Healthcare is never going to be out of demand, and this is a low valued growing company
Strengths
Experienced management team with strong execution track record – Shalby is promoted by renowned joint replacement specialist, Dr. Vikram Shah, who has over 25 years of medical experience in the UK, the US and India. Its overall operations are also supported by its senior management, with an average experience of more than 10 years in healthcare services in India and abroad. Shalby enjoys strong goodwill among patients and healthcare professionals, which has helped it to grow over the years.
Dominance in Indian arthroplasty segment – Shalby remains one of the largest specialist joint replacement provider in India and the world, with a total of over 1,25,000 joint replacement surgeries till date and an average of 8,000–10,000 surgeries per year. The company enjoys a strong market position in the healthcare services industry. underpinned by its established brand equity, especially in the arthroplasty segment. The arthroplasty segment has remained the key revenue and profit generator for Shalby over the years.
Increase in diversification into non-arthroplasty segments – Over the past few years, the share of non-arthroplasty segments in Shalby’s total revenue has been increasing steadily, contributing 77% to the total revenue in FY2021. Among the nonarthroplasty segments, oncology surgery has been the largest revenue contributor, followed by cardiology/cardiac.
Improvement witnessed in profitability in FY2021, capital structure and coverage indicators continues to be healthy – Shalby’s profitability improved in FY2021 as reflected by operating margin of 20.1% in FY2021 (16.8% in FY2020 and 17.8% in FY2019) because of better cost management, which also led to rise in net margin to 9.8% (5.7% in FY2020 and 6.8% in FY2019) on a consolidated basis. Further, scheduled repayments over FY2021 and nil utilisation of working capital facilities as on March 31, 2021 resulted in lower debt levels as compared to March 31, 2020. Given the improvement in net worth base and low debt levels, the gearing remained healthy at 0.1 times as on March 31, 2021. The Debt/OPBITDA metrics also improved to 0.5 times in FY2021 from 0.8 times in FY2020. Also, given the large cash balance of Rs. 134.09 crore, as of FY2021, the liquidity also remains strong.
Growth Drivers
Rising health awareness
Rising medical insurance
Company is expanding its chain of hospitals