Kids Clinic India IPO

Leading Specialised Chain: India has an under-penetration of quality specialized healthcare infrastructure. There are significant growth opportunities for super-specialty chains to provide integrated services in mother and baby care sector. Currently Kids Clinic has penetration of only 5-10% in private maternity care market as of Fiscal 2021. They have rapidly grown operations to 23 centres. They recorded revenue from operations of Rs. 554.5 Cr in Fiscal 2021, highest in India amongst super-specialty mother and baby care space.

Differentiated Offering: Their deep understanding of the requirements and preferences of customers in their entire perinatal journey has enabled them to provide quality services. Their Customer Lifetime Value has increased 10.51% from Rs.1,44,571 in Fiscal 2019 to Rs. 1,59,673 in Fiscal 2021,

Advanced Clinical Excellence: Reputed accreditations, robust medical protocols and investment in medical technologies have resulted in low neonatal and mortality rate at Kids Clinic. They have also partnered with international medical universities for clinical research.

Scalable Business Model: They have evolved their execution capabilities in setting up new centres, reflected by improvements in breakeven and payback periods. They have successfully reduced new centre set-up costs by 39.30% between Fiscal 2015 to 2020 and Fiscal 2021 to 2022 with a faster path to profitability for new centres. They have also improved capital expenditure efficiency over the years with experience of prior successes in setting up new centres.

Robust Financial Performance : The business has demonstrated attractive financial performance over the last three Fiscals and successfully weathered the challenges of COVID-19. As of September 30, 2021, total debt/ equity ratio was 0.33. They also enjoy significant predictability in our cash flows as the revenue-generating aspects of each customer’s perinatal journey is predetermined.

Experienced Management Team: Company founders, Dr. R. Kishore Kumar and Rohit M A., and the senior management team has been critical in establishing a successful, scalable operating model, and managing the set-up of new centres and roll-out of new segments. They have also developed proven recruiting and staffing capabilities to identify, hire and retain high-quality doctors.

Medico-Legal Risk: Company is subject to various operational, reputational, medical and legal risks associated with the operations of our healthcare services. An inability to provide quality healthcare catering to the needs of our customers could adversely affect reputation and finances.

Dependence on Medical Professionals: They are highly dependent on doctors, nurses, and other healthcare professionals and the business will be impacted significantly if they are unable to attract/retain such professionals.

Expansion Risk: Company intends to expand in other cities but may face a risk with respect to commencement of operations where they have no prior operating experience and are less familiar with local socio-economic conditions, culture and customer expectations.

Past Losses: They have in the past incurred, and may in the future incur, net losses. They incurred restated losses after tax of Rs. 65.4 Cr, Rs. 29.6 Cr and Rs. 34.7 Cr for Fiscal 2019, 2020 and 2021. Healthcare business is capital intensive and new centres require a gestation period to break even. Their growth strategy may also prove more expensive than expected due to increasing competition and challenging macro-economic environment,