Annual report -
Below is the mail response for investor queries.
Is there any update on credit rating? Is there a possibility to reach out to players like Piramal Enterprises and negotiate a better interest rate?
- Currently we are rated by India Ratings (Fitch). However, we have now approached CRISIL to try for a better rating, but cannot assure till it is finally awarded. In the current scenario, it will be difficult for most of the NBFCs to take up new proposals. We are approaching different Banks / FIs for better Rate of interest & Payment terms
QFund - is there a possibility to buy out the next player who is of 40% QFund’s size. As we operate from India, might give some cost synergy.
- We have approached some players in the US for acquisition in the past. However, given that this is a niche segment, existing players plan to continue running their businesses. It is true that if we were to acquire our competitors in the US, along with the revenue, the margins will also improve due to cost synergies.
When is the next conference call going to be scheduled?
- We understand the importance of investor calls. We plan to hold the calls in future. We will keep the investors informed once the time frame for the calls is firmed up.
How do you forecast the debt moving in next 1-2 years.
- Total consolidated debt as on March 31, 2019 was Rs. 162 Cr. Presuming that there is no additional borrowing, based on the repayment schedule of the existing debt, it is expected to be around Rs. 143 Cr by the end of March 2020.
Any reason why the stock is correcting even with the decent fundamentals?
Q3 FY20 Concall Notes
Main hospital in Banjra Hills will have 3 blocks and an additional Oncology block. Block One which is operational has 350 beds. Couple of months back we operationalised the 2nd block with 50 beds which is for economy segment. 3rd block will have 100 beds and the Oncology block will have 100 beds. Total will be 600 beds.
100 bed Oncology block will need capex of Rs. 40 cr.
Will start the Oncology expansion process in next 2-3 months. It will take 18 months to complete after the process is started.
Hospital business has become self sustainable. Cash flows from hospitals are able to meet out there own interest payments.
Operating at 30% capacity as of now. We will be comfortable at 35% capacity utilisation. In next 2 years we are looking at 60% capacity utilisation.
We are consciously not pushing hard in government schemes like Arogyashri. It will increase the capacity utilisation but payment is recovered in 6-7 months. Currently revenue from this is very minimal.
Cash + Insurance is 85-88% of sales. Insurance companies pays in 30-45 days. Receivables are pretty much in control from this.
Economy segment block is for lower segment patient. It is not for government schemes. Looking for regular economy patient.
Average revenue per bed is Rs. 28000.
Before moving to new geography will make sure that existing hospital is able to take care of it’s own debt. Future geographies will be in South India only, currently Chennai is in mind.
Future capex of hospital will be through PE funding and not through debt.
IT Product (Q Fund)
Q3FY20 IT product revenue is less yoy because of one time license fees of Rs. 28-29 cr in Q3FY19.
On going business growing at industry growth rate of 5-7%.
In serious discussion with one big customer, without that business 5-6% growth will continue.
From an organised player perspective we have close to 50% market share. We are also targeting the unorganised sector now. Unorganised sector is as big as organised.
IT Services (K Soft)
IT services business has bottomed out. It will sustain current margins and sales figures.
Transition of business shift from US to India has stabilised.
Expect Rs. 56-58 cr sales for full year going forward. Growth in this segment will start after one year.
Margins are down because of higher visa cost and higher visa rejection rate at 50%.
Wherever possible we have shifted our existing clients to offshore service model.
Very strong customer interest. As of now building the business process.
Growth is still away but stability is coming.
Lending conditions are strict and therefore drops off rate is high as of now.
Other than RBL Bank we are in talks with one NBFC for lending requirements. Focus will be to use the NBFC funding for small ticket size customers rejected by the bank.
500 cards issued to people outside of out pilot testing period.
Started with 12 cities, currently we are live in 48 cities.
Will not use company’s cash flows for customer acquisition. Will look for growth capital from outside.
Salaries and other expenses on VCard is done through P&L.
Debt repaid in H1FY20 close to Rs. 20 cr. Will repay Rs. 10 cr more till March 2020.
All debt repayment on time now in last couple of months. Sorted out earlier problems of payment delay with the lender.
