| GPT Healthcare Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A-/Stable/CRISIL A2+’ ratings on the bank facilities of GPT Healthcare Limited (GHL).
The ratings continue to reflect the company’s established market position, sound operating efficiency, promoters’ extensive experience in the healthcare industry, and its healthy financial risk profile. These strengths are partially offset by the modest scale of operations and exposure to intense competition. |
Key Rating Drivers & Detailed Description Strengths: Established market position and extensive experience of the promoters: Strong recall for the ILS Hospital brand, particularly in West Bengal and Tripura, through multiple hospitals has helped GHL sustain revenue growth over the past few years. The company commenced operations with one hospital at Salt Lake City, Kolkata, in 2000, and has expanded its reach to different areas over the years and currently operates four hospitals (three in Kolkata and one in Agartala). While the company has scaled up operations in all the hospitals, bed occupancy in the Howrah and Agartala hospitals remained low around 44% and 53%, respectively, in fiscal 2024. However, extensive experience of the promoters and strong internal controls have resulted in healthy return on capital employed (RoCE) and operating margins in the range of 26-31% and 21-22%, respectively in three fiscals through March 31, 2024. Cash flow from operations has also been positive historically. Improvement in bed occupancy and timely commissioning and ramp-up of operations at the upcoming asset-light hospitals in Raipur (by the fourth quarter of fiscal 2025) and Ranchi (by fiscal 2027-28) should strengthen GHL’s market position.
Healthy financial risk profile: Proceeds of fresh issue of about Rs 40 crore in February 2024 and steady accretion to reserve resulted in networth of Rs 218 crore as on March 31, 2024. The funds raised through the initial public offering were used for prepayment of term debt and general corporate purposes. This helped sustain a comfortable capital structure, as reflected in gearing and total outside liabilities to tangible networth ratio of 0.1 time and 0.6 time, respectively, on March 31, 2024. Debt protection metrices were adequate with interest coverage and net cash accrual to adjusted debt ratio at 12.4 times and 2.7 times, respectively, for fiscal 2024. Planned capital expenditure of ~Rs 55 crore over fiscals 2024-2025 and of ~Rs 50 crore by fiscal 2028 for setting up the hospital in Raipur and Ranchi, respectively, will be funded largely through internal accrual, thus limiting reliance on external debt over the medium term. However, any acquisition significantly leveraging the balance sheet bears watching.
Weaknesses: Modest scale of operations: Despite a 11% on-year growth in operating income to about Rs 400 crore in fiscal 2024, the company’s scale of operations remains modest in comparison to its peers in the healthcare industry. The growth in fiscal 2024 was driven by an increase in average revenue per occupied bed (ARPOB) to Rs 32,947 per day in fiscal 2024 from Rs 29,671 per day in fiscal 2023, while bed occupancy was stable at 59%. Prudent internal control helped sustain healthy operating margin at 21-22% in the three fiscals ended March 31, 2024. Improvement in bed occupancy and launch of new specialties driving revenue growth for the existing hospitals, and timely commissioning and ramp-up of operations at upcoming hospitals, resulting in a significant increase in scale of operations, is a key rating sensitivity factor.
Exposure to intense competition: The hospitals of GHL face competition from various large hospitals in their region. Also, GHL faces regulatory risk inherent in the healthcare industry. Government policy on capping prices for medical procedures and devices may impact profitability as seen in the past. Furthermore, GHL generates revenue from West Bengal and Tripura, rendering the company susceptible to any increase in competition because of the entry of any large hospital chain in these regions. |
Liquidity: Adequate Bank limit utilisation was low, at 4% on average for the 12 months through June 2024. Cash profit before dividend payout is expected to be over Rs 70 crore against term debt obligation of less than Rs 10 crore over the medium term and will cushion liquidity. The current ratio was low at 0.73 time on March 31, 2024. The company declared a dividend payout of 39-40% in the two fiscals though fiscal 2024. Free cash and bank balance and liquid investments in debentures was around Rs 20 crore as on March 31, 2024. Low gearing and healthy networth support the company’s financial flexibility to withstand adverse conditions or downturn in the business. |
Outlook: Stable CRISIL Ratings believes GHL will continue to benefit from its established market position and healthy financial position. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company GHL was incorporated in 1989 as Jibansatya Printing House Pvt Ltd by the Kolkata-based GPT group. The company was later renamed GPT Healthcare Pvt Ltd and was reconstituted as a public limited company with the present name in September 2021. It owns and operates four mid-sized multispecialty hospitals with an aggregate capacity of 561 beds across Kolkata (three hospitals) and Agartala (one hospital) under the ILS Hospitals brand. Mr D P Tantia (Chairman), Dr Om Tantia (Managing Director) and Mr Anurag Tantia (Executive Director) mange the company’s operations. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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Criteria Details
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