Detailed Rationale

Crisil Ratings has reaffirmed its ratings on the bank facilities of Krishna Institute of Medical Sciences Limited (KIMS) at ‘Crisil AA/Stable/Crisil A1+’

 

The ratings continue to reflect the established market position of the ‘KIMS’ group in Telangana and Andhra Pradesh clusters through its network of fifteen hospitals under the KIMS Hospital brand, and sound operational efficiencies, as reflected in stable occupancy and high average revenue per operating bed per day (ARPOBD), leading to healthy operating profitability. These strengths are partially offset by high dependence on the flagship hospital in Secunderabad for revenue and profit, geographical concentration of its hospitals, average financial risk profile and regulatory risks associated with the hospital sector.

 

KIMS reported a 26% year-on-year revenue growth during the 9 months of fiscal 2026 achieving Rs.2830 crores, driven by a strong pace of bed additions, improvement in ARPOBD and healthy occupancy. The company added approximately 1,600 beds, including the commissioning of its 800-bed greenfield hospitals at Bangalore and inorganic expansions in Maharashtra, Telangana, and Kerala. In fiscals 2026 and 2027, KIMS expects revenue growth of ~20%, driven by steady bed additions across new hospitals, including Nashik, Thane, Bangalore, Kondapur, and Rajahmundry in past 1-2 fiscals as well as expected addition of 900 beds in fiscal 2027 and 2028 through brownfield expansions and new specialties (mother & child and Oncology) in existing hospitals. Growth in ARPOBD is also expected to drive to double digit revenue growth.

 

KIMS' operating margins declined to ~21% during the 9 months of fiscal 2026 from 26.1% in the corresponding period of the previous year, primarily due to the operating losses from commissioning of new hospitals in Bangalore, Thane, and Kollam. However, despite initial profitability drag from greenfield hospitals, operating profitability is expected to recover to 23-24% over the near to medium term, driven by better operational performance of mature hospitals, quicker ramp-up of new hospitals, and improved case mix. This is supported by KIMS' track record of quicker turnaround of new hospitals, as seen in Nashik (breakeven in January 2026), Thane and Mahadevapura - Bangalore (breakeven in April 2026). Electronic City (Bangalore) and Kollam hospitals are expected to achieve breakeven in the first half of fiscal 2027.

 

The KIMS group’s financial risk profile has moderated over time, due to aggressive debt fund capital expenditure (capex), and part front-ending of the same. KIMS is estimated to have incurred capex of around Rs 1500-1600 crore in fiscal 2026 primarily towards greenfield hospitals in Thane, Bengaluru and brownfield expansions in Kondapur, Srikakulam, Anantpur, Ongole etc. Due to higher capex, long-term debt increased to Rs 2890 crore as on March 31, 2026 (Rs 1776 crore as on March 31, 2025). Furthermore, lease liabilities increased to ~Rs.1000 crore at March 31, 2026 (Rs 651 crore as on March 31, 2025) on account of leased assets added. At overall level, the debt (including the lease liabilities) levels rose to Rs.4202 crore at March 31, 2026(Rs 2577 crore as on March 31, 2025), and resulted in moderation of gearing to an estimated 1.80 times (1.22 times). The ratio of net debt (including lease liabilities) to earnings before interest, taxes, depreciation and amortisation (debt/Ebitda) increased to an estimated 4.9 times (3.2 times in fiscal 2025), higher than anticipated.

 

KIMS has modest capex plans of Rs. 1,200-1,300 crores across 3 years between fiscals 2027 and 2029, primarily for brownfield expansions to add around 900 beds and routine maintenance. This will be largely funded through internal accruals. Further, Crisil Ratings notes KIMS board of directors in March 2026, approved raising Rs. 1,500 crore of equity through a Qualified Institutional Placement (QIP) in the first quarter of fiscal 2027, with 75% (Rs. 1,100 crore) earmarked for debt repayment and the remainder to be held as liquidity surplus for future capex and funding new unit losses. This, combined with its modest capex plans, is expected to reduce KIMS' total debt levels to Rs. 2,700-2,800 crore (including leases) by end March 2027, and also improving leverage metrics to more comfortable levels; for instance, net debt to EBITDA is estimated at below 3 times. Any material delay in equity raise through QIP or higher than capex, leading to continuing elevated debt levels and preventing correction in debt metrics will remain a key sensitivity factor.

