GPT Healthcare Limited (GPTHEALTH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to GPT Healthcare Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sejal Bhattar from MUFG Intime. Thank you. And over to you, ma'am.

Thank you, Hudha. Welcome to Q1 and FY '27 Earnings Call of GPT Healthcare Limited. Today, on this call, we have with us Mr. Anurag Tantia, Executive Director; Mrs. Kriti Tantia, CFO; and Mr. Atul Tantia, Group CFO. Before we proceed the call, I would like to give a small disclaimer that this conference may contain certain forward-looking statements, which are based on beliefs, opinions and expectations of the company as on date. These statements are not guarantees of future performance and involve risks and uncertainties, which are difficult to predict. A detailed disclaimer has been given in the company's investor presentation, which is uploaded on the stock exchange. Now, I would like to hand over the conference to Mr. Anurag Tania for the opening remarks. Thank you. And over to you, sir.

Good morning, everyone, and thank you for joining us today for GPT Healthcare Limited's Q1 FY '27 Earnings Call. I hope all of you are keeping well. To begin with, let me share a few perspectives on the health care industry and the structural trends that continue to shape its long-term growth. India's health care sector is steadily shifting towards a model where the quality of care is becoming as critical as access. Rising incomes, greater health awareness and expanding insurance penetration are enabling more patients to seek timely treatment at organized hospitals that can deliver specialized clinical expertise and better clinical outcomes. Consequently, demand for tertiary and coronary care services continues to grow faster than the overall health care market. At the same time, a substantial gap persists between the demand for quality health care and the available infrastructure. Although India's health care system has advanced meaningfully over the past decade, the supply of hospital beds and access to advanced medical facilities remain significantly below global benchmarks. This shortfall is particularly evident in Eastern and Central India, where large populations continue to be underserved despite increasing health care requirements. We are also observing a clear shift in patient expectations towards hospitals that provide comprehensive technology-driven care under one roof. Today's patients value not only experienced doctors, but also access to advanced diagnostics, robotic-assisted procedures, organ transplant programs and integrated critical care services. These capabilities are emerging as key differentiators for organized health care providers and are reshaping industry competition. In addition, the rapid adoption of digital health technologies and AI-enabled solutions are transforming the way health care is delivered and experienced. Against this evolving backdrop, our strategic focus remains consistent. We continue to invest in strengthening clinical excellence, expanding specialized offerings, improving patient outcomes and executing our expansion plans with discipline. We believe these priorities position GPT Healthcare well to capitalize on the long-term opportunities in the sector while delivering sustainable value to all stakeholders. Let me now take you through our operational highlights for the quarter. During the quarter, our total income increased by 18.2% and PAT increased by 66% compared to the same period last year. The network occupancy stood at 45.5%, while average revenue per occupied bed or ARPOB, improved to INR 42,350. Excluding the newly commissioned Raipur facility, occupancy across our mature hospitals maintained healthily at 58.07%, reflecting steady patient inflows and continued demand for specialized tertiary care. Approximately 90% of our revenues continue to be generated through cash and insurance patients, highlighting the strength of our payer mix and sustained demand for quality health care across our operating regions. Our performance during the quarter was supported by encouraging progress across each of the hospitals. Starting with ILS Hospital Salt Lake, our flagship tertiary care hospital continued to deliver strong operational performance. The hospital further strengthened its leadership in robotic-assisted surgeries with a cumulative number of robotic procedures now exceeding 800, reflecting increasing patient acceptance of advanced minimal invasive surgical techniques. During the quarter, occupancy stood at 62%, up from 60% on a Y-o-Y basis, while ARPOB improved to 45,300, supported by a favorable mix of higher contributing surgeries. The hospital also received the approval for conducting the previous prestigious DrNB course in medical gastroenterology. This adds to our bouquet of excellence in clinical and academic work. Moving to ILS Hospitals Dumdum. The hospital continued to build on the operational turnaround achieved over the past year and remained the highest occupied hospital within our network. The renal transplant program continues to be one of the most recognized in Eastern India, having successfully completed more than 700 renal transplants. During the year, the newly commissioned cardiothoracic and vascular surgery unit further strengthened our comprehensive critical care offerings, while advanced 3D imaging technology enhanced