Looking for a profitable fast-growing stock? Look at Kovai Medical Center & Hospital

04-06-2016 • About Kovai Medical Center & Hospital ($KOVAI) • By InTwits

Kovai Medical Center & Hospital is a fast-growing stock in Healthcare Services industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Kovai Medical Center & Hospital showed fast growth in the last financial year. Kovai Medical Center & Hospital's revenue surged on 15.9% in FY2016. In addition to revenue Kovai Medical Center & Hospital also keeps delivering EBITDA growth. It was -2.87% in FY2016

In the longer period the company showed fast revenue growth of 16.1% from FY2013 to FY2016 annually. EBITDA surged on 9.10% from FY2013 to FY2016 annually.

Kovai Medical Center & Hospital ($KOVAI) financials for the last 5 years

mln. INR	FY2012	FY2013	FY2014	FY2015	FY2016
Revenue	2,224	2,971	3,340	4,014	4,653
Revenue growth, %		33.6%	12.4%	20.2%	15.9%
SG&A, %
EBITDA	446	710	734	949	921
EBITDA growth, %		59.3%	3.5%	29.2%	-2.9%
EBITDA margin, %	20.0%	23.9%	22.0%	23.6%	19.8%
Net Income	119	204	238	385	406
Net Income margin, %	5.37%	6.88%	7.12%	9.60%	8.73%

CAPEX	773	102	150	379	708
CAPEX/Revenue, %	34.8%	3.45%	4.49%	9.44%	15.2%
Debt	2,256	2,082	1,836	1,627	1,584
Cash	255	312	349	553	511
Net Debt/EBITDA	4.5x	2.5x	2.0x	1.1x	1.2x

ROIC, %	11.5%	18.0%	18.4%	23.0%	20.6%
ROE, %	21.5%	29.1%	26.3%	32.4%	26.1%

Profitability and return on investment

EBITDA margin declined slightly from 23.6% in FY2015 to 19.8% in FY2016. If we look for the longer period Kovai Medical Center & Hospital showed big decline in EBITDA margin of 4.10 pp from 23.9% in FY2013 to 19.8% in FY2016.

Kovai Medical Center & Hospital shows attractive ROIC at 20.6% for the last 12 months which assumes stable development model. During the last three years it surged - it was 18.0% in FY2013. For the last three years the average ROIC was 20.7%.

The company showed decline of 0.900 pp from 9.60% to 8.70% in FY2016. In the longer period the company's Net Income margin surged on 1.80 pp from 6.90% in FY2013 to 8.70% in FY2016.

Kovai Medical Center & Hospital operates at ROE of 26.1%. For the last three years the average ROE was 28.3%.

Capital expenditures (CAPEX)

To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 15.2% in FY2016. CAPEX/Revenue surged on 11.8 pp from 3.45% in FY2013 to 15.2% in FY2016. Average CAPEX/Revenue for the last three years was 9.71%.

Leverage (Debt)

Having such a fast growth profile Kovai Medical Center & Hospital keeps medium debt level at 1.2x Net Debt/EBITDA. In the longer period Kovai Medical Center & Hospital showed big decline in leverage of 1.33x from 2.49x in FY2013 to 1.16x in FY2016.

Peers in Healthcare Services

Below you can find Kovai Medical Center & Hospital benchmarking vs. other companies in Healthcare Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top
	FY2012	FY2013	FY2014	FY2015	FY2016
Fortis Malar Hospitals ($FORTISMLR)		2.2%	11.1%	9.2%	9.9%
Dr.Agarwal'S Eye Hospital ($DRAGARWQ)	0.7%	4.4%	4.3%	4.2%
Vimta Labs ($VIMTALABS)		24.9%	8.4%	-9.3%	16.3%

Median (3 companies)	0.7%	4.4%	8.4%	4.2%	13.1%
Kovai Medical Center & Hospital ($KOVAI)		33.6%	12.4%	20.2%	15.9%