 

Crisil Ratings also notes an increase in promoter share pledge to 10.7% as of March 31, 2026 (nil as on September 30, 2025). This is on account of Dr. Bhaskar Rao pledging part of his stake in KIMS to secure personal loans of Rs. 750 crores in the second half of fiscal 2026. The loans were utilized as follows: Rs. 400 crores to repay loans taken by his brothers Mr. Seeniah Bollineni and Mr. Krishnaiah Bollineni and other family members, which had been subsequently extended to Dr Bhaskar Rao, and Rs. 350 crores for loans to promoter-owned companies and for strategic investments. The interest on these loans is being serviced from the cash flow and interest earned on investments. The promoter plans to repay the personal loan within 36 months, post which the share pledge is expected to be released.

Analytical Approach

For arriving at its ratings, Crisil Ratings has fully consolidated the business and financial risk profiles of KIMS and its subsidiaries, which are strategically important to KIMS and have a significant degree of operational integration with it. These companies are together referred to as the KIMS group. Crisil Ratings considers these entities as being strategic to KIMS in view of their common line of business and management and strong integration with the operations of KIMS. Furthermore, the group allows transfer of funds among entities depending upon the requirement.

 

Crisil Ratings has amortised the goodwill of Rs 212 crore on acquisition of Sarvejana Healthcare Pvt Ltd (SHPL) over a period of five years starting April 2022.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Established market position: Through its network of 25 hospitals under the KIMS Hospital brand, the group has an established presence in the south India market. The group also has a long operational track record of more than two decades in the tertiary and the quaternary healthcare segments and benefits from the strong brand reputation and the extensive experience of the group’s promoters in the healthcare industry.

 

In terms of specialties, cardiac treatments account for the highest share of revenue at ~17%, followed by neurosciences at ~11% and renal sciences at ~9%. With the acquisition of SHPL in fiscal 2023, which is primarily an orthopedics player, the share of revenue from orthopedics increased to 14% compared with 5% before the pandemic. The balance is spread across oncology, mother and child, gastric sciences and others.

 

The group, with a combined bed capacity of 6464 beds as of December 2025, is one of the leading players in the tertiary care segment in Andhra Pradesh and Telangana. The group’s Secunderabad facility is one of the largest single location hospitals with ~1,000 beds, offering multi-specialties. Addition of SHPL has further enhanced the market presence of the KIMS group in Hyderabad, which is a core market. KIMS commissioned two greenfield hospitals in Bangalore (Karnataka Cluster) during first 9 months of fiscal 2026 and one greenfield hospital in Thane (Maharashtra cluster) in the first quarter of fiscal 2026

 

KIMS already has presence in Maharashtra through Nagpur facility (acquisition of SPANV Mediresearch Pvt Ltd) in fiscal 2023 and Nashik Facility which was commissioned in October 2025. Besides, KIMS also signed O&M agreements and expanded its presence into Kerala market as well with latest being the lease agreement signed with Avitis Super Specialty (Palakkad) during April 2026.The expansion into adjacent markets contribute to revenue diversity and enhances the market position of KIMS in south India. The company’s revenues are expected to register growth of ~20% in fiscal 2026 and 2027, and ~15% thereafter.

 

Sound operating efficiency: The group has reported above-average operating profitability of more than 25% (barring an exceptional 31.8% in fiscal 2022, which was buoyed by high occupancy during the second wave of the Covid-19 pandemic) despite constant capacity addition, including through acquisitions. The policy of providing equity partnerships to its key doctors has enabled the company to attract talent in Tier 2 locations and maintain low attrition and tight control over costs. These factors, coupled with prudent capital spending, have helped KIMS to turn around acquired hospitals as well as achieve breakeven at newer hospitals in a short span of time, translating into healthy operating capabilities.

