Very good results overall.
- 20% increase in Revenues YoY; 11% increase QoQ as well. It looks like business is back to normal at last.
- The 38-40% increase in Profits is a little deceiving, since Cash profits have only risen 7-8% (Increased Working Capital and higher Taxes)
- But the real kicker for me is the bulk repayment of long term Debt to the extent of Rs. 118 Crores. We can see the immediate impact in Finance Costs reducing from Rs. 36.53 Crores in Mar 2023 to Rs. 15.82 Crores in Sep 2023.
- For the HY ending Sep 2023, Education segment has clocked around Rs. 14 Crores in PBT. Annualized, that’s Rs. 28 Crores – which is quite the jump from last year’s Rs. 2 Crores. Per management commentary, this could be peaking out soon. We’ll have to see how much the profits will grow YoY post that. I presume around 10% at least. 15% would be good from IRR perspective (Considering the Rs. 700+ Crores Capex that was made; but some of it was for the additional beds).
- If majority of the remaining Rs. 350 Crores (Short and long term) loan is repaid as discussed by the Management, the quarterly savings in Finance costs would be around Rs. 7-8 Crores. Of course, paying off Debt also allows internal profits to accrue faster and build up a war chest for further expansion.
Interesting times for KMCH.
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