Shalby tanks after tepid Q3

Shalby is down in the red today as it posted a disappointing set of numbers for Q3FY18. The stock price tanked almost 5% to Rs.253; yesterday in anticipation of better numbers, the stock has in fact hit a new high at Rs.274.

The company, is promoted by orthopedic surgeon Dr. Vikram Shah and is an Ahmedabad head quartered tertiary care multi-specialty hospital chain, operating 11 hospitals aggregating 2,012 beds, of which, 9 hospitals are operational with 841 beds.

For Q3FY18, it posted a 9% (YoY) rise in revenue at Rs.97 crore but net profit slipped 24% to Rs.1 crore. EBITDA was down 6.5% to Rs.21.5 crore while margins slipped from 25.8% to 22.2%.

In an interview with Bloomberg, post the results, the company CEO stated that its older hospitals have started reporting positive operating income and it is looking at getting into new segments like cardiac along with existing ortho. It has repaid debt to the tune of Rs.300 crore.

The stock had issued an IPO at a price of Rs.248 and had a tepid listing at Rs.237. But since then it has managed to always remain over the IPO price and despite the results, remains a strong stock.

In our New Issue Analysis, we had rightly said, “While the company seems to be built on a strong foundation, it is yet to reap the fruit of its labour, as new hospitals mature over the next 2-3 years. No doubt it is better among the lot and valuation is also not too aggressive, but immediate upside may be limited. Over the longer term, the stock can be better rewarding.”