| GPT Healthcare Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
| ||||||
| 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 Ltd (GHL; part of GPT group).
The ratings reflect the established regional position of the group in the healthcare industry, its effective working capital management and healthy financial risk profile. These strengths are partially offset by exposure to intense competition, regulatory risk and geographic concentration in revenue. |
Key Rating Drivers & Detailed Description Strengths: Established regional market position: GHL operates three hospitals in West Bengal and one in Tripura. Healthy infrastructure and the established ILS brand developed under the aegis of an experienced management team have helped the company establish a sound market position in eastern India. GHL’s operating performance has been improving, as reflected in compound annual growth rate of around 20% in revenue in the five years through fiscal 2023 and improved operating margin backed by ramp-up in operations and better average revenue per occupied bed (ARPOB). The company is estimated to have achieved revenue of about Rs 361 crore and operating margin over 20.8% in fiscal 2023 against Rs 338 crore and 21.9% %, respectively, the previous fiscal. Measures to curb costs and enhance efficiency, along with ramp-up of operations at the Howrah (West Bengal) hospital, helped improve the operating profitability. The performance is likely to be sustained this fiscal.
Efficient working capital cycle: The group has an efficient working capital cycle given the limited share of government and insurance business. The controlled working capital cycle is reflected in gross current assets of less than 50 days with receivables of less than 40 days in the past five years.
Healthy financial risk profile: The financial risk profile is supported by improved networth, comfortable capital structure and adequate debt protection metrics. Networth is estimated to have increased to over Rs 165 crore as on March 31, 2023, from Rs 158 crore a year earlier, backed by conversion of preference shares to equity. Gearing is estimated to have improved to 0.4 time as on March 31, 2023. GHL plans a capital expenditure (capex) of Rs 50 crore over the medium term for its hospitals at Ranchi (Jharkhand) and Raipur (Chhattisgarh). Its reliance on debt, however, is expected to remain limited given its strong operating cash flow and surplus liquidity.
Weaknesses: Exposure to intense competition and regulatory risk: The hospitals under the company face competition from various large hospitals in their region of operation. Also, GHL is exposed to regulatory risk inherent in the healthcare industry. Government policy on capping of prices for medical procedures and devices may impact profitability as seen in the past.
Geographic concentration in revenue: Revenue accrues primarily 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 GHPL has ample liquidity as reflected in its barely utilised fund-based bank lines of Rs 15 crore, healthy surplus in the form of cash and equivalents and the recent instances of prepayment of debt. GHL had cash and equivalents of about Rs 45 crore as on March 31, 2023, built from recent equity infusion and healthy operating cash flow. Larger-than expected capex or debt funded acquisition remain key monitorables. |
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
|
About the Company GHL, was incorporated in 1989 as Jibansatya Printing House Pvt Ltd by Kolkata-based GPT group. Later it was renamed as GPT Healthcare Pvt Ltd, which was converted into a public ltd company on September 15, 2021. It owns and operates four mid-sized multispecialty hospitals with an aggregate capacity of 556 beds across Kolkata (West Bengal; three hospitals) and Agartala (Tripura; one hospital and nursing college) under the ILS Hospitals brand. Mr D. P. Tantia, Chairman, Dr Om Tantia, MD and Mr Anurag Tantia, Executive Director mange the operations. |
Key Financial Indicators
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||
|
Criteria Details
|