Top companies by EBITDA margin, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
N.G.Industries ($NGIND)				17.9%
Vimta Labs ($VIMTALABS)	2.1%	19.3%	22.6%	16.2%
Kmc Speciality Hospitals (India) ($KMCSHIL)				15.5%
Dr.Agarwal'S Eye Hospital ($DRAGARWQ)	10.7%	11.0%	8.8%	10.9%
Fortis Malar Hospitals ($FORTISMLR)	14.7%	12.5%	8.3%	6.4%	4.7%

Median (7 companies)	10.7%	12.5%	8.8%	10.9%	4.7%
Kovai Medical Center & Hospital ($KOVAI)	20.0%	23.9%	22.0%	23.6%	19.8%

Top companies by CAPEX/Revenue, %

Top
	FY2012	FY2013	FY2014	FY2015	FY2016
Vimta Labs ($VIMTALABS)	4.4%	3.6%	7.3%	7.1%

Median (1 company)	4.4%	3.6%	7.3%	7.1%
Kovai Medical Center & Hospital ($KOVAI)	34.8%	3.4%	4.5%	9.4%	15.2%

Top companies by ROIC, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Vimta Labs ($VIMTALABS)	-9.9%	4.7%	13.7%	5.0%
N.G.Industries ($NGIND)	14.3%	13.1%
Secunderabad Healthcare ($SECHE)	0.2%	-0.1%
Chennai Meenakshi Multispeciality Hospital ($CMMHOSP)	11.3%	19.8%
Oceanaa Biotek Industries ($OBIL)		2.8%

Median (8 companies)	11.3%	14.5%	1.9%	5.0%
Kovai Medical Center & Hospital ($KOVAI)	11.5%	18.0%	18.4%	23.0%	20.6%

Top companies by Net Debt / EBITDA

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Vimta Labs ($VIMTALABS)	10.9x	0.5x	0.2x	0.2x
N.G.Industries ($NGIND)	-0.2x	0.8x	0.0x	0.0x
Secunderabad Healthcare ($SECHE)	48.3x	99.8x		0.0x	0.0x
Kmc Speciality Hospitals (India) ($KMCSHIL)	3.2x	2.3x	7.7x	0.0x
Oceanaa Biotek Industries ($OBIL)				0.0x

Median (7 companies)	3.2x	1.3x	0.0x	0.0x	0.0x
Kovai Medical Center & Hospital ($KOVAI)	4.5x	2.5x	2.0x	1.1x	1.2x

Kovai Medical Center & Hospital stock price chart

Kovai Medical Center & Hospital financials

mln.	FY2010	FY2011	FY2012

Revenue	4,829	1,747	2,224
EBITDA	257.8	368.3	445.6
Net income	116.0	121.0	119.4
CAPEX	646.7	976.0	773.1
Debt	1,082	1,922	2,256
Cash	15.013	286.3	254.6

About Kovai Medical Center & Hospital

Kovai Medical Center and Hospital Limited provides hospital services to in-patients and out-patients in Coimbatore, India. The company operates a 750-bed multi-disciplinary advanced super specialty hospital that offers various services, including open heart surgeries, valve replacements, kidney transplants, hip and knee replacements, brain surgeries, and spine surgeries. It operates various medical facilities, which provide services related to internal medicine, KMCH heart institute, endocrinology and diabetology, health check programs, rheumatology, gastroenterology and hepatology, pulmonology, nephrology, dermatology, neurosciences, critical care medicine, obstetrics and gynaecology, fertility and reproductive medicine, neonatology, psychological medicine, haematology, and emergency. The company also operates surgical facilities that offers general/gastrointestinal/bariatric and laparoscopic, cardio-thoracic, orthopedics and joint replacement, neuro, plastic and reconstructive, cosmetic, urology, spine, pediatric, ENT/head and neck, dentistry/facio maxillary, and vascular surgeries. In addition, it operates interventional radiology and imaging sciences, nuclear medicine and PET CT, and laboratory medicine facilities; and physical medicine and rehabilitation facilities. Further, the company operates an ayurvedic wellness center, which offers various therapies, and treatments for back pain and head; and 24 hours trauma care centers and emergency care control room facilities. Kovai Medical Center and Hospital Limited was incorporated in 1985 and is based in Coimbatore, India.