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Thursday,28-October-2021

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Higher occupancy to drive recovery for pvt hospitals

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Higher occupancy due to a surge in Covid-19 treatments will help private hospitals bounce back with 15-17 per cent growth in revenue this fiscal, a shade above what they attained in the pre-pandemic year of fiscal 2020, Crisil said on Tuesday.

According to a report by the ratings agency, higher occupancy and revenue will aid recovery of operating margin by 100-200 basis points (bps) to 13-14 per cent, but still fall short of the fiscal 2020 mark due to higher proportion of Covid-19 treatments, which are less profitable.

That said, recovery in operating margins will render stability to credit profiles, even as capital spending is enhanced after the curtailment last year, an analysis of 40 hospital companies (including 36 rated by CRISIL Ratings), with a combined revenue of about Rs 32,000 crore, showed.

To recall, the performance of hospitals was severely impacted in the first quarter of last fiscal due to postponement of elective surgeries and preventive healthcare (which together account for 60 per cent of revenue), in addition to travel restrictions and curbs on Covid-19 treatment by private hospitals.

The sector clawed back in the second quarter and had recovered completely by the third as elective surgeries and preventive healthcare treatment increased and Covid-19 treatments, too, were permitted for most private hospitals. This helped limit the overall revenue decline to 12 per cent for the full year.

Manish Gupta, Senior Director, CRISIL Ratings, said: “While the second wave lashed again in April, the first quarter this fiscal will be sharply better on-year, with occupancy of 75 per cent, almost double on-year. This will be largely on account of a surge in Covid-19 treatments more than offsetting the deferral of elective surgeries and outpatient footfalls. As the second wave recedes in the second quarter, we expect pent-up demand for non-Covid-19 treatments to rebound and support occupancies. Overall, higher occupancies of 65-70 per cent this fiscal versus 58 per cent in the last, would drive rebound in revenue growth.”

Higher occupancy should, in turn, drive recovery in operating margin as well, but remain short of the pre-pandemic level of 15 per cent. Much of the revenue increase would be on account of Covid-19 beds, which can realise only 50-60 per cent of average revenue per bed for non-Covid-19 treatments, as state governments cap the charges.

Additionally, hospitals have to pay higher incentives to para-medical and support staff amid the second wave of the pandemic. This will weigh on margins, Crisil said.

Rajeswari Karthigeyan, Associate Director, CRISIL Ratings, said, “Recovery in revenue and margins will nevertheless spur hospitals to resurrect capex, which had almost halved on-year last fiscal. Much of the capex this fiscal is expected to be brownfield in nature, towards bed addition and related infrastructure including oxygen plants, funded significantly through accruals. The Rs 50,000 crore liquidity window offered by the RBI to augment healthcare infrastructure is expected to help in this regard – the three-year loan tenure will suit brownfield expansions and low-cost funding will particularly help mid and small-sized hospitals.”

Backed by improved profitability, we expect to see better debt protection metrics after the temporary dent last year. Interest cover and debt to Ebitda ratios are seen improving to 4.5 times and 2.3 times from 3.2 times and 2.9 times, respectively, last fiscal – both reaching close to pre-pandemic levels. This would support ‘stable’ credit profiles.

Crisil said that though its view is based on the expectation of Covid-19 cases declining from the second quarter onwards, an intense third wave and stringent regulatory control over the cost of Covid-19 treatments will remain monitorables.

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Small LPG cylinders, financial services at FPS proposed

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 The Centre on Wednesday proposed to sell small LPG cylinders through Fair Price Shops (FPS) across the country.

There is a proposal to provide financial services through FPS and extending MUDRA loans to its dealers for capital augmentation.

There are a total of 5.32 lakh FPS in the country. With this step, the Centre is aiming at taking its services closer to poorer and needy consumers.

Focussing on enhancing financial viability of FPS, Department of Food and Public Distribution Secretary, Sudhanshu Pandey in a video conference with representatives of multiple ministries and PSUs stressed on the need of taking proactive measures for the same.

The representatives from oil marketing companies appreciated the proposal for retail selling of small LPG cylinders through FPS and informed that “necessary support required would be provided for the same in coordination with interested state or Union Territory (UT) governments,” said a release from the Ministry of Consumer Affairs, Food and Public Distribution in New Delhi.

