| Experienced Management and long operational track record
Felix group is promoted by Dr. Dharmendra Kumar Gupta and Dr. Rashmi Gupta who have an experience of more than a decade each in the healthcare industry. The management is ably supported by their daughter and Dr. Shilpi Gupta. All of the directors of the company are practicing doctors. The promotors of the company are backed by team of 130 qualified doctors. FHPL has tie ups with most Third-Party Administrators (TPAs) in the industry and caters to corporate clients. Corporate clientele of FHPL includes Bharat Heavy Electricals Limited (B.H.E.L), National Thermal Power Corporation Limited (NTPC), Northern railways etc. Acuité believes that the group will continue to derive benefit from its experienced management and established operational track record in the medium to long term.
Improvement in operating performance
The revenue of the group has increased to Rs.174.02 Crore in FY2024 as against Rs.133.33 Crore in FY2023 and Rs.102.32 Crore in FY2022. Further, the group has achieved the revenue of Rs.153.03 Crore in 9MFY2025. The growth is driven on account of increased occupancy and revenue per bed in FHPL as MHPL is expected to commence operations in April 2026. The operating margin of the group increased to 27.85 per cent in FY2024 against 20.45 per cent in FY2023. The PAT margin also rose to 17.11 per cent in FY2024 against 10.97 per cent in FY2023. Acuite believes that the operating performance of the group is expected to improve in the medium to long term on the back of ongoing expansion and addition of new services.
Moderate Financial Risk Profile
The financial risk profile of the group is marked by moderate net worth base, improving gearing ratio and above average debt protection metrics. The tangible net worth of the group stood at Rs.79.83 crore as on 31st March, 2024 as compared to Rs.50.00 crore in the previous year. this was on account of accretion to reserves, further, in FY2025, the group has infused equity capital of Rs.1.45 crore in FHPL.
The gearing (debt equity ratio) improved and stood at 0.90 times as on March 31, 2024 as compared to 1.28 times over the previous year. The total debt of Rs.71.77 crore as on March 31, 2024 includes long term debt of Rs.39.95 crore, unsecured loans from directors of Rs.12.71 crore, short term debt of Rs.10.16 crores and current portion of long term debt of Rs.8.95 crore. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.26 times as on March 31, 2024, as against 1.89 times as on March 31, 2023. The debt protection metrics stood above average with Interest coverage ratio (ICR) stood at 11.19 times in FY2024 as against 6.74 times in FY2023. However, the Debt Service Coverage Ratio (DSCR) stood moderate at 2.71 times in FY2024 as against 1.90 times in FY2023. The Net Cash Accruals to Total Debt (NCA/TD) stood at 0.49 times in FY2024. The group has an ongoing capex for expansion of its current capacity of 200 beds to ~1000 beds as an extension to the existing hospital in FHPL and setting up new hospital in MHPL with a total cost of ~ Rs.270 crore which would be funded through term loans of ~ Rs. 200 crore and rest through own funds.
Acuité believes that, notwithstanding the benefits derived due to debt funded capex, the financial risk profile of the group would remain moderate in the medium term on account of the steady accruals and infusion of funds from promoters.
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| Working Capital intensive nature of operations
The working capital operations of the group remained working capital intensive in nature marked by high Gross Current Asset (GCA) of 165 days as on March 31, 2024 as against 168 days as on March 31, 2023. The high GCA days are on account of the high debtor period. The debtor’s days stood high at 128 days as on March 31, 2024 as compared to 119 days as on 31st March 2023. The debtor’s days are stretched due to delayed payments from government agencies registered with TPAs. However, the inventory period stood comfortable at 5 days in March 31, 2024 as against 8 days as on March 31, 2023. The fund-based limit utilisation of FHPL stood low at 54.82 percent over the last six months ended February, 2024.
Project risk associated with timely completion and commercialisation of ongoing capex
The group is undertaking a capex for new hospital adjacent to Felix healthcare in which there is a modification in the building structure for which group has received approvals from the authority. Earlier both the towers were to be kept separate but post modification both old and the new tower will be connected to improve the service and better connectivity. Post modification, total number of beds have been increased to 350 beds from previous envisaged 300 beds. Further, due to this modification there is a cost escalation wherein the overall cost has increased to Rs.134.9 crore (from Rs.91.50 crore) which is funded through term loan of Rs.101.9 Cr. (from existing Rs.68.50 Cr.) and own funds of Rs.33 Cr. (from existing Rs.23 Cr.). The project is still in under initial construction stage with ~35 per cent completed which is expected to be completed by December 2025. In addition, the Felix Hospital has acquired a running hospital from Sanjeevani trust which is under renovation and will increase the capacity by 130 beds which is expected to be operational in July 2025. The total cost including the acquisition cost stands at Rs.55 crore out of which Rs.42 crore would be funded through debt and remaining from own funds.
Further, the group is setting up a 250 bed (revised from 300 beds) multi-speciality hospital in Noida under MHPL which is expected to be operational in April 2026 with total construction cost at Rs.135.15 crores (revised from Rs. 131.36 Cr), the project is funded through term loan of Rs. 98.15 Cr. and own funds of Rs. 37.00 Cr. (from existing Rs.33.21 Cr). Acuite believes notwithstanding the benefits derived from the expansion, the timely completion and timely commercialisation of the projects along with augmentation of positive project cash flows would remain as a key rating sensitivity.
Risk associated with regulatory framework in healthcare sector
The healthcare sector functions under multiples layers of regulations of government and professional bodies. In view of the Covid-19 pandemic, regulatory restrictions and state intervention in the normal operations of hospitals has increased. Additionally, the hospital faces intense competition from several players in the city from small players as well as large players.
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