the hospital's interventional neurology capabilities. Dumdum also continued its participation in the BEMAKI clinical trial on acute kidney injury, reflecting our growing emphasis on clinical research and evidence-based health care. Occupancy for Dumdum stood at 65% compared to 60% of last year and ARPOB stood at 43,041. At ILS Hospital Agartala, we continue to strengthen our position as the leading corporate tertiary care hospital in Tripura. Our comprehensive cancer care center equipped with PET scan and Linear Accelerator facilities has now completed more than 700 radiation procedures since its launch and continues to witness encouraging response. The hospital also achieved important clinical milestones, including Tripura first leadless dual chamber implantation and the state's first subclavian and vertebral artery stenting procedures. Supported by these specialized capabilities, Agartala is witnessing increased patient inflows from Bangladesh as well, further strengthening its position as an emerging medical value travel hub for the region. The hospital saw a slight decrease in occupancy because of geopolitical reasons, but the overall ARPOB grew by 70% to INR 41,573 on account of higher-end tertiary care work. At ILS Hospital Howrah, we were able to significantly increase our revenue by 31% compared to last year and increase our occupancy levels by 16%. We continue to strengthen our orthopedic franchise through the MAKO robotic knee replacement program. The encouraging response to robotic-assisted joint replacement surgeries has enhanced the hospital's clinical positioning while supporting improvement in ARPOB through a higher share of complex procedures. We remain focused on steadily improving occupancy while expanding the contribution of specialized surgical services across the hospital. Coming to ILS Hospital Raipur. Our first hospital in Central India has continued to scale up operations in line with our expectations. During the quarter, we further strengthened our service portfolio across oncology, chemotherapy, renal transplants, onco surgeries and cardiology. We have also conducted our first liver transplant operation, becoming one of the few hospitals to achieve this speed in just over a year of commissioning. The hospital added another feather to its cap being recognized as an NABH hospital in a record time of just 13 months. The bed occupancy for this hospital improved to 17% compared to 7% of same period last year. Supported by its strategic location and asset-light operating model, Raipur remains on track to achieve operational breakeven while steadily expanding its reach across the surrounding catchment area. Our expansion plans also continue to progress well. Construction of our 155-bed tertiary care hospital at Jamshedpur remains on schedule and is expected to be commissioned during Q4 FY '27. The project represents another important milestone in our strategy of expanding across -- access to quality tertiary care across underserved markets. In addition, we continue to evaluate opportunities for our seventh hospital, which will increase our network capacity to over 1,000 beds in the next 2 years and further strengthen our presence across Eastern and Central India. Let me now take you through our financial performance for the quarter. During Q1 FY '27, revenue from operations stood at INR 126.2 crores, while EBITDA was INR 26.2 crores, translating to an EBITDA margin of 20.4%. Profit after tax for the quarter stood at INR 12.7 crores, with a PAT margin of 9.9% [ performance ]. Our performance during the quarter reflects the resilience of our mature hospitals, supported by healthy patient volumes, improved occupancy and a favorable case mix. At the same time, our newer facilities continue to progress in line with our expectations as they move through the ramp-up phase. Looking ahead, our focus remains on executing a disciplined growth strategy through capacity expansion, stronger clinical capabilities and prudent capital allocation. We are ramping up our Raipur hospital, progressing the Jamshedpur project and evaluating opportunities for the seventh hospital, which will expand our network beyond 1,000 beds over the next 2 years. At the same time, we will continue to strengthen our high-acuity specialties, expanding our transplant programs and investing in advanced medical technologies. Our growth strategy is centered on building right-sized hospitals in high-potential underserved markets, improving occupancy and asset utilization and maintaining a balanced specialty mix. Backed by a healthy balance sheet and disciplined execution, we remain committed to delivering sustainable earnings growth while targeting long-term ROE and ROCE of around 25%. I would like to thank our doctors, nurses, clinicians and every member of the GPT Healthcare family for their dedication to delivering quality patient care. I also extend my sincere gratitude to our patients, shareholders, lenders, business partners and all other stakeholders for their continued trust and support. With a strong presence, a growing network and a clear road map for expansion, we are confident of creating sustainable long-term value while strengthening our position as a leading health care provider in Eastern India. With that, I conclude my opening remarks and request the moderator to open the floor for questions. Thank you.

[Operator Instructions] The first question from the line of [ Saumya Raghuvanshi ] from [ Nirva Securities ]. As there is no response, I'm taking the next question from the line of Rucheeta from C.J. Shah Group.

So, sir, my question was on the Agartala hospital itself. So, we are seeing geopolitical conditions, but we've been confident that in spite of that, we'll be able to increase our occupancy. So, what are we missing here? Like are [ insurance ] taken or you're not seeing any -- just wanted to understand that.

Thank you for your question. So the Agartala Hospital is improving every quarter. We are seeing improvement in ARPOB and occupancy levels. Last quarter, there was a certain amount of dip in the occupancy level, and that was purely on account of the local elections in that area. There were tribal elections because of which the state had restricted movement during that phase of almost a month, which impacted the overall patient flow. That is what I meant by geopolitical conditions. Apart from that, we are seeing significant amount of patient inflow and increase. In fact, last month, we did one of our highest revenues ever in that hospital. So the hospital is on the right track. We are increasing our productivity across all disciplines and spectrums in that hospital.

So sir, last month, what was the occupancy?

Last month, we had an average occupancy of almost 51%.

Okay. So it's improving. And by this year-end, is that target intact or we have kind of recalibrated?

We are in line with our original target and are confident we'll be reaching that.

Okay. And in July, was it only Agartala where you saw very good revenue? Or were there other hospitals which did better than what we have been doing earlier?

We are continuing good momentum across all hospitals. Quarter 2 does become a seasonally favorable season for health care, and that has its impact across all the hospitals as well.

And Raipur, what are we seeing? Is it improving above the 17% threshold?

Raipur is also continuing to grow. We are adding new specialties and verticals in its product offerings almost on a monthly basis. Like I said in my speech as well, we conducted liver transplant there last month. We are doing kidney transplants also. So, there is a vast addition of spectrum of services being added, and that is adding to the overall growth of the hospital.

And we saw that in July as well, higher than 17% occupancy.

Yes.

[Operator Instructions] The next question is from the line of Abhishek Maheshwari from SkyRidge Fund.

Congratulations on good numbers. Just a follow-up on previous participant's question. You've explained the occupancy dip in Agartala, but this blended increase that you've seen in ARPOB for Agartala and Howrah both, is it majorly because of the new high-end treatments or you took calibrated price increases across all treatments?

We have not had any tariff increase in any of our hospitals. Our tariff increase generally happens in the month of October. This is probably an effect of incremental change in case mix. We have been focusing a lot on high-end tertiary care, including cardiology, oncology, neurosciences, which is giving an impact in the blended ARPOB being increased.

Okay. Good to hear. So, this is not a one-time thing. Going forward, this would be the strategy.

We hope this will continue, yes.

Okay. Secondly, can you share Raipur loss during the Q1? It was minus INR 3 crores during Q4. Any update on Q1?

Q1 has been minus INR 3 crores. We expect it to taper down throughout the year.

Right. And sir, anything on the Jamshedpur hospital apart from that, any other cities that we were thinking of [ land acquisition ] ?

We are constantly evaluating greenfield land acquisition opportunities in these areas. It is just a matter of the right opportunity clicking. We have to be mindful of multiple factors, including location, pricing, et cetera, for the right hospital. So, we are evaluating opportunities and are hopeful of clicking something in the near future.

[Operator Instructions] The next question is from the line of Parth Kotak from Plus91 Asset Management.

Firstly, congratulations on a great set of numbers. A couple of questions from my end. One, Raipur, we've seen occupancy ramp up quite encouragingly. What should be our exit occupancy for Raipur?

We expect to close the year at around 30% occupancy at Raipur.

Okay. Perfect. And sir, lastly, if you can share the debt, has there been a meaningful change in our debt position because of Jamshedpur? Or is it the same as last year?

It is the same as last year. Jamshedpur will see an incoming debt, but that will happen in this FY. That will be to the tune of around INR 25 crores.

[Operator Instructions] The next question is from the line of [ Anush Kashyap ] from [ AP Capital ].

