Jupiter Life Line Hospitals Limited (JLHL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Jupiter Lifeline Hospitals Q1 FY '25 Earnings Conference Call hosted by Anand Rathi Share and Stock Brokers. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Binani from Anand Rathi Share and Stock Brokers. Thank you, and over to you, sir.

Thank you, Sejal. Good day, everyone. And on behalf of Anand Rathi Institutional Equities, I welcome all the participants on the call today. We have with us the management of Jupiter Life Line Hospitals to be represented by Dr. Ankit Thakker, ED and CEO of the company, along with the senior management team. So without any further ado, I would like to hand over the call to the management for their opening remarks, post which we'll take the floor open for Q&A. Thank you, and over to you, sir.

Thank you, Himanshu. Good morning, everyone. Thank you for joining us on our earnings call to discuss the business and financial performance of Q1 FY '25. I hope everyone had a chance to view our financial results and the presentation, which were uploaded on our website and the stock exchanges. I'm accompanied by our Chief of Business and Strategy, Mr. Anand Apte; our Head of Finance, Mr. Nitin Patodi; our Company Secretary and Compliance Officer, Ms. Suma Upparatti; and Falguni Shah, our Business Controller, along with SGA, our Investor Relations advisers on this call. We've had a good beginning to FY '25. All 3 of our hospitals have been awarded the gold tier for the NABH Digital Accreditation. All 3 of our hospitals are now also offering da Vinci robotic surgeries in addition to the robotic orthopedic surgeries that they were offering earlier. The CapEx for expansion is going as per plan. We have commissioned additional 22 beds in Pune on 1st July '24. The construction activity for our expansion in Indore has also commenced. We will be adding about 75 beds there. They are expected to be ready by the end of this financial year and commence operations in early Q1 FY '26. The construction in Dombivli is also progressing as per plan. Our second hospital in Pune has now begun application for regulatory permissions. We hope to secure all the necessary clearances in the next 1 or 2 quarters and then begin with the construction there as well. We shall keep you appraised of the progress on that front in our future calls. Coming to this quarterly financial performance, the total income for Q1 '25 stood at INR 288.6 crores, an increase of 18.2% year-on-year. EBITDA for the quarter stood at INR 65.3 crores, an increase of 20.9% year-on-year. The margin was 22.6%. PAT for the quarter 44.6%, representing a margin of 15.5%. The average occupancy was 63.9% in Q1 FY '25 compared to 57.2% Q1 FY '24. The ARPOB for this quarter was INR 59,700 and the ALOS was 3.76 days. So with this, I open the floor for question and answers, and I'm happy to discuss what you would like. Thank you.

[Operator Instructions] The first question is from the line of Aman Vishwakarma from PhillipCapital.

I just had a question on your robotics surgery. So are we seeing any sort of traction there because I don't believe a lot of insurance companies also cover this. So I mean if you could give us some insight on that.

So robotic surgeries, as I said, these orthopedic robotic surgeries we have had for a couple of years, and they have been doing well. They are covered by quite a few of the insurance companies. The da Vinci robotics has just been installed maybe around a month back. So it's too early to talk about traction. But we are in dialogues with insurance companies and quite a few of them have come on board to that as well. But as we have used it for more time, I'll be happy to update you on how it's going.

Okay. And just quickly on the ARPOB. So how are our ARPOBs in the robotic surgeries or da Vinci robotic surgery is different from our standard ARPOBs, if you could just give me a broad number?

So we don't really track surgery or procedure-wise ARPOBs or department-wise ARPOBs very closely. But broadly speaking, the consumables and the -- what do you say, the cost of using the robo would probably push up the cost of surgery maybe between INR 1 lakh and INR 2 lakh.

The next question is from the line of Karan Mehra from Mehta Investments.

A couple of questions. Sir, on a quarter-on-quarter basis, our revenue has been muted. So if you can please highlight the reason for the same?

So over the past calls and whenever we have spoken, this has been discussed that the seasonality as far as our business goes is to the tune of maybe around 10% or so with Q1 and Q3 being relatively weaker quarters. Q1 has traditionally been a weak quarter because a lot of elective work gets pushed out of the quarter because of vacations and things like that in this part of the world. So doctors want to travel, patients want to avoid what they can. And similarly, Q3, with the weddings and festivals and things like that, the lifestyle related procedures tend to get avoided in Q1 and Q3. So for those reasons, these 2 are traditionally weaker quarters. So this is as per expectation.

Okay. And sir, I believe -- so the occupancy at Thane Hospital was at around 69% in Q1. So this was on the lower side compared to previous quarters. So I believe the seasonality which you spoke, this is related to the same.

Correct. Correct.

[Operator Instructions] The next question is from the line of Nishi Shah from RH Investment.

I have a couple of questions. So are we planning any price hike in self-pay or in any of the hospitals in FY '25? And if so, when are we planning to hike and in which hospitals?

Nishi, so I don't think there is a plan of self-payer price hike currently in this year. We may do it at the end of the year or beginning of next year as far as the self-payers are concerned.

Okay. Okay, sir. And we added 22 beds in Pune Hospital. How much CapEx did we do? And further, is there any scope of adding a few more beds in Pune Hospital? Or have we reached the maximum capacity?

We just have a semi-finished ICU for 12 beds, which has to be commissioned in Pune. Apart from that, there's nothing more which we can do in Pune. So some of the CapEx for these beds was already incurred in the previous period where we had again finished [indiscernible] and part interior, et cetera. In the current quarter or 2, we have probably spent about INR 10 lakhs, INR 15 lakhs per bed for the finishing of these beds.

The next question is from the line of Ameya from JM Financial.

On good set of numbers. Ankit, the first question I have is on the expansion side. Last quarter, if I remember correctly, we had given an indication of adding one more hospital maybe second half of this year. So how things are panning out on that front?

