Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
While hospital revenue growth in 1Q FY12 was robust, margins were below
expectations on account of an adverse product mix, new hospitals, and higher
fee to doctors. Management expects margins to rise over the course of the
year as new hospitals ramp up. We reduce our earnings estimates and cut our
PT to Rs160 to account for lower margins. Maintain Neutral.
Hospital operating matrices robust, but margins disappoint: FORH 1Q
hospital revenues grew 25% YoY driven by new beds, better ARPOB (+5%
YoY) and lower ALOS (decline by 0.2 days). However, EBITDA margins
were weak at 12.6% (-180bp YoY) due to poor mix (cardiac procedures
down from 40% to 34% of total procedures) and new bed addition.
Rapid hospital expansion: FORH announced the addition of six new
hospitals with 1400 beds which will increase capacity to 9700 beds by
FY15E. Another four hospitals with 600-700 beds are likely to be
announced in two weeks. New expansion will be based on rented real estate
(10%-11% rental yields), which will aid capital efficiency (management has
a two-year ROCE target of 20%) and help rapid expansion.
SRL to scale up over the year. SRL contributed Rs620MM in 1Q revenues
with EBITDA margin of 14.3%. Management indicated that synergies
between the hospitals and SRL business should ramp up over the course of
the next two years and offer significant upside potential for margins.
1Q FY12 result summary: Revenues were up 43% YoY aided by SRL
acquisition (18%) and addition of new hospitals (+26%). EBITDA margins
declined 160bp YoY to 12.9% mainly due to poor hospital margins (12.6%
vs. 14.5% in 1Q FY11) due to mix changes and higher fees to doctors
(+64% YoY). Net profit (pre-exceptional) declined 30% YoY to Rs151MM.
Reduce Mar-12 PT to Rs160: We reduce our FY12/FY13 EBITDA
estimates by 4%/3% to account for lower-than-expected 1Q margins and
cost pressures on account of higher doctor fees, which is expected to persist
(higher retainer fees in hospitals in Mumbai). Accordingly, we cut our PT to
Rs160 (still based on 15x FY13E EV/EBITDA). Maintain Neutral.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
While hospital revenue growth in 1Q FY12 was robust, margins were below
expectations on account of an adverse product mix, new hospitals, and higher
fee to doctors. Management expects margins to rise over the course of the
year as new hospitals ramp up. We reduce our earnings estimates and cut our
PT to Rs160 to account for lower margins. Maintain Neutral.
Hospital operating matrices robust, but margins disappoint: FORH 1Q
hospital revenues grew 25% YoY driven by new beds, better ARPOB (+5%
YoY) and lower ALOS (decline by 0.2 days). However, EBITDA margins
were weak at 12.6% (-180bp YoY) due to poor mix (cardiac procedures
down from 40% to 34% of total procedures) and new bed addition.
Rapid hospital expansion: FORH announced the addition of six new
hospitals with 1400 beds which will increase capacity to 9700 beds by
FY15E. Another four hospitals with 600-700 beds are likely to be
announced in two weeks. New expansion will be based on rented real estate
(10%-11% rental yields), which will aid capital efficiency (management has
a two-year ROCE target of 20%) and help rapid expansion.
SRL to scale up over the year. SRL contributed Rs620MM in 1Q revenues
with EBITDA margin of 14.3%. Management indicated that synergies
between the hospitals and SRL business should ramp up over the course of
the next two years and offer significant upside potential for margins.
1Q FY12 result summary: Revenues were up 43% YoY aided by SRL
acquisition (18%) and addition of new hospitals (+26%). EBITDA margins
declined 160bp YoY to 12.9% mainly due to poor hospital margins (12.6%
vs. 14.5% in 1Q FY11) due to mix changes and higher fees to doctors
(+64% YoY). Net profit (pre-exceptional) declined 30% YoY to Rs151MM.
Reduce Mar-12 PT to Rs160: We reduce our FY12/FY13 EBITDA
estimates by 4%/3% to account for lower-than-expected 1Q margins and
cost pressures on account of higher doctor fees, which is expected to persist
(higher retainer fees in hospitals in Mumbai). Accordingly, we cut our PT to
Rs160 (still based on 15x FY13E EV/EBITDA). Maintain Neutral.
No comments:
Post a Comment