Saturday, May 29, 2021

KMC Speciality Hospitals (India) Ltd (524520) – Benefiting from COVID-19

KMC Speciality Hospitals (India) Ltd (524520) closes   at 39.70 with  a   Fall  of   - 1.40%   on    28-May-2021  with formation of  a  Red  Candle    on Daily  Price Chart.

About the Company : KMC Specialty Hospitals India Limited (KMCL), established in 1982, is a part of the Kauvery Group of Hospitals based at Tiruchirappalli (Trichy). The company runs Kauvery Hospital, a 220 bed super specialty hospital that offers services in neurology, obstetrics & gynecology, pediatrics, cardiology, ENT, dental, joint replacement among others. Further, during FY2018, the company also started lever transplantation services in the hospital. Kauvery group of hospitals is one of the reputed hospital chain with about 1200 beds across Tamil Nadu. KMC is a publicly listed company with Bombay Stock Exchange

Sector Update : Positive

Strength :  1. Experienced management and establish presence

2.. Comfortable financial risk profile

Weaknesses : 1. Moderate scale within the industry, geographical concentration risk and intense competition ( KMC operates only one hospital with 220 beds; the same are modest within the industry dominated by large players like Apollo Hospitals, CARE Hospitals among others. Further, KMC’s entire revenues are skewed from a single location property. Any unforeseen eventuality will impact the entire business and financial risk profile of the company. Though KMC has a brand ‘Kauvery’ in the State of Tamil Nadu with a chain of hospitals with aggregate bed capacity of about 1200, however KMC Hospital at Trichy remain under pressure and faces competition from other leading hospitals in the vicinity as reflected in volatile operating margins )

2. Project execution risk (The company has proposed a new project to setup a Mother and Child Health Care hospital which is under construction. However it was delayed due to Covid for a period of 6 months due to lockdown and now it is expected to be completed by April 2023. The cost of the project is around Rs. 75 to 80 crores of which Rs.50 - 60 crores will be provided by the bank and the balance Rs. 25.00 crores will be funded through internal accruals and promoters )

Financials : KMC Speciality Hospitals (India) Ltd  has posted Net Sales / Revenue   of 103.00 Cr & Net Profit of 13.00 Cr in FY2021 .

Valuations  : The Company is now Trading at X 3.0  of its  valuations ( FY2021 earnings considered here) with ~200 % premium ( While Apollo Hospitals Enterprise Ltd is Trading X6.0 of its Valuations )

Margin of Safety (1Yr Bond Yield: Value>1 ) is now  0.50  which  makes is attractive after a ~50% fall in market price. The  Equity Value Per Share ( Enterprise Value Method ) is  39.70

Whats  best in It   :It has passed on the indicator Growth Candidate ( If >1 ), which is now 1.1 and Future Stocks Price  Upmove Start Index ( FSPUI ) Decline after Up which is a good Indicators for a Multibagger.

If We factor its earnings/valuations, its Price arrives at 54.20 with consideration FY2022 earnings (Historical 10Yrs Growth Rate basis ).

Disclaimer : We are / may going to take exposure shortly.

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