 

However, operating profitability declined to ~21% during 9 months of fiscal 2026 from 26.1% during corresponding period of previous year due to decline in occupancy levels to 50% (9 months of fiscal 2026) from 55% (9 months of fiscal 2025) with the commissioning of new hospitals in Bangalore, Thane & Kollam. Despite the bed additions and initial drag on profitability due to greenfield hospitals commencing operations, the operating profitability is expected to settle at 23-24% over the near to medium term supported by better operational performance of the existing mature hospitals, expected quicker ramp-up of the new hospitals as reflected in KIMS track record of quick stabilization of new hospitals during fiscal 2027 along with better case mix. Notably Nashik hospital, which commenced operations in October 2024 broke even in January 2026, while Thane & Bangalore (Soul Space) which had commenced operations in first half of fiscal 2026, achieved breakeven in April 2026. The Kollam hospital is expected to achieve breakeven in first half of fiscal 2027. The presence of highly qualified professionals enables a low average length of stay which is comparable to large hospital chains. Further, the new hospitals are majorly in metropolitan cities where the turnaround time is generally faster compared to tier-1/ smaller cities.

 

Healthy profitability and increasing occupancy, enabled steady improvement in the group’s return on capital employed (RoCE), which stood at above 24.3% in fiscal 2023, compared with 13-15% in earlier years. With the company entering capex cycle, RoCE declined to 16.5% in fiscal 2025 and ~11% in fiscal 2026. RoCE will settle at ~12-15% over the neae to medium term, in line with better profitability, and continuing capex.

Key Rating Drivers - Weaknesses 

Revenue and geographical concentration risks: The group has had a high reliance on its flagship hospital in Secunderabad, which contributed 60% of revenue and 66% of Ebitda in fiscal 2018. With steady organic and inorganic expansion, this has reduced the revenue dependance to <35% in fiscal 2026.

 

While the contribution of the Secunderabad unit has reduced in recent years, the flagship hospital is likely to continue to be the key revenue and profitability driver (contributing to at least 30-35% of overall operating profits) over the medium term exposing the group to revenue and geographical concentration risks. Besides, a sizeable number of the company’s other hospitals are in Telangana and Andhra Pradesh (over 90% of its revenue), which renders operations partly vulnerable to any regulations imposed by authorities in these states. The geographical diversification is modest compared to other peers in the healthcare space. Even as the group continues to expand in existing markets, it is also diversifying geographically by building or acquiring new hospitals in the neighbouring states of Karnataka (Bengaluru), Maharashtra (Thane, Nashik, Nagpur) and Kerala (mostly O&M). Land for a new hospital has been acquired at Chennai, but construction is not expected to commence for atleast a year. KIMS commissioned two greenfield hospitals in Bangalore (Karnataka Cluster) during first 9 months of fiscal 2026; earlier Nashik hospital commenced operations in October 2024 and Thane hospital commenced operations in May 2025. However, there are already established players in these geographies, and the ability of KIMS to ramp-up occupancy will be critical to reduce revenue dependence on its flagship hospital.

 

Average financial risk profile: The KIMS group’s financial risk profile has moderated over time, due to aggressive debt fund capital expenditure and part front-ending of the same. KIMS is estimated to have incurred capex of around Rs 1500-1600 crore in fiscal 2026 primarily towards greenfield hospitals in Thane, Bengaluru and brownfield expansions in Kondapur, Srikakulam, Anantpur, Ongole etc. Due to higher capex, debt levels have reached Rs.4202 crore at March 31, 2026 (Rs 2577 crore as on March 31, 2025); ergo, gearing has moderated to an estimated 1.80 times at March 31, 2026 (1.22 times at March 31, 2025), while the ratio of net debt (including lease liabilities) to Ebitda increased to 4.9 times (3.2 times in fiscal 2025).

 

KIMS has modest capex plans of Rs. 1,200-1,300 crore across 3 years between fiscals 2027 and 2029, primarily for brownfield expansions to add around 900 beds and routine maintenance. This will be largely funded through internal accruals. Further, Crisil Ratings notes KIMS is likely to raise Rs.1500 crore via a QIP in the first quarter of fiscal 2027 and use sizeable portion of the proceeds to prune debt. This is expected to KIMS' total debt levels to Rs. 2,700-2,800 crores (including leases) by end March 2027 and also improving leverage metrics to more comfortable levels; for instance, net debt to Ebitda is estimated at below 3 times. Any delay in deleveraging plans will remain a key monitorable.

