Jhunjhunwala-backed Inventurus Knowledge Solutions Ltd, abbreviated has IKS Health, has seen some fresh initiation from the brokerage firms after making its stock market debut in December 2024. Analysts tracking the counter continue to remain mostly positive on the stock but see limited upside potential in the counter.
Shares of IKS Health dived more than 3 per cent to Rs 1,695 during the trading session on Wednesday, with a total market capitalization of the company slipping below Rs 29,000 crore mark. The stock is down 23 per cent from its all-time high at Rs 2,190 hit in December 2024.
IKS operates in a crowded healthcare provider space, it differentiates itself through extensive use of tech platforms and a non-linear revenue model. These reflect better revenue/employee and superior margins. AQuity acquisition has added inpatient capabilities in IKS’ repertoire, opening up cross-sell opportunities. While that should play out over the medium term, pruning of tail accounts and higher offshoring in AQuity portfolio will likely weigh on FY25/26 revenue growth. These interventions, however, should help expand EBITDA margin by 350bps over FY24-27E, said JM Financial.
IKS’ extensive platform-led delivery positions it well to consolidate its share in a fragmented provider space, potentially outpacing the industry. Absence of cross-sell track record and limited clients among the top10 physician groups are potential risks to its medium-term growth outlook. We, therefore, value the stock at 35 times, at 1.1 times PEG, despite a better EPS growth outlook over the next 2 years, it added with a 'hold' rating and a target price of Rs 1,840.
Shares of IKS Health were listed in the last month of the previous calendar when the company raised Rs 2,497.92 crore via IPO, which was entirely an offer-for-sale by the promoters of the company. The company sold its shares for Rs 1,329 apiece and the stock is still 28 per cent above its issue price.
Incorporated in 2006, IKS Health provides services to healthcare enterprises such as handling administrative chores/work. The company helps doctors and other healthcare providers by handling their paperwork and administrative tasks. IKS Health offers services such as clinical support, medical documentation management, virtual medical scribing and more.
IKS Health is a platform as a service (PaaS) company that caters to US’ healthcare provider segment. It focusses on outsourcing the routine chores of physicians, said ICICI Securities. "IKS’ platform has 16 key features, spanning across chores in a physician’s value chain, bundled into admin offerings and clinical offerings. With strong financial credentials, synergistic large acquisition and US healthcare industry-led tailwinds in its favour, the delta for IKS lies in the cross-selling-led potential arising from the 800 customers added via the Aquity acquisition, " it said.
"We model FY25–28E revenue/EPS CAGRs of 20 per cent/34 per cent. While we like IKS business for its superior financial performance, technology prowess and attractive large scale opportunity; valuations at 33 times FY27E P/E are rich," ICICI Securities added, with a 'hold ' rating and a target price of Rs 1,820.
Rekha Rakesh Jhunjhunwala, three discretionary trust, along with other entities cumulatively own 8,46,68,326 equity shares, or 49.3 per cent stake in IKS Health, which is worth Rs 14,450 crore as of today. Nearly half of the company is owned by Jhunjhunwala's associates.
Nistha Jhunjhunwala Discretionary Trust, Aryaman Jhunjhunwala Discretionary Trust and Aryavir Jhunjhunwala Discretionary Trust own 2,80,91,965 equity shares, or 16.37 per cent each in IKH Health. Rare Enterprises has a holding of 1,953 equity shares while Rekha Rakesh Jhunjhunwala owned 3,90,478 equity shares, or 0.23 per cent in the company as of December 30, 2024.
IKS Health saw its profit after tax rise 28 per cent YoY to Rs 129.7 crore in the reported quarter, while it reported a 16 per cent YoY revenue growth to Rs 657.2 crore for the quarter ended December 31, 2024, driven by strong performance from its top five customers and new client acquisitions.
The healthcare technology solutions provider clocked a 24 per cent YoY increase in its Ebitda to Rs 200.6 crore, with its Ebitda margins improving to 30.5 per cent during the period under review. IKS Health secured significant client wins during the quarter.