Shalby Ltd - Result Update - ICICI Securities

Q4FY20 revenues de-grew 4.1% YoY to Rs. 109 crore impacted by loss of few business days due to Covid-19 related disturbances. EBITDA margins posted a steep decline of 1100 bps to 2.3% (13.4% in Q4FY19) due to negative operational leverage. Subsequently, EBITDA declined 83.4% YoY to Rs. 2.5 crore. Despite higher other income, higher tax outgo (Rs. 19 crore vs Rs. 3.6 crore in Q4FY19) contributed towards registering a loss of Rs. 17.1 crore for the quarter. On a full year basis, revenues grew 5.6% to Rs. 487 crore with EBITDA margins contracting 104 bps to 16.8% mainly due to lower gross margins whereas EBITDA remained flat at Rs. 82 crore.

Valuation & Outlook

Like other hospitals, Q4 performance was impacted by Covid 19. This is likely to continue for some time and more so for Shalby where significant traction is from elective surgeries (read arthroplasty) although management remains hopeful of early recovery. Arthroplasty continues to dominate its revenue pie although it has been seeing greater traction in other specialities as well. Leverage free b/s, strong margins and free cash flow generation are some of the strongholds. However, skewed margins, weak return ratios are still major concerns. We value the company on an SOTP basis by valuing hospitals (above six years) at 6x FY22E EV/EBITDA and hospitals (below six years) at 1x FY22E EV/sales. We arrive at an SOTP target price of Rs. 70. Ramp up in below six years hospitals will be key to watch for re-rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Shalby_Q4FY20.pdf

Shares of Shalby Ltd was last trading in BSE at Rs.70.95 as compared to the previous close of Rs. 73.05. The total number of shares traded during the day was 27687 in over 548 trades.

The stock hit an intraday high of Rs. 76.1 and intraday low of 70.35. The net turnover during the day was Rs. 2009333.

Source : Equity Bulls

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