| Sahyadri Hospitals Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL A-/Stable/CRISIL A2+' | ||||||
| Rating Action | ||||||
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| 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 Sahyadri Hospitals Private Limited (SHPL; part of Sahyadri group).
Group’s operating performance has improved in fiscal 2022 reflected in estimated revenue and operating margin of over Rs. 750 crore and 24% respectively vis-à-vis Rs.570 crore and 22% in previous fiscal. Benefit of covid hospitalization at the start of fiscal, pick up in non-covid treatments and regular surgeries, higher realization per occupied beds and steady occupancy had led to improved performance during the year. With sizable addition of new capacity (primarily for private/ICU beds) in coming fiscals and group’s established regional market position, the business risk profile should continue to bolster over medium term.
The financial risk profile continues to remain healthy despite ongoing debt funded capex majorly aided by healthy accretion to reserves and reducing debt. The company had received the funding of Rs. 140 crores from Everstone Group in recent fiscals which was used to prepay some of the debt and fund the capex. Liquidity of the company continues to remain healthy supported by healthy accruals, negligible utilization of working capital bank lines and healthy cash and cash equivalents.
The ratings continue to reflect SHPL's extensive industry experience of the promoters and establish market position, efficient working capital cycle and healthy financial profile. These strengths are partially offset by its exposure to intense competition and regulatory risks, geographic concentration in revenue and ongoing large capex. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of SHPL and with its wholly owned subsidiaries i.e. Sahyadri Karad Hospitals Pvt Ltd and Surya Hospitals Pvt Ltd, these have synergistic businesses and are operated by the same promoters and management.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
The Sahyadri group’s operating performance has been improving, as reflected in compound annual growth rate of around 16% in revenue in the five years through fiscal 2022 and improved operating margin backed by ramp-up in operations and better ARPOB (Average Revenue Per Occupied Bed). The operating performance is likely to improve further over medium term as well aided by addition of new capacity and group’s established market position in the region.
The group plans large capex of over Rs. 100 crores annually over the medium term. Its reliance on debt, however, is expected to remain limited given its strong operating cash flow and surplus liquidity.
Weaknesses:
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Liquidity: Strong Bank limit utilization remained minimal at around 2 percent for the past twelve months ended March 2022. Cash accrual are expected to be over Rs 100 crores which are sufficient against term debt obligation of Rs 12-20 crores over the medium term. In addition, cash and cash equivalents of more than Rs. 140 crores will continue to cushion the liquidity amidst ongoing capex. During fiscal 2022, the group has prepaid the debt of over Rs. 60 crore. Current ratio was quite adequate at 1.40 times on March 31, 2021. |
Outlook: Stable CRISIL Ratings believe the group will continue to benefit from its established presence in the region and healthy financial risk profile. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company SHPL (formerly known as Sahyadri Hospitals Ltd) was incorporated in 1996. It operates eight hospitals with over 845 beds across Maharashtra along with its subsidiaries. It owns three of the hospitals and has long-term leases on four, while the flagship hospital at Deccan Gymkhana is under an operator arrangement with a hospital trust. SHPL was promoted by Dr Charudutt Apte and his business acquaintances. Currently Private equity firm Everstone Group holds controlling stake (86.55%) in SHPL. |
Key Financial Indicators (Consolidated):
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Status of non cooperation with previous CRA: SHPL has not cooperated with India Ratings And Research Private Limited which classified it as not-cooperative vide a release dated May 12, 2022. The reason provided is non-furnishing of information for monitoring the rating. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 10 | HDFC Bank Limited | CRISIL A-/Stable |
| Cash Credit | 5 | Union Bank of India | CRISIL A-/Stable |
| Letter of Credit | 0.5 | Union Bank of India | CRISIL A2+ |
| Overdraft Facility | 1.5 | HDFC Bank Limited | CRISIL A2+ |
| Proposed Fund-Based Bank Limits | 23 | Not Applicable | CRISIL A-/Stable |
| Term Loan | 60 | HDFC Bank Limited | CRISIL A-/Stable |
This Annexure has been updated on 04-Apr-2023 in line with the lender-wise facility details as on 03-Apr-2023 received from the rated entity.
Criteria Details
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