Company announces succession plan and management team changes
- Mr. Shreegopal Rameshwarlal Kabra stepped down from the position of Managing Director with effect from 31st May 2025. Mr. Mahendrakumar Rameshwarlal Kabra, currently serving as Joint Managing Director and son of Mr. Tribhuvanprasad Rameshwarlal Kabra, will assume the role of Managing Director with effect from 1st June 2025
- Mr. Tribhuvanprasad Rameshwarlal Kabra stepped down from the position of Executive Chairman and Director with effect from 31st May 2025.
- Consequently, Mr. Ramesh Chandak, who was serving as an Independent Director, has been appointed as the Non-Executive Chairman with effect from 1st June 2025.
- Mr. Mahesh Tribhuvanprasad Kabra (son of Mr. Tribhuvanprasad Kabra) and Mr. Rajesh Shreegopal Kabra (son of Mr. Shreegopal Kabra) have been appointed as Executive Directors with effect from 1st June 2025.
- Mr. Mahesh Kabra will oversee Plant Operations, while Mr. Rajesh Kabra will lead the Sales function at RR Kabel.
- Mr. Shishir Sharma ceased to be the Chief Sales Officer with effect from 31st May 2025 and has been appointed as Chief Marketing Officer with effect from 1st June 2025.
Board composition and leadership updates: Family representation restored
- As per the exchange filing dated 28th May 2024, Mr. Shreegopal Rameshwarlal Kabra has been re-appointed as Managing Director for a period of five years effective 28th June 2024 and is now stepping down as part of the succession planning. As per management, the Nomination and Remuneration Committee (NRC) took time to carefully implement the succession plan, which has resulted in a delay in the succession process.
- Earlier, the Board of Directors comprised three family members; however, following the stepping down of Mr. Shreegopal Rameshwarlal Kabra and Mr. Tribhuvanprasad Rameshwarlal Kabra, only one family member (Mr. Mahendrakumar Kabra) remains on the Board. To keep the family compositing on the board, Mr. Mahesh Kabra and Mr. Rajesh Kabra were appointed as Executive Directors on 1st June 2025, restoring family representation to three.
PL View
We have a neutral view on the change in management and the stepping down of founders and promoters; however, they will continue to support the company through their guidance. The company remains confident of continuity and stability during this transition. The promoters have appointed the next generation to leadership roles, which is considered a positive development for the company.
RRKABEL is currently trading at 38x/30x FY26/FY27E earnings. We expect revenue/EBITDA/PAT CAGR of 16.2%/29.8%/31.8% over FY25-27E.
Quick Pointers:
- Hospital OPM guided at 24% (flat YoY) despite capacity addition in FY26
- Reiterated EBITDA break-even in 24×7 by 2HFY26; expects 30% jump in GMV.
Apollo Hospitals Enterprise (APHS) reported consolidated EBITDA of Rs7.7bn (up 20% YoY), was in line with our estimates. Adjusted for 24×7 losses and ESOPs cost (~Rs1.6bn), EBITDA was Rs9.3bn, up 18% YoY. The recent stake sale in HealthCo to Advent and merger with Keimed are a positive step and will lead to an integrated pharmacy distribution business complemented by the fast-growing omni-channel digital health business. Scale-up in Apollo HealthCo has been on track with likely breakeven in EBITDA of digital business over the next 3-4 quarters. Further, the management guidance of Rs20bn EBITDA of the merged entity by FY28, provides comfort. Our FY26E and FY27E EBITDA estimates broadly remain unchanged. Overall, we estimate 16% EBITDA CAGR over FY25-27E (ex 24×7 losses). We maintain ‘BUY’ rating with TP of Rs8,100/share. We ascribe 26x EV/EBITDA multiple to hospital and offline pharmacy and assign 1x sales to the 24/7.
- In-line EBITDA; 16% YoY growth in hospital: Consolidated EBITDA at Rs7.7bn; up 20% YoY. 24×7 digital app expenses were at Rs1.15bn (flat QoQ) and higher ESOP related non-cash expenses of Rs 455mn in Q4 (Rs268mn in Q3). Pharmacy OPM adjusted for 24×7 improved by 30bps YoY to 8.3%. Apollo HealthCo reported EBITDA of Rs 364mn vs Rs 587mn in Q3. Overall hospital EBITDA growth was at 16% YoY with OPM of 24.3% (up 120bps YoY). AHLL reported EBITDA of Rs 472mn (up 32% YoY) with 12% OPM.
- Steady occupancy; healthy growth in ARPOB: Overall occupancy stood at 67% vs 68% in Q3 impacted by seasonal weakness and lower international patient footfalls, especially from Bangladesh. ARPOB was up 5% QoQ and 7% YoY to Rs63.6K; aided by higher surgical volumes and improved case-payor mix. Overall consol and hospital revenues grew by 13% and 10% YoY, while HealthCo registered 17% YoY growth in revenues. APHS had become net cash positive in Q2 due to the receipt of funds from the stake sale in HealthCo to Advent. Net cash stands at Rs 109mn vs Rs1.4bn QoQ.
Quick Pointers:
- Aiming for a volume growth of 7-8% in FY26E.
- EBITDA margin at multi-quarter low of 9.2%.
