Hold Shalby; target of Rs 130: ICICI Direct

ICICI Direct's research report on Shalby

Shalby reported decent Q3FY21 numbers with revenues growing 9.1% YoY to Rs 132 crore amid continued sequential recovery in elective surgeries and higher Covid treatments. EBITDA margins improved 525 bps YoY to 23.3% due to lower employee and other expenditure stemming from cost rationalisation measures. EBITDA grew 40.7% YoY to Rs 31 crore. PAT grew 106.4% YoY to Rs 17 crore. Delta vis-a-vis EBITDA was due to lower tax rate.

Outlook

We maintain HOLD and arrive at a target price of Rs 130 (vs. Rs 100 earlier) based on SOTP by valuing hospitals (above six years) at 12x FY23E EV/EBITDA and hospitals (below six years) at 1x FY23E EV/sales.