CRISIL Ratings stated that the ratings reflect the company’s long vintage, the extensive experience of the promoters in the healthcare industry, its diversified revenue streams and comfortable operating performance and a strong financial risk profile.
These strengths are partially offset by geographic concentration in revenue and exposure to regulatory risks.
The agency further said that steady revenue growth and stable healthy operating margin over 25% leading to higher cash accrual and geographical diversification in the hospital business while maintaining strong financial risk profile could lead to a positive rating action.
However, sluggish revenue growth or decline in operating margin leading to net cash accrual and additional large debt-funded capex or acquisition weakening the key credit metrics could lead to a downward rating action.
Kovai Medical Center and Hospital operates a 854-bed multispecialty hospital in Coimbatore. The company has set up satellite centres in Coimbatore (City center, Sulur Hospital and Kovilpalayam Hospital) and Erode (Erode Speciality Hospital).