Know your stock | Why are analysts upbeat on KIMS?

Representative Image

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Krishna Institute of Medical Sciences (KIMS) has been flying high on investor optimism over its growth prospects and solid capital spending plans.

The company's upbeat stock performance in recent months is just an added bonus, coupled with its robust financials.

Krishna Institute of Medical Sciences is emerging as a favourite within the hospital pack, giving peers like Fortis Healthcare and Narayana Hrudayalaya a run for their money.

In the past three months, the stock has risen nearly 19 percent. A major foreign institutional investor, General Atlantic Singapore, also took notice and chose to sell 2.32 million shares, or a 2.89 percent stake, in KIMS in a block deal on May 30.

The deal, done at an average price of Rs 1,600 a share, amounted to a total of Rs 371.3 crore. As of March 2023, General Atlantic had held an 8.61 percent stake or 6.889 million shares in KIMS.

As General Atlantic grabbed the opportunity offered by the surge in KIMS stock price to book partial profits, should one take the lead and invest in it? Before we unlock that mystery, here's a little brief about the company.

Follow our live blog for all the market action

KIMS is a chain of 12 multi-specialty hospitals, operating mainly in Telangana, Andhra Pradesh and Maharashtra. The company, with an aggregate capacity of over 4,000 beds, was founded in 2000.

The hospital chain operator has expanded its network significantly in recent years through acquisitions of hospitals in Ongole in FY17, Vizag and Anantapur in FY19, Kurnool in FY20, Sunshine Hospitals in FY21 and Nagpur (Kingsway Hospitals) in FY22.

According to the company's website, about one-third of its 4,000 bed capacity was launched in the last four to five years.

Going by the company's recent acquisitions, KIMS has been aggressive in capital expenditure (capex) in the last few years and aims to keep that up in the near term.

Analysts, too, are positive about the company's expansion in recent times.

Prabhudas Lilladher believes recent acquisitions of Sunshine, Nashik and Nagpur are value-accretive. which will continue to aid the company's growth momentum.

Tata AIA Life Insurance, Axis Mutual Fund, Mirae Asset Large Cap Fund, HDFC Life Insurance and ICICI Prudential Life Insurance Co some major domestic institutional investors holding a stake in the company.

Among foreign institutional investors, Amansa Holdings, Nomura India Investment Fund and Emerald Investments hold a stake in KIMS.

Despite being in an aggressive expansion mode, the company has managed to safeguard its financials, posting growth quarter-by-quarter. Although operating margins have eroded slightly thanks to the capex plans, they still remain in a comfortable zone of around 28 percent.

In the fourth quarter of FY23, consolidated revenue jumped 54.7 percent on year to Rs 576 crore. This growth was primarily driven by improvements in occupancies and average revenue per occupied bed (ARPOB).

Consolidated bed occupancies improved by 260 basis points quarter on quarter, reaching 70.8 percent. One basis point is one-hundredth of a percentage point. Additionally, there was also a sequential increase of 2.6 percent in ARPOB, which rose to Rs 30,573 in Q4.

The EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) margin also remained stable on a sequential basis at 28.4 percent. This stability can be attributed to a slight increase in capacity utilisations and realisations during the last quarter.

Consolidated net profit recorded an on-year growth rate of 18.5 percent, reaching Rs 99 crore. This increase was primarily driven by high operating profitability and lower tax rates.

Pushing the next leg of its growth story, the company has additional capital expenditure plans in place. In its Q4 earnings call, management highlighted that it plans to earmark capex of Rs 700 crore in FY24, which will be largely spent towards its Thane (Rs 400-450 crore), Nashik and Bengaluru units.

ICICI Securities believes the company is on track to add beds in its new hospitals at Nashik, Bengaluru and Thane; empanelment of new doctors in the acquired Sunshine facilities could significantly boost revenues for KIMS.

On top of it, the company is also evaluating opportunities and currently looking at a plot in Malad to expand its Maharashtra cluster.

The strong capex outlay follows spending of Rs 570 crore in FY23 primarily towards the buyout of Sunshine, the company's Bengaluru and Nashik units.

KIMS’ strong financials and robust expansion plans have garnered much praise from the Street, with several securities firms placing the stock among their list of top picks within the hospital segment.

Prabhudas Lilladher, for one, remains bullish on the company's robust cost control, low capital intensive set-up and value-accretive acquisitions. The firm has a 'buy' call on the stock, with a price target of Rs 1,660.

ICICI Securities attributes its optimism to a solid long-term outlook for KIMS, given its strong brand recall in its home markets of Andhra Pradesh and Telangana, expansion in adjacent states, robust execution and prudent capital allocation, and healthy margins.

These factors prompted ICICI Securities to retain its 'buy' rating on the stock with a target price of Rs 1,795.

Axis Securities highlighted the company's strong RoCE (Return on Capital Employed) of about 32 percent and robust operating cash flow generation, which, according to the firm, makes it a good bet for long-term investment.​

On June 2, the stock was trading at Rs 1,578 on NSE at 1.09 pm, down 1.26 percent from the previous close.