So yes, you are right. We have a desire to add one more hospital in this financial year. We have a couple of negotiations underway, but greenfield projects mean that you have to first buy land. And in India, that comes with its own set of time lines. So today, I can't really give you a definitive answer about where it is and when it will come up, but we are quite optimistic that in this year, we should be able to do one more.

Sure. And if -- so far, we have Dombivli, which is coming in, in FY '27 or maybe a fag end of FY '26, then there will be another Pune Hospital, which is coming up. But for next 1, 1.5 years, how the growth would pan out and from where it will come from?

Yes. So Dombivli will come, then Pune will come and then the year after that, we hope the third one will -- we should be able to launch. So that is a longer-term growth pipeline. The shorter-term growth pipeline will predominantly be from Pune and Indore. -- with Pune still being at 53% of occupancy last year in Q1 has grown to 62% in this quarter. So it still has about a 10% headroom for growth in terms of occupancy. So Pune should contribute to growth over the next 1.5 years. Indore, similarly, from last year around 46%, 47% has grown to 57% in this quarter in terms of occupancy. So Indore has a headroom for growth. And plus in the next year, as I said, we'll also add 75 more beds. So on an expanded base, we will have a still bigger headroom for growth in Indore. So these are the 2 principal areas of growth. Thane, of course, is around 70-odd percent of occupancy. So its job is mainly to continue doing the performance that it is and continue generating the cash that it is in order to fund our future growth.

Sure. So assuming all these 3 hospitals get matured over, let's say, next 3 years, potentially, is it fair to say that we could reach 25% plus margin?

Yes. So around 25%, give or take, something is a respectable margin according to us, and that can be expected.

[Operator Instructions] The next question is from the line of Raj Mehta from Advisors.

Sorry for joining late. So I have a question on the robotic surgery part. So we have started robotic surgery across our hospitals. So can you please highlight which of the major divisions will get a benefit? And also, how will it improve our overall revenue?

Raj, so we did talk a little about this, but robotic surgeries will predominantly be for abdominal surgeries, for urology, for gynecology, for general surgeries, for cancer, for transplants. Predominant indications are these for the robotic surgery. And there are certain clinical advantages associated with it. So those will be passed on to the patient. In terms of revenue increase, I don't really think we -- at a blended consolidated level, adding 1 or 2 these kind of branches or services will have a huge or a meaningful impact for you to notice from the outside. So it is more of keeping in line with the medical advancements and offering the patients the best choices to seek their treatment.

Got it, sir. And on the location front, so apart from New Pune, which other locations are we looking for? So is there anything in the final negotiations?

Yes. So again, as I said, we prefer to remain restricted to Western India for this phase of growth. And we are looking at certain locations across Maharashtra and Gujarat. So yes, I think I really can't get into too much detail about the location of land because I don't want to engage in speculation. But as soon as we have something concrete to announce, I will definitely do this. We are optimistic to close something in this year.

The next question is from the line of [Harshal Patel] from Mirae Asset Capital Market.

I just have 2 questions to ask. One is for the Indore addition of 75 beds, typically, what would be the CapEx per bed that we'll be targeting considering that there is some bit of construction already being done?

For Indore, we'll probably incur INR 20 lakhs, INR 25 lakhs odd of CapEx for the new beds being constructed.

Okay. And sir, just one point to understand. On the NABH accreditation gold standard that we've got for all the 3 hospitals, from an understanding perspective, sir, does this by any way help us in pricing renegotiations with the insurance companies? Or what can be a benefit that we could see out of that?

No. So this is not done with a pricing angle in mind. It is more of continual quality improvement. So we have always been NABH accredited for the health care services. Recently, there is also an initiative to improve the digital spine of the hospital. And this is a new kind of accreditation initiated for the digital framework in the hospital. So we volunteered and got ourselves accredited on that front as well. So it is just a commitment to quality. It is not really done with the pricing angle.

The next question is from the line of Aman Vishwakarma from PhillipCapital PCG.

So I had a question on the case mix. So I don't think you already give out that data. So if you could give me a broad number of -- my question is on the case mix that you operate in. So I don't think you give out that data. So if you could give us a broad number as to what cases predominantly are -- something that we cater to?

Yes. So we are truly a full-service community hospital. So we do everything from child birth going up to transplant, oncology, everything. We don't really have a specific focus area in any of our hospitals. There is not a single branch which probably would go significantly above 15% or maybe not even 15%. So it is well diversified, and it is spread out quite evenly.

Okay. And just I think excuse my ignorance, but this has been answered previously. I mean, so how are we seeing that ARPOB growth coming through going forward? I mean if not the case mix, do we expect any other driver to drive the growth in ARPOB?

Yes. So Thane and Pune ARPOB will predominantly be driven only by inflation now. In those case mix will have some role to play. So when I say case mix, it is complexity and the frequency of complex procedures. So in a -- let's say, when you start a new hospital on day 1, you may not be doing everything, right? On day 1 of starting a new hospital, for example, you may not have a liver transplant team. But over the years, once your gastroenterology, pathology gets established, then you start doing transplant. But the day you -- so that is an introduction of a new complexity in case mix, which is at the higher end of the spectrum and which can improve your ARPOB. The second driver now, which is happening in Indore for case mix is that you have a transplant team. But the day you have a team, they don't start becoming fully busy or occupied, right? They take a couple of months or years to fully settle down and get fully utilized. So that is the second driver of case mix. That is the frequency of use. So currently, Indore is in that second phase. The first phase of introduction of new specialties is pretty much over. The second phase of getting matured into doing more tertiary and quaternary work is underway. So maybe for another year or 2, Indore will see this case mix driver. After that, Indore should also slide into this inