Shalby Hospitals

Shalby Ltd - Looks very very promising

Q2 concall highlights -

Sales - 243 cr, up 18 pc
EBITDA - 58 cr, up 37 pc !!!
PAT - 27 cr, up 50 pc !!!

Net Cash on books @ 70 cr
Q2, annualised ROCE @ 21 pc vs 13 pc LY

Company owned hospitals - 9 across western, central India with headroom to grow bed capacity without any major capex in most facilities. Shalby remains a leader in Joints replacement. Currently diversifying into Onco, Critical care, general medicine and transplants

Franchise hospitals - 06 facilities. Shalby ltd monitors quality of services via FOSO ( franchise owned, shalby operated ), FOSM ( franchise owned, shalby managed )models. All of them have ortho, joint replacement heavy models. Company gets into a franchise agreement only after stringent channel checks to maintain the reputation of the brand

Implants - manufacturing USFDA approved implants for sale across US, RoW. In long term, aim to make it a 800 cr business ( ie inside 5 Yrs ). Current annual run rate at aprox 60 cr / yr. The business is already EBITDA positive ( although marginally )

Surgery count in Q2 -

Anthroplasty - 3800, up 18 pc
Nephro and Urology - 740, up 42 pc
Onco - 480, up 22 pc
Cosmetic - 760, up 10 pc
Ortho - 740, (-) 13 pc
Others - 1080, up 17 pc

Payor mix -

Self pay - 35 pc
Insurance - 44 pc
Govt schemes - 21 pc

Last 5 yr sales CAGR @ 20 pc, EBITDA CAGR @ 22 pc

Q2 occupancies @ 54 pc vs 49 pc in Q2 LY (company doing 22 pc EBITDA at mid 50s occupancy - this is absolutely out of this world)

Implants business likely to pick up momentum in H2

Current sales contribution from Ortho + Anthroplasty @ 40 pc vs 100 pc 15 yrs back

Aim to reach a total of 40 FOSO + FOSM hospitals in next 3-4 years

As the capacity utilisation improves, EBITDA should keep improving

Avg rise in ARPOB on an annual basis @ 6-8 pc - likely to be similar going forward as well

As the franchise owned- Shalby managed hospitals scale up - this will lead to a further expansion in EBITDA margins ( which are already more than healthy )

Aim to reach 7-8 pc kind of EBITDA margins in the implants business by end of this FY

Increased inventory levels due anticipated pick up in Implants business specially in Q4

Expecting similar growth in Q3 on a YoY basis as was seen in Q2 in the Hospitals business

Looking to expand via Franchise / Owned hospitals model in cities like - Delhi NCR, Kolkata, Lucknow, Patna

Have set up a number of OPD centers in East Africa, Middle East, Bangladesh, Nepal - to rope in Medical Tourism patients. Medical tourism is EBITDA accretive

Disc: holding, biased, bullish, not SEBI registered

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Notes from ICRA credit report:
Shalby has acquired 87.26% stake from the founders of PK healthcare pvt ltd(PKHPL).
PKHPL owns Sanar international hospital , Gurugram spread over 1.27 acre plot taken on lease basis.
Current capacity is 130 beds which can be expanded to 180 beds.
70% of business from international markets.
Sanar hospital offers specialties like Oncology, Cardiac, Transplant services, neuro , Bone & joint surgeries.

Turnover last 3 years:
FY21: Nil
Fy22:1.7 Cr
Fy23:67.7Cr.

Cost of acquisition for 87% stake is Rs. 102 Cr.
40-45 Cr of net debt on books of PKHPL which leads to net debt of ~140 Cr for Shalby.

Even though current bed capacity is 130 beds, only 50 beds were operational(not official information)

Considering the valuation per bed of other hospital in the region, this looks like decent acquisition. Shalby must be planning to target international patients through this acquisition.
Diclosure: Buying during last few days…no meaningful allocation in PF as of now.

3 Likes

Shalby Ltd -

Q3 FY 24 results and concall highlights -

Revenues - 220 vs 207 cr, up 6 pc
EBITDA - 47 vs 38 cr, up 23 pc ( margins @ 21.2 vs 18.5 pc )
PAT - 19 vs 15.5 cr, up 25 pc

Standalone Revenues @ 200 cr, EBITDA @ 47 cr, PAT @ 25 cr ( all grew at very healthy rates )

Net Cash ( minus debt ) on books @ 61 cr

Company’s portfolio / businesses -

10 Multi Speciality hospitals across West, Central and North India. A leader in Joint replacement in the represented market

60 OPD domestic clinics + 16 international OPD clinics ( mainly in Africa )

06 Franchisee hospitals

US based Knee and Hip implants manufacturing facility

Total bed capacity @ 2150 + beds, present across 13 cities in India

Q3 operational matrices -

ARPOB @ 37.3 vs 36.3 k
Occupancy rate @ 47 vs 43 pc
Surgery count @ 6746 vs 6782

Hospitals business segmental revenue percentages -

Anthroplasty - 43 pc
Critical care - 9 pc
Cariac - 9 pc
Onco - 10 pc
Ortho - 10 pc
Neuro - 5 pc
Nephro - 4 pc
Others - 11 pc

Hospitals business payor mix -

Self pay - 35 pc
Insurance - 41 pc
Govt - 24 pc

Implants business sales mix -

India - 57 pc
US - 43 pc

Implants business financials -

Revenues @ 21 cr, up 46 pc
EBITDA @ 20 lakh
No. of constructs sold @ 2630 ( 70 : 30 - Knee : Hip )

Company invested 102 cr to acquire 87 pc stake in Sanar International hospital Gurugram. Its current bed capacity is 130, expandable to 180. This hospital caters mostly to international clients ( 68 pc of its revenues )

Still have the vision to grow the implants business to 800 cr / yr kind of sales in 5 yrs

Sanar International is likely to do a 30-35 cr / Qtr kind of topline for next yr. Also, the ARPOBs here are much higher - in the range of 1 lakh. However, current occupancies are low @ around 25 pc. Currently making EBITDA losses

Aiming to do high single digit EBITDA margins from the implants business by end of next yr

Mumbai - is a Greenfield project ( Hospital ) that’s lined up by the company. May take 3-4 yrs to go live

Aiming for 20-22 pc growth in EBITDA for next FY without accounting for the new facilities and inorganic opportunities like the Sanar hospital

Seeing pickup in no of surgeries in Jan, Feb 24. Confident of doing better business in Q4 vs Q3
Disc: holding, biased, not SEBI registered

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