Rating Rationale
September 02, 2022 | Mumbai
GPT Healthcare Limited
'CRISIL A-/Stable/CRISIL A2+' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.72.71 Crore
Long Term RatingCRISIL A-/Stable (Assigned)
Short Term RatingCRISIL A2+ (Assigned)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed rationale

CRISIL Ratings has assigned its CRISIL A-/Stable/CRISIL A2+’ ratings to the bank facilities of GPT Healthcare Limited (GHL).

 

The ratings reflect the company’s established market position, efficient working capital management and healthy financial risk profile. These strengths are partially offset by exposure to intense competition and regulatory risks, and geographic concentration in revenue.

Key rating drivers and detailed description

Strengths:

  • Established market position: GHL operates three hospitals in West Bengal and one in Tripura. Adequate infrastructure, established brand and experienced management team have helped the company establish strong market position in east India.

 

Operating performance has been improving, as reflected in compound annual growth rate of around 23% in revenue in the five fiscals through 2022 and better operating margin backed by ramp-up of operations and higher average revenue per occupied bed. Revenue and operating margin are estimated at Rs 338 crore and 21.9%, respectively, in fiscal 2022, as against Rs 244 crore and 20.5%, respectively, in fiscal 2021. Measures to curb cost and improve efficiency, along with ramp-up of operations at the Howrah hospital, supported the operating profitability.

 

  • Efficient working capital management: The working capital cycle is efficiently managed, as reflected in gross current assets of less than 50 days and receivables of less than 40 days in the past five fiscals, because of the limited share of government and insurance business. 

 

  • Healthy financial risk profile: Networth increased to an estimated Rs 158 crore as on March 31, 2022, from Rs 94 crore a year earlier, driven by conversion of preference shares to equity. Gearing is estimated at 0.6 time as on March 31, 2022. Debt protection metrics were adequate, as reflected in estimated interest coverage and net cash accrual to total debt ratios of over 6.64 times and 0.40 time, respectively, in fiscal 2022.

 

GHL has planned capital expenditure (capex) of Rs 50 crore over the medium term for its hospital in Ranchi. Reliance on debt, however, should remain limited given strong operating cash flow and surplus liquidity.

 

Weaknesses:

  • Exposure to intense competition and regulatory risks: The company faces competition from various large hospitals in the region. Also, GHL is exposed to regulatory risks inherent in the healthcare industry. Government policy on capping of prices for medical procedures and devices may impact profitability.

 

  • Geographic concentration in revenue: Revenue comes primarily from West Bengal and Tripura, rendering the company susceptible to increase in competition because of entry of large hospital chains in the region.

Liquidity: Adequate

Fund-based bank lines of Rs 5 crore, were minimally utilised. Cash and equivalent was around Rs 19 crore as on March 31, 2022. The company has prepaid debt of over Rs 12.2 crore with surplus funds.

Outlook: Stable

CRISIL Ratings believes GHL will continue to benefit from its established market position and healthy financial risk profile.

Rating sensitivity factors

Upward factors

  • Increase in revenue by 15% and stable operating margin leading to higher cash accrual
  • Sustenance of financial risk profile and liquidity

 

Downward factors

  • Decline in operating margin by over 500 basis points
  • Large, debt-funded capex or acquisition weakening the financial risk profile and liquidity

About the company

GHL was incorporated in 1989 as Jibansatya Printing House Pvt Ltd by the Kolkata-based GPT group. The company was reconstituted as a public limited company with the current name on September 15, 2021. It owns and operates four mid-sized multispecialty hospitals with aggregate capacity of 556 beds across Kolkata (three hospitals) and Agartala (a hospital and a nursing college) under the brand ILS Hospitals. Operations are managed by Mr D P Tantia, Chairman; Dr Om Tantia, MD and Mr Anurag Tantia, Executive Director.

Key financial indicators

As on / for the period ended March 31

 

2022

2021

Operating income

Rs crore

338

244

Reported profit after tax (PAT)

Rs crore

42

21

PAT margin

%

12.3

8.7

Adjusted debt / adjusted networth

Times

0.6

0.92

Interest coverage

Times

6.64

2.78

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of instrument(s)

ISIN

Name of

instrument

Date of allotment

Coupon

rate (%)

Maturity

date

Issue size

(Rs crore)

Complexity

level

Rating outstanding

with outlook

NA

Bank Guarantee

NA

NA

NA

1

NA

CRISIL A2+

NA

Overdraft Facility

NA

NA

NA

5

NA

CRISIL A-/Stable

NA

Proposed Fund-Based Bank Limits

NA

NA

NA

0.5

NA

CRISIL A-/Stable

NA

Term Loan

NA

NA

Nov-24

14.43

NA

CRISIL A-/Stable

NA

Term Loan

NA

NA

Jul-24

11.31

NA

CRISIL A-/Stable

NA

Term Loan

NA

NA

Sep-29

6.73

NA

CRISIL A-/Stable

NA

Term Loan

NA

NA

Jul-28

33.74

NA

CRISIL A-/Stable

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 71.71 CRISIL A-/Stable   --   --   --   -- --
Non-Fund Based Facilities ST 1.0 CRISIL A2+   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 1 HDFC Bank Limited CRISIL A2+
Overdraft Facility 5 HDFC Bank Limited CRISIL A-/Stable
Proposed Fund-Based Bank Limits 0.5 Not Applicable CRISIL A-/Stable
Term Loan 14.43 HDFC Bank Limited CRISIL A-/Stable
Term Loan 11.31 State Bank of India CRISIL A-/Stable
Term Loan 6.73 State Bank of India CRISIL A-/Stable
Term Loan 33.74 Punjab National Bank CRISIL A-/Stable

This Annexure has been updated on 02-Sep-2022 in line with the lender-wise facility details as on 01-Sep-2022 received from the rated entity.

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
CRISILs Criteria for rating short term debt

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