days as of March 31, 2022, from 69 days as of March 31, 2021, backed by improved collection from Government debtors. However, its debtor holding period remained at 88 days as of September 30, 2022, in line with the cyclical trend in Government receivables witnessed during the fiscal.
KDL’s established position in the PPP segment mitigates the competitive pressure to a certain extent.
The company has an established market position in the PPP segment with over 2,020 diagnostic centres across 15 states and two union territories (UT; Delhi and Chandigarh) in India. KDL also has tie-ups with private hospitals and operates 27 centres under this segment (as on September 30, 2022).
OPM improved to 28.9% in FY2022 from 23.8% in FY2021, backed by significant improvement in the core business. During H1 FY2023, additional manpower costs for the newly launched centres (which is yet to fully ramp-up) led to contraction in OPM, while remaining healthy at 24.8%.
As on September 30, 2022, the company had over 45 active PPP contracts, with the contract tenor ranging between 3-12 years(including renewal clauses). Additionally, the PPP contracts have an embedded price escalation clause (mandating yearly price increases of 2-7%), which is expected to support the realisation levels, going forward.
The company witnessed a healthy bid-win ratio of ~78% in the past four years and the same is expected to remain healthy going forward as well, backed by its strong market position.
60% of its revenues coming in from western India. With new centres in Punjab, Himachal Pradesh, Uttar Pradesh, Maharashtra, Tripura, Chandigarh, Rajasthan and Delhi expected to generate revenue from FY2023-FY2024, the geographical diversification is expected to improve, going forward.
The company derives ~73% of its revenues (FY2022) from the PPP segment.
The company operates a teleradiology hub in Pune with a team of over 200 radiologists. This addresses the shortage of fulltime doctors and staff in the diagnostic industry, and considerably increases the turnaround time for diagnostic test reports. In addition, it also allows KDL to serve patients in remote locations where diagnostic facilities are limited.
This looks like a Krsnaa B2C franchise. It will be useful to track progress and how much this contributes to the top and bottom lines in the coming years.
Concall extract Q4 21-22 : 'Looking ahead we are confident that we will be able to maintain our growth momentum and therefore we have started a clear strategic roadmap to double the revenue and triple the profitability in next two to two-and-a-half years."
Management had guided 40% growth for next 2 to 3 years vis a vis flat growth delivered during first half year. Management needs to be more realistic in its guidance.
Constant selling pressure is visible in the stock price.
Disclosure : Exited my positions at around 500.