Rationale

 The rating favourably factors in Muthoot Health Care Private Limited’s (MHCPL) established position as a multi-speciality hospital in Kerala. The company operates two hospitals in the state with a combined operational capacity of 250 beds and an established panel of doctors and surgeons across multiple specialities. The rating also draws comfort from the strength it derives as a part of the Muthoot Group, which has a diversified presence in sectors like financial services, hospitality, healthcare and education. Additionally, MHCPL benefits from the personal involvement of the Muthoot family in its operations. The company’s revenue witnessed a healthy growth of around 10% in FY2025, supported by the sustained growth in average revenue per occupied bed (ARPOB), while occupancy remained stable at 64-65%. Its revenue is expected to grow at 9-10% in FY2026, which would be driven by improved patient mix and sustained occupancies. MHCPL’s operating margins declined to 11.2% from 17.5%, owing to increased employee expenses with the addition of new doctors. However, the margins are expected to improve to 12–14% in FY2026 driven by improved scale, better absorption of overheads and controlled costs. The rating, however, remains constrained by the company’s accumulated net losses as the Muthoot Group runs the hospitals for philanthropic purposes and offers subsidised rates for various medical facilities. However, an improvement in its net worth is anticipated, based on the presumed healthy earnings in the medium term. The company’s coverage indicators remain comfortable, despite the negative net worth, as its debt profile is dominated by interest-free unsecured loans, followed by working capital borrowings. It plans to repay promoter loans to the tune of Rs. 0.75 crore per month, subject to having sufficient cash balances. However, ICRA notes that the promoters would support the company in a timely manner, if required. The hospitals continue to face competition from other such hospitals in the vicinity and nearby cities and are exposed to regulatory risks, inherent to the healthcare industry. The Stable outlook on the rating reflects ICRA’s opinion that MHCPL’s operating performance will remain steady, supported by healthy occupancy levels, growth in ARPOB, improving scale and stable profitability