Cash Flows from operations at Rs. 28 cr for Q3FY20 and Rs. 82 cr from 9MFY20.
Loans and Advances in balance sheet of Rs. 42 cr are for supplies.
Promoter cannot buy shares in FY20 as 5% limit is already exhausted. Promoter will be eligible to buy from April 2020.
On Demerger - No plan as of now. Will wait for hospital business to mature. Will think about it then.
Disclosure: Tracking positin
I now see them aggressively promoting their V card in social media platforms like Facebook… For a company with 20+ RoE and ROCE and decent growth, the valuation market is giving is unbelievable. Might be it knows something which we don’t.
Too many red flags on Promoter front.
I thinks interesting in this co. is only the Hospital part. If someone from Hyderabad, share feedback of the hospital (in general) vis-a-vis other major hospitals. If hospital is having genuine response, then this co. is good bet from demerger / PE investment angle.
Hi saurav, could you please enumerate the red flags.Would be a great help to people like me who are invested in virinchi.
I would say Virinichi hostipal is not bad but it is not very good hospital also.
Hydrabad is hub for healthcare, it is very common to find good hospital at every corner
So don’t invest based on hospital bussiness.
Few pointers due to which I am not comfortable with the Promoter/ Mgmt:
- Structure of ESOPs allotment and that too to the extent of 8-9% of the share capital.
- Pl check salary expense and median salary of the employee. Nos dont add up, infact there is a big gap.
- Promoter getting salary as consultant
- For the last 1-1.5 yr, hospital utilization hovers around 30-35%, with claims of improvement.
- Capacity of 5000 beds in next 5 yrs has become tagline of the company, with not even a new single bed added in last few quarters.
- In last concall, the Cash flow nos shared didnt add up with the cash deployment strategy shared by the mgmt.
- If we go back to FY15-FY16 annual reports, hospital asset capitalization took place without any mention by the mgmt on the same. Co has never been forthcoming of funds deployment strategy.
would request you to verify the pointers at your end.
Having a hospital segment, how does Virinchi play out during this scenario of Corona?
I have been invested in Virinchi because it seemed to hold value amongst the Ambit capit picks of coffee can investing
I revisited my decision just now pondering on whether to average down my buying price or exit.
This link here helped me gather wits as to why virinchi is no longer a wise bet
If you do basic checks around cashflows and jugglery with subsidiary, you will understand the story. Subsidiary financials can be obtained from RoC and that will give you full picture. All the best.
Request you to please share your findings as your comment is very high-level. This will help all investors.
Please DM me, some grey areas can’t be discussed in public forum unless factually verified. Hope you understand.
Virnchi offering first UPI based credit card.for this they have tie up with RBL Bank and product name is vcard.they are promoting this product online below is the link. Dont understand why IT company diversified to Hospital.
Disclaimer - Holding few shares
Appreciate your candor and frankness. Hopefully exit opportunity coming soon
Virinchi has raised 525cr capital through convertible warrants to strategic investors at an issue price of 150. This, when the current market cap is 537cr and CMP is 142.
Management has so far not released any capex plans but my guess is that they might expand the hospital business to outside Hyderabad.
Just noticed Virinchi is on the radar again and want to warn new investors about this stock. As a novice, I’d invested heavily based on the hospitals story and ended up burning my fingers badly. This is an extremely shady/fraudulent company with continuous promoter dilution, dressed up numbers and weak management. I exited at a loss a while back and wouldn’t touch it with a barge pole - sharing some notes from calls I had with their ex employees who are IIM grads - these helped me make up my mind to book my losses.
The recent announcement of 525 cr warrant issuance to unknown entities is exactly what Virinchi and other junk caps did in the 2017 small cap bubble… Spin a story and announce warrants at significant premium to current price, Retail jumps in, money never really comes in, and insiders exit at the top. Look at the equity history of Virinchi and you will see that promoters have issued warrants to themselves every year with no clear use of funds, never bought a single share from the market even when it fell to sub 20 levels, and sold in the market when it suited them.
Re their hospitals business, it has been banned multiple times from treating Covid patients for medical negligence, surplus billing etc.
disc. No position
Thanks for the caution. Was going to research given that the money they are raising is almost equal to be current market cap and got me interested.