The representative from the Department of Financial Services appreciated the government’s proposal to provide financial services through FPS, extending MUDRA loans to FPS dealers for capital augmentation and informed that necessary support would be provided for it in coordination with interested state or UT governments.

Earlier, the CEO, Common Service Centre (CSC), gave a presentation about the various service offerings provided by it. An update on the activities undertaken by CSC to tie-up with individual state or UT governments to take this initiative forward was presented, too.

Set up under the Ministry of Electronics and Information Technology, the CSC scheme provides a centralised and collaborative framework for delivery of services to the citizens.

In his concluding remarks, Sudhanshu Pandey mentioned that different states or UTs can take up these initiatives and tailor them to suit their individual requirements.

Representatives from the Ministry of Electronics and Information Technology, Department of Financial Services, Ministry of Petroleum and Natural Gas, Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, CSC e-Governance Services India Limited and all states/UTs participated in the virtual conference, the release added.

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Google logs record $18.9 bn profit, Search and YouTube soar

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Alphabet, the parent company of Google, has posted an all-time record revenue of $61.9 billion for the July-September quarter, along with record profits at $18.9 billion.

Google Services revenues were $59.9 billion, up 41 per cent, and Google Search and other advertising revenues of $37.9 million in the quarter were up 44 per cent.

The company said in a statement late on Tuesday that YouTube advertising revenues of $7.2 billion were up 43 per cent due to strength in both direct response and brand advertising.

“Our long-term investments in AI and Google Cloud are helping us drive significant improvements in everyone’s digital experience,” said Sundar Pichai, CEO of Alphabet and Google.

“Search remains the heart of what we do. We have made remarkable advances over the past 23 years that benefits Search and related products like Google Assistant, which just celebrated five years,” he added.

For Google Cloud, the revenues were $5 billion for the third quarter, up 45 per cent.

“Google Cloud Platform’s (GCP) revenue growth was again above cloud overall, reflecting significant growth in both infrastructure and platform services,” said Ruth Porat, Senior Vice President and Chief Financial Officer.

At the Alphabet level, headcount grew by nearly 6,000 in the third quarter, including seasonal campus hires.

“We expect robust headcount growth in Q4 for both Google Services and Google Cloud,” the company said.

Alphabet said that with respect to foreign exchange impact on reported revenues, it expects virtually no impact in Q4 in contrast to a 1.5 per cent tailwind in Q3 and 4 per cent in its Q2.

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Petrol, diesel rates raised again by 35 paise/ltr

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Petrol and diesel prices increased again on Wednesday after a two-day break as global oil prices failed to relent and continued to remain firm.

Accordingly, the pump price of petrol in Delhi increased by 35 paise per litre to jump to Rs 107.94 a litre while diesel prices also increased by the same margin to reach Rs 96.67 a litre, according to a price notification of state-owned fuel retailers.

In the financial capital Mumbai, petrol prices have now risen to Rs 113.80 per litre while diesel to Rs 104.8 5 a litre, the highest among all metros.

Across the country as well petrol and diesel prices increased between 35-40 paise per litre, but their retail rates varied depending on the level of local taxes on petroleum products.

The fuel prices remained static last week on Monday and Tuesday, but had risen for four straight days by 35 paise per litre previously before again rising for five consecutive days between Wednesday and Sunday. It remained static again on Monday and Tuesday before rising again on Wednesday. There was no change in rates on October 12 and 13.

Diesel prices have now increased for 25 of the last 33 days taking up its retail price by Rs 8.15 per litre in Delhi.

With diesel prices rising sharply, the fuel is now available at over Rs 100 a litre in several parts of the country. This dubious distinction was earlier available to petrol that had crossed Rs 100 a litre-mark across the country a few months earlier.

Petrol prices had maintained stability since September 5, but oil companies finally raised the pump prices last week and this week given a spurt in the product prices lately. Petrol prices have also risen on 22 of the previous 29 days taking up its pump price by Rs 6.75 per litre.

Crude prices have been on a surge rising over three year high level of over $ 86 a barrel now as global demand remains firm while OPEC+ continues to move slowly on increasing production. Since September 5, when both petrol and diesel prices were revised, the price of petrol and diesel in the international market is higher by around $9-10 per barrel as compared to average prices during August.

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