 

Exposure to regulatory risk: The group, like other hospital chains, remains exposed to regulations which may come into play, as introduced. For instance, the performance of private hospitals was significantly impacted on account of price caps imposed on cardiac stents and knee implants in the last quarter of fiscal 2017. Besides, the cap on cash transactions, up to Rs 2 lakh, also caused temporary challenges when introduced in fiscal 2018. In addition, the recent Supreme Court proposal to standardise the prices for different procedures across public and private hospitals, if implemented, will be monitorable.

Liquidity Strong

Liquidity is supported by an unencumbered cash balance of Rs 120 crore as on September 30, 2025, and healthy cushion in existing fund-based facilities. Expected annual cash accrual of Rs 600-800 crore should be sufficient to fund routine maintenance capex as well as part of the expansion capex. The group has also successfully raised long tenure debt for funding capex, which has resulted in modest annual debt obligation. The group has principal debt obligation of Rs 433 crore and Rs 467 crore in fiscals 2027 and 2028, respectively, which can be serviced from accruals. The company has been obtaining loans of longer tenures similar to peers, which permits enough time for newer hospitals to ramp-up and stabilise operations, without straining liquidity.

 

The QIP proceeds are expected to obviate pressure of high debt on the balance sheet, and also part fund capex and losses from new units. The group is unlikely to pay out material dividend over the medium term, with cash flows being reinvested.

Outlook Stable

Crisil Ratings believes that KIMS will continue to benefit over the medium term from its established presence in the South Indian market and diversified revenue stream, including from acquired and upcoming new hospitals. Continuing healthy operating profitability will ensure good annual cash generation, which along with prudent capex going forward will lead to gradual improvement in debt metrics.

Rating sensitivity factors

Upward factors

• Sustained double-digit revenue growth, supported by contribution from newer hospitals and reducing dependence on the flagship hospital, leading to material improvement in the scale of operations and geographical diversity, while maintaining healthy operating margin of over 24-25%
• Sustaining healthy debt protection metrics, considering organic and inorganic expansion plans

 

Downward factors

• Sluggish revenue growth and deterioration of operating margin to ~19-20%, affecting cash generation
• Higher-than-expected, debt-funded capex or acquisitions, or additional debt raised to fund cost overruns in ongoing projects, leading to moderation in key debt protection metrics; for instance, net debt to Ebitda ratio (post Ind-AS) in excess of 3 times on sustained basis.
• Adverse regulations impacting the hospital sector, including KIMS

About KIMS Group

Founded by Dr Bhaskar Rao Bollineni, a renowned cardiothoracic surgeon, KIMS operates a chain of multispecialty hospitals in Andhra Pradesh and Telangana, with a focus on tertiary and quaternary healthcare. It began its journey in 2004 with a 300-bed hospital in Secunderabad. KIMS is one of India's leading multi-disciplinary integrated private healthcare service providers offering comprehensive healthcare services across specialties and super specialties.

 

The flagship hospital of the group is at Secunderabad and has a capacity of 1,000 beds. KIMS has a network of 23 hospitals (including under construction hospitals) across five states – Telangana, Andhra Pradesh, Maharashtra, Kerala and Karnataka with a combined bed capacity of 6,464 beds as on December 31, 2025.

 

In June 2018, General Atlantic invested over USD 130 million, in a combination of primary capital and secondary purchases, to acquire a significant minority stake of 42.6% in KIMS. This included the takeover of 30% stake from India Advantage Fund, India's largest private equity fund held by ICICI Ventures. The company went public in June 2021, and General Atlantic completely exited in September 2022. As on March 31, 2026, Dr Bhaskar Rao, held 34.11 % stake in KIMS, mutual funds 27.41%, insurance companies 4.59%, foreign portfolio investors 14.57%, Directors and relatives 4.34% and public the balance.

 

KIMS reported net profit of Rs 209 crore on operating income of Rs 2830 crore in the first nine months of fiscal 2026, compared with net profit of Rs 309 crore on operating income of Rs 2238 crore in the corresponding period of fiscal 2025.

Key Financial Indicators (Consolidated)

As on / for the period ended March 31	Unit	2025	2024
Revenue	Rs crore	3,039	2,503
Profit after tax (PAT)	Rs crore	415	336
PAT margin	%	13.6	13.4
Adjusted debt/adjusted networth*	Times	1.22	0.73
Interest coverage	Times	8.24	11.99

*lease liabilities have been considered as debt

Any other information: Not applicable