Shalby Ltd - Q2FY21 Result Update - ICICI Securities

Q2FY21 results were better than expectations on all fronts. Revenues grew 201% QoQ to Rs. 115.6 crore (Rs. 38.4 crore in Q1FY21) on the back of a revival in patient footfalls, higher surgeries count, better occupancy. EBITDA margins were at 25.5% vs. -12.6% in Q1 due to better overall operational performance QoQ stemming from cost rationalisation measures. Hence, Shalby posted EBITDA of Rs. 29.5 crore (vs. EBITDA loss of Rs. 4.8 crore in Q1). PAT for the quarter was at Rs. 24.5 crore vs. a loss of Rs. 8.7 crore in Q1FY21.

Valuation & Outlook

After a significantly Covid-impacted quarter (Q1FY21), Shalby posted strong Q2 performance amid easing lockdown restrictions. While arthroplasty continues to be impacted (13% of topline vs. 42% pre-Covid) by the pandemic, higher Covid patient contribution (30-35% of Q2 sales) and greater traction in other specialities has led to a strong sequential recovery. Subsequently, Q2 occupancies improved to 41% vs. 17% in Q1FY21. Barring further Covid-related lockdowns, recovery to pre-Covid levels is likely to be achieved in H2FY21. In the long-term, the management has put an inspirational target to achieve 2.5x sales in the next three to five years on the back of introduction of franchise model, better occupancies and new service offerings (home care & Shalby Care cards). Leverage free b/s, strong margins and free cash flow generation are some strongholds. However, skewed margins, weak return ratios still remain major deflators. We arrive at a target price of Rs. 100 based on SOTP by valuing hospitals (above six years) at 8x FY23E EV/EBITDA and hospitals (below six years) at 1x FY23E EV/sales.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Shalby_Q2FY21.pdf

Shares of Shalby Ltd was last trading in BSE at Rs.91.3 as compared to the previous close of Rs. 97.35. The total number of shares traded during the day was 23155 in over 697 trades.

The stock hit an intraday high of Rs. 97.35 and intraday low of 90.55. The net turnover during the day was Rs. 2170681.

Source : Equity Bulls

Keywords