Congratulations for the good set of numbers. Sir, I wanted to know that there is a change in the government in the state of West Bengal and Kolkata as such is heavily government organization like really still command of the army, MNS, railways and everything. And sir, in our total revenue, we don't have any government -- our government segment of the revenue is very small. Do you think in the absolute future, are we looking to press the accelerator on it? Like, sir, there is a [ general problem ] of the region? Sir, what is your take on it?

Thank you for your question. Yes, there has been an encouraging change in governance in West Bengal. That being said, our hospitals in West Bengal are not very big and do not require government patients to support the overall financial metrics of that hospital. As a result of that, we have never really focused on government patients, be it from government corporates or from the schemes. That is the reason why we have not focused on it at any point. Even now, we don't really see a need to change our strategy and focus on these patients because they come with a delay in payments and lower ARPOB numbers for sure. So in Calcutta, we've not really seen the requirement to do that. If a requirement does arise, we would be open to it.

Okay, sir. You are right, sir, because our ROC and ROE will suffer otherwise because inventory -- like the payment days will get delayed, sir.

[Operator Instructions] The next question is from the line of [ Sahil Sharma ] from [ DD Capital ].

Sir, I have some questions with me. First question is that the company continues to target long-term ROA and ROC of around like 25%. So beyond improving occupancy, what are the biggest levers to achieve this target over the next 3 to 5 years?

Thank you for your question. So yes, occupancy increase is one of the main reasons. Apart from that, we have also been focusing on lower length of stay, higher ARPOB patients by changing our specialty mix and adding higher-end coronary care services. That is also something, which has already started giving results. As you can see, our ARPOB has significantly ramped up on account of the change in specialty mix. And our length of stay has also gone down across all hospitals because of our focus on higher ARPOB, lower stay procedures. Apart from this, the newer expansion, which we are focusing on is also on an asset-light basis, which should impact the ROCE positively as well.

Great, sir. Understood. And like would you consider providing medium-term guidance on occupancy and mature hospital revenue growth like similar to what larger hospital peers have started doing?

We'll request MUFG to get back to you on that.

Sorry, sir?

I will request MUFG to get back to you on that.

Okay, okay. Sure. And one last question is like regarding the proposed 7 hospitals. Has the company shortlisted potential cities? And also, should investors expect another greenfield hospital? Or are you evaluating acquisition opportunities as well?

We have been focusing on the Tier 1 and Tier 2 cities of Eastern India. These include cities like Cuttack, Ranchi, Patna, Banaras, Prayagraj. We have been evaluating both acquisition opportunities and greenfield opportunities in these areas. So depending on the right location and the right price, we are hopeful that something should click in one of these cities.

[Operator Instructions] The next question is from the line of Nilanjan from TCG AMC.

Just a quick one. You mentioned something about asset-light businesses. Could you clarify what you mean by that?

Sure. Thank you so much. So by asset-light, I meant, for example, our existing or newly commissioned hospital of Raipur is on an asset-light model where the developer has customized the building and given it to us on a long-term rent. Similarly, the Jamshedpur hospital also, which is coming up is on similar lines where the developer is making that building to a specification and giving it to us on a long-term rent. As a result, the investment in the real estate has reduced significantly, and we are investing more in medical assets and allied finishing. That is what I meant by asset-light basis.

Okay. So that's -- and that's the model you're going to adopt, I guess, going forward?

We are not fixated on that model. This model has been successful for us in Raipur and in Jamshedpur. Going forward, it is really a factor of the location. If the location has an existing asset which can be converted to an asset-light model, yes, we would go for that, but we are not opposed to an acquisition or a greenfield.

[Operator Instructions] The next question is from the line of [ Pranay Shah ] from [ Carron Capital ].

Elevating to the previous question, where we take on a long-term rental basis, sir, what would be the rental we would be paying for the -- we are paying currently for Raipur and for Jamshedpur will we paying for?

So the Raipur rental is in the mid-30s. It is as per the market area, market standard. Similarly, the Jamshedpur rental is around that much only completely based on the market feedback around the mid-30s.

Okay. And what was the reason, sir, for the drop in occupancy in Dumdum and Agartala also, sir?