Extensive experience of promoters
PMPL is promoted by KEF Healthcare Services Pte Limited, and Peekay Group. KEF Healthcare Pte Limited, is into managing a chain of hospitals and provide consultancy and management services and is a wholly owned subsidiary of KEF Holdings engaged into infrastructure, healthcare and investments across India and UAE. KEF Holdings incorporated in Singapore & headquartered in Dubai specializes in offsite manufacturing technology in industries, including healthcare, education, sports and agriculture led by Mr. Faizal E. Kottikollon, an industrialist who has a diversified experience of more than a decade across various industries. Mr. Faizal Kottikollon founded Emirates Techno Casting in Sharjah back in 1997. In 2012, Emirates Techno Casting was sold to Tyco International for over $400 m. This capital was then used to create KEF Holdings. Dr. Ali Faisal is an experienced cardiologist in North Kerala with special interest in non-coronary and peripheral vascular intervention for more than 20 years. The promoters of Peekay group through its group companies are present across various sectors such as steel, flour mills, real estate, construction, plantations, education, healthcare, charitable institution etc.

Improvement in operating performance in H1FY2025
The company reported an improvement in average revenue per occupied bed (ARPOB) per day and overall occupancy level in 5MFY2025. The ARPOB improved to Rs. 54179 in 5MFY2025 from Rs. 53837 in FY2024 and Rs. 46785 in FY2023. The occupancy level stood at 61%, 50% and 63% respectively for the corresponding period. Driven by these parameters, the company reported revenue of Rs.200.37 Cr. in FY2024 against Rs. 222.80 Cr. in FY2023. The operating margin stood at 6.10 percent in FY2024 as against 5.41 percent in FY2023. In H1FY2025, operating income stood at Rs. 123.89 Cr. i.e. 61.83 % of its FY24 revenue and operating margin of 17.14 percent. The significant improvement in operating performance in H1FY2025 is driven by multiple steps taken by the company namely increase rack rates on billable items, hiring of doctors in-house vis-à-vis on consultation basis earlier, optimisation of costs by entering in long term contract on fixed percentage basis etc. Acuite believes this improvement in operating performance will sustain over the near to medium term.

Stringent regulatory framework in the healthcare sector
Despite the increasing trend of privatization of healthcare sector in India, the company continues to operate under stringent regulatory environment. Accordingly, regulatory challenges continue to pose a significant risk to private healthcare institutions, as they are highly susceptible to changes in regulatory framework. Healthcare is a highly sensitive sector where any mishandling of a case or negligence on part of any doctor and/or staff of the unit can lead to distrust among the masses. Thus, the healthcare providers need to monitor each case diligently and maintain standard in services in order to avoid the occurrence of any unforeseen incident. They also need to maintain high vigilance to avoid any malpractice in any pocket.

Weak  financial risk profile albeit estimated improvement in debt protection metrics over the near to medium term:
Financial risk profile of the company continues to remain weak marked by high gearing (debt to equity ratio) and weak debt protection metrics. During the year FY2024, the tangible net worth declined and stood at Rs.53.33 Cr. as on March 31, 2024 from Rs. 58.76 Cr. as on March 31, 2023. The company reported profit after tax (PAT) of Rs. (41.97) Cr. in FY2024 against profit of Rs.3.53 Cr. in FY2023. The tangible net worth includes quasi equity of Rs. 139.48 Cr. out which Rs. 137.19 Cr. is outstanding towards ECBs. The company has entered into ECB agreement with KEF Healthcare Services Pte Limited (parent entity) in FY2019 and FY2022 of USD 10 million each (approx. 164 Cr). PMPL till March 31, 2024 has drawn Rs. 120.89 Cr. These ECBs are proposed to converted to equity in the near term.
The total debt stood at Rs. 315.38 Cr. as on March 31, 2024 which includes long term borrowing of Rs.297.76 Cr. and Rs.17.62 Cr. of short term borrowing. The overall gearing of the company stood 5.91 times as on March 31, 2024 as against 5.54 times as on March 31, 2023. The overall gearing though improved continues to remain high. The coverage indicators marked by interest coverage and Debt to EBITDA though improved in FY2024, continued to remain weak at 0.32 times and 24.58 times in FY2024 respectively as against 0.28 times and 26.12 times respectively in FY2023. The DSCR stood at 0.32 times in FY2024 as against 1.45 times in FY2023.
With conversion of ECB to equity and expected improvement in profitability and reduction in finance costs, the debt protection metrics is also expected to improve. Debt to EBITDA ratio is estimated to come in the range of 5-7 times over the near to medium term and the interest coverage ratio is expected to improve and range between 1.5-2.5 times over the near to medium term.