We cut our EPS estimates by 8%/12% for FY26E/FY27E and downgrade TCIEXP to HOLD (earlier BUY) amid persistent volume growth challenges and pricing pressure. TCIEXP reported weak set of results as revenues declined 3.0% YoY to Rs3,075mn (PLe Rs3,033mn) with an EBITDA margin of 9.2% (PLe 11.2%) as volumes declined for 6th quarter in a row to 255,000 MT. Pricing pressure was also evident as realization was down 1.5% YoY to Rs12,058 per ton. Given stiff competition, we expect volume and realization CAGR of 6%/1% over FY25-FY27E. However, EBITDA margin is expected to improve 430 bps over the next 2 years amid improvement in utilization levels to 84% by FY27E. We expect sales/PAT CAGR of 8%/29% (driven by low base) over FY25-FY27E and downgrade the stock to HOLD with a TP of Rs816 (22x FY27E EPS; no change in target multiple).
Revenue declined by 3.0% YoY: Revenue decreased by 3.0% YoY to Rs3,075mn (PLe Rs3,033mn) on account of lower volumes. Gross margin declined to 28.3% (PLe 28.9%) due to below par fleet utilization (82.5%).
EBITDA margin at 9.2%: EBITDA decreased by 37.2% YoY to Rs282mn (PLe Rs341mn) on account of higher operational expenses like toll tax and labor cost. EBITDA margin compressed to 9.2% (PLe 11.2%). PAT for the quarter was flat at Rs207mn (PLe Rs225mn) with a margin of 6.7%.
We increase our PAT estimates after accounting for minority interest by 20.6%/12.7% for FY26E/FY27E as we re-align our debt & interest forecast post fund infusion by GIC into a newly created JV platform for upscale hotel assets. SAMHI reported an in-line operating performance with EBITDA margin of 38.1% (PLe 36.9%) while PAT was impacted by an exceptional charge of Rs194mn; offset by a tax write back of Rs233mn. We expect top-line CAGR of 12.9% over the next 2 years led by addition of 245 keys with an EBITDA margin of 38.0%/39.1% in FY26E/FY27E. After fund infusion by GIC (Rs5,800mn received as of 27th May), net debt has fallen to Rs14,289mn. Consequently, we expect interest cost to fall from Rs2,288mn in FY25 to Rs1,500mn in FY27E resulting in 75.4% PAT CAGR over the next 2 years (after accounting for minority interest). Samhi trades at attractive valuation of 11x/9x our FY26E/FY27E EBITDA estimates and we expect re-rating to follow amid improvement in BS health and strong PAT growth. Retain BUY on the stock with a TP of Rs313 (14x FY27E EBITDA; no change in target multiple).
RevPAR increases 17.7% YoY: Topline increased 14.2% YoY to Rs3,188mn (PLe Rs3,362mn). ARR increased 19.2% YoY to Rs7,487. RevPAR grew 17.7% YoY to Rs5,615 while occupancy stood at 75.0%.
EBITDA margin stood at 38.1%: EBITDA increased 42.2% YoY to Rs1,215mn (PLe Rs1,241mn) with a margin of 38.1% (PLe 36.9%). PAT rose 306.1% YoY to Rs459mn (PLe Rs406mn) with a margin of 14.4% (PLe 12.1%). PAT includes exceptional charge of Rs194mn pertaining to loss on sale of investments and reversal of impairment provision on certain properties. Additionally, there was a tax write-back of Rs233mn. Adjusting for these items, PAT was up 447.2% YoY to Rs420mn.
Ipca Labs (IPCA) reported EBITDA of Rs4.1bn (up 35% YoY), was in line with our estimates. However, mgmt. FY26 guidance of 8-10% revenue growth was below our expectations (12-13%). Resultant, our FY26E and FY27E EPS stands reduced by 4-8%. API and generic business growth were muted in FY25; recovery will be gradual. Domestic formulation business, which now contributes 40% of revenues and ~55% of EBITDA, continued to outperform and grow at healthy levels. Turnaround in Unichem remains on track with margins improving from 6% at time of acquisition to 12.5% in FY25. At CMP, the stock is trading at 17x EV/EBITDA and 29x PE on FY27E adjusted for Unichem stake. We maintain our ACCUMULATE with revised TP of Rs1,525/share; valuing at 18x EV/EBITDA.
Domestic formulation and institutional segment aided growth: IPCA’s revenues came in at Rs 22.5bn, up 10.5% YoY in line with our est. Domestic formulations remained healthy at 11% YoY (we est 12%) to Rs 7.6bn. Export formulation was up 11% YoY at Rs 5.2bn in line with our estimate. Branded business increased by 3% YoY while generics growth was at 7% YoY. Institutional businesses witnessed strong growth of 33% YoY. API revenues showed muted growth up 2% YoY to Rs 3.4bn. Export API was down 3% YoY whereas domestic API increased 18% YoY. Revenues from subsidiaries, including Unichem came at Rs6.1bn.
In line EBITDA, PAT beat aided by lower tax: Consolidated gross margins improved 220bps YoY to 68.5%. There was forex gain to the tune of Rs 190mn booked under other expenses. Adj for forex; other expenses were up 9% YoY. Staff cost was up 7% YoY. EBITDA adj for forex gain came in at Rs 4.1bn; in line with our est. OPM came in at 18.2%, up 320bps YoY, down 170bps QoQ. Unichem margins came at 14.3% (down 170bps QoQ). Adj for Unichem; EBITDA growth was at 17% YoY. OPM at 19.6%. Tax came in lower at 18%. Resultant PAT came in at Rs2.73bn; up 39% YoY.