KIMS IPO: The Hyderabad-based hospital chain is banking on the bull run in the markets to pare its debt and expand its operations

KIMS IPO: The Hyderabad-based hospital chain is banking on the bull run in the markets to pare its debt and expand its operations
KIMS Hospital branch in HyderabadKrishna Institute of Medical Sciences
  • KIMS is a Hyderabad-based company that operates multi-specialty hospitals in Telangana and Andhra Pradesh.
  • It has nine hospitals across the two states with an aggregate bed capacity of over 3,000.
  • It intends to use the proceeds of the IPO towards expanding its operations in adjacent areas like Bengaluru, Chennai, Bhubaneshwar and even Central India.
The Hyderabad-based Krishna Institute of Medical Sciences (KIMS) is banking on a bullish market to mop up ₹2,100 crore from its initial public offering (IPO), as it looks to pare its debt and become more agile.

Particulars
Issue opensJune 16, 2021
Issue closesJune 18, 2021
Price band₹815-825 per share
Market lot18 shares
Minimum order value₹14,850

TOP VIDEOS FOR YOU
The Hyderabad-based company filed its draft red herring prospectus (DRHP) in April this year, with plans to raise ₹200 crore from the IPO via a fresh issue of equity shares.
In addition to this, the company’s existing investors, US equity giant General Atlantic and the promoters, will offer 21.3 million shares totaling to ₹1,950 crore.

Advertisement
With over two decades of history, KIMS is one of the largest private hospital chains in Andhra Pradesh and Telangana. It currently operates nine multi-specialty hospitals under the KIMS Hospitals brand.

Also read: IPO watch: List of upcoming public issues in 2021 – from Zomato to GoAir, over a dozen companies have filed for a listing

In total, KIMS has a bed capacity of 3,064, out of which 2,500 were operational as of December 31, 2020.

KIMS IPO: The Hyderabad-based hospital chain is banking on the bull run in the markets to pare its debt and expand its operations
KIMS revenues and profits over the last four yearsKIMS / Business Insider India / Flourish

Advertisement

According to an Axis Capital report, the 3-year compounded annual growth rate (CAGR) of KIMS is the best amongst major hospital players.

CompanyCAGR (2017-2020)
KIMS26%
Narayana Hrudayalaya19%
Apollo Hospitals16%
Manipal Hospitals16%
Healthcare Global16%
Source: Axis Capital

Using the bullish equity market to pare its debt



Advertisement
The IPO proceeds worth INR 200 crore will go to the company. Of this, it intends to repay ₹150 crore worth borrowing. The remaining ₹50 crore will go towards general corporate purposes, which can include capital expenditure, partnerships, among other things.

Expansion plans get a shot in the arm



KIMS wants to ride the bull run in India’s equity markets to expand its operations to adjacent areas like Karnataka, Odisha, Tamil Nadu and even central India.

Advertisement
Among these, Bengaluru and Chennai could be the next big markets for KIMS.

Apart from this, the liquidity boost could help KIMS expand its bed capacity and healthcare equipment to augment its operations.

Revenue concentration remains a key area of concern for KIMS



Advertisement
The hospital’s two branches, namely KIMS Kondapur and KIMS Secunderabad – both located in Hyderabad – contribute nearly two-thirds to the total revenue of the company.

A high concentration of revenue could hamper the company’s prospects if it cannot expand and diversify in a meaningful manner.

KIMS says COVID-19 had a noticeable adverse impact on its operations



Advertisement
Despite a surge in revenue and profit, KIMS says that the COVID-19 pandemic had an adverse impact on its operations.

The company says that in March 2020 and more so in April 2020, it witnessed a substantial decline in in-patient and out-patient volumes. When compared to February 2020, its inpatient volumes fell by more than half in April 2020.

It also notes that some patients were reluctant to visit hospitals due to a perceived notion of increased risk of infection.

Advertisement
Heightened risk of its doctors, nurses and other healthcare workers, and a resulting increase in costs to ensure their safety also remains another area of concern for the company.

SEE ALSO:

Blackstone-backed Sona Comstar’s ₹5,500 crore IPO could open next week, reports suggest

IPO watch: List of upcoming public issues in 2021 – from Zomato to GoAir, over a dozen companies have filed for a listing

Softbank-backed Paytm fast tracks IPO plan a year into the pandemic ⁠— a $3 billion fundraising could be the biggest market debut in India
{{}}