Kovai Medical Center and Hospital – Health and Wealth

Thankful for the detailed analysis and notes mentioned above. Had done a small analysis on various hospitals during Yatharth’s IPO.
Considering the run-up of various hospitals, Kovai is the only one that seems reasonably priced. Indraprastha is stuck in legal issues considering their agreement with Delhi govt. for providing free-of-cost treatment in lieu of lease of hospital land.

Note: Data is from early Aug for other hospitals

The only issues I can see are:

1. The company doesn’t seem to have geographical expansion plans. It’s a good stable business that appears to be undervalued but no amazing story
2. Medical college is impacting PAT margins and the company has high interest costs
3. Lack of institutional interest and low market vol. depth
4. The Google reviews (not sure how reliable they are) are not favourable. Usually they’re above 4 for major hospitals in most cities, see Royal Care is 4.3. This might impact patient inflow
5. Lack of medical tourism, which is a very high margin business for most hospitals. They don’t have MTQUA certification (only NABH) which Sri Ramakrishna Hospital in Coimbatore has
6. From annual report, their Inpatient nos. increased 25% while revenue only increased 5% (decrease in ARPOB) which they need to pass on

Pros:

1. Promoter holding has increased this quarter
2. Cheaper valuation (P/E, EV to EBITDA, CFO to EBITDA) compared to other hospitals (see KIMS) considering the no. of beds and strong brand image (as per their AGM and comments from people above)
3. As mentioned above, they
4. Most of Coimbatore population is in urban areas and it is growing at 2.65% rate per annum (same as Delhi)
5. In Tamil Nadu, IPD per 1000 is double that of India, implying people are more inclined towards hospitalization services in the state

Happy to get feedback, insights from other people

Disc: Invested and averaging down