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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 230.00 | ACUITE BBB- | Stable | Assigned | - |
| Total Outstanding Quantum (Rs. Cr) | 230.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has assigned its long-term rating of ‘ACUITE BBB-’ (read as ACUITE Triple B minus) on the Rs.230.00 Cr bank facilities of Dr. Namjoshi Hospital Pvt Ltd (DNHPL). The outlook is ‘Stable’.
Rationale for rating assigned The rating draws comfort from the extensive experience of the management, steady revenue growth and additions to the scale of operations on account of acquisitions. These strengths are partially offset by its moderately aggressivae financial risk profile and intense competition in the healthcare industry. |
| About Company |
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Established in 1999, Dr. Namjoshi Hospital Pvt Ltd (DNHPL) is a multispecialty hospital in Mumbai. DNHPL has three hospitals located in Mumbai, first in Juhu, second in Andheri East with a capacity of 100 beds each and third one in Kurla with a capacity of 250 beds. All these hospitals operate in the name of Criticare Multispeciality Hospital and provide medical treatments for various specialities ranging from general pathology to cardiology, Gynaecology, orthopaedics, trauma care, etc. The hospital has around 189 visiting doctors and 53 in-house doctors from various specialities. Further, DNJPL has acquired 50% stake in Clublink (India) Pvt Ltd. Clublink (India) Pvt Ltd is a club located in Malad which is being renovated by the company to start a new hospital facility with a capacity of 100 beds. The operations of this facility are expected to start in FY23. The company in Q4FY2022 also acquired Kohinoor hospital in Kurla. This hospital has a capacity of 250 beds and is now operating under the name of Criticare Multispeciality hospital.
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| About the Group |
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Established in 1999, Dr. Namjoshi Hospital Pvt Ltd (DNHPL) is a multispecialty hospital founded by Dr. Deepak Namjoshi hospital. The group is promoted by Dr. Deepak Namjoshi and Dr. Masuuma Namjoshi. DNHPL also has three group companies Coronary care private Ltd (CCPL), Criticare hospital Pharma (CHP) and Criticre hospital Chemist (CHC). Coronary Care Private limited is a catherisation lab and Criticare hospital Pharma and Criticre hospital Chemist are pharmacies.
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Analytical Approach
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profile of DNHPL and its three group companies Coronary care private Ltd (CCPL), Criticare hospital Pharma(CHP) and Criticre hospital Chemist (CHC). The consolidation is in view of similar line of business and common ownership.
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Key Rating Drivers
| Strengths |
| Experienced Management and long track record of operations
DNHPL was founded by Dr. Deepak Namjoshi (Director), who is a Cardiologist and Chest Physician. Dr. Namjoshi has an extensive experience of over 3 decades as a cardiologist and is also actively involved in the day-to-day activities of the hospitals. The company also has around 190 visiting and inhouse doctors with an extensive experience across various specialities. The company also has maintained healthy relations with various public and private sectors corporates like Reserve Bank of India (RBI), Tata Motors, Mahindra and Mahindra, L&T group, etc. Acuité believes that the long track record of operations will benefit the company going forward. Improved ARPOB coupled with increasing scale of operations The company's average revenue per occupied bed (ARPOB) saw a steady improvement from FY2019 through FY2021. ARPOB stood at Rs. 13,323 in FY2021 as against Rs. 12,413 in FY2020 and Rs.12,265 in FY2019. However, the occupancy rate of the beds has remained stable between 88- 90% and average length of stay (ALOS) remained in the range of 4 to 5 days over the last three years. Further, during Covid-19 the company designated the Andheri East hospital completely for Covid treatments and the Juhu hospital was reserved for non-covid treatments. DNJPL recorded a modest Y-o-Y growth of 4.96% in its topline. The revenue stood at Rs.118.36 Cr in FY2021 as against Rs.112.77 Cr in FY2020. Such growth in revenue comes at the back of increased occupany in the In Patient Department (IPD) because of increased covid patients during FY2021 coupled with stable non-covid hospitalisation in the Juhu facility. The EBITDA margins also saw a growth of 754.56 bps from 18.58% in FY2020 to 26.12% in FY2021. Further, in FY2021 DNJPL has acquired 50% stake in Clublink (India) Pvt Ltd. Clublink (India) Pvt Ltd is a club located in Malad which is being renovated by the company to start a new hospital facility with a capacity of 100 beds. The operations of this facility are expected to start in FY23. The company in Q4FY2022 also acquired Kohinoor hospital in Kurla. This hospital has a capacity of 250 beds and is now operating under the name of Criticare Multispeciality hospital. Acuite expects the company to register a strong revenue growth on account of the addition to the hospital facilities. |
| Weaknesses |
| Moderately aggressive financial risk profile
The financial risk profile of the company is moderate marked by moderate net worth, high gearing and a comfortable debt protection metrics. Tangible Networth of the company stood moderate at Rs.31.12 Cr in FY2021 as against Rs.21.77 Cr in FY2020. Total Debt of the company stood at Rs.119.53 Cr in FY2021 as against Rs.111.21 Cr in FY2020. Gearing (Debt/Equity) of the company remained high at 3.89 times in FY2021 as against 5.16 times in FY2020 whereas Total Outside Libilities to Tangible Net worth (TOL/TNW) remained at 4.95 times in FY 2021 as against 6.48 times in FY 2020. Gearing of the company is expected to remain high at 5.01 times in FY2022 whereas TOL/TNW to remain at 5.81 times due to additional debt taken for the acquisition of Kohinoor hospital and is expected to moderate at 2.33 times and 3.15 times respectively in FY2024. Debt protection metrics remain comfortable with Debt Service Coverage ratio (DSCR) at 1.79 times in FY2021 as against 1.44 times in FY2020 and Interest Coverage ratio (ICR) at 2.24 times in FY2021 as against 1.86 times in FY2020 Acuite expects the financial risk profile of the company to be moderate on account of debt funded capex in the near term. Highly fragmented and competitive industry The company operates in a highly competitive and highly regulated healthcare industry. The company faces intense competition on account of the rising pool of qualified healthcare professionals supported by increased investment by the government in the healthcare infrastructure. |
| Rating Sensitivities |
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Lower than expected operating performance Significant improvement in profitability margins |
| Material Covenants |
| None |
| Liquidity: Adequate |
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The liquidity position of the company is adequate marked by sufficient net cash accruals of Rs.14.95 Cr in FY2021 as against maturing debt obligations of Rs.3 Cr during the same period. Despite the incremental debt of Rs. 101 Cr in FY2022 the company is expected to generate sufficient net cash accruals of Rs.23.26-41.36Cr as against Debt obligation of Rs.8.29-11.77Cr. The company maintains an unencumbered cash balance of Rs.16.53Cr in FY2021 as against Rs.4.07Cr. in FY2020.
Acuite believes that the liquidity of the company is likely to remain adequate over the medium term on account of average cash accruals against no major debt repayments over the medium term. |
| Outlook: Stable |
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Acuité believes that the outlook of the DNHPL will remain 'Stable' over the medium term on account of experienced management and improving scale of operations. The outlook may be revised to 'Positive' in case of higher-than-expected growth in revenues while improving Acuité Ratings & Research Limited www.acuite.in profitability margins. Conversely, the outlook may be revised to 'Negative' in case of any further deterioration of its financial risk profile and liquidity
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 21 (Actual) | FY 20 (Actual) |
| Operating Income | Rs. Cr. | 118.36 | 112.77 |
| PAT | Rs. Cr. | 9.94 | 4.58 |
| PAT Margin | (%) | 8.39 | 4.06 |
| Total Debt/Tangible Net Worth | Times | 3.89 | 5.16 |
| PBDIT/Interest | Times | 2.24 | 1.86 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm |
| Note on Complexity Levels of the Rated Instrument |
| https://www.acuite.in/view-rating-criteria-55.htm |
| Rating History : |
| Not Applicable |
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| About Acuité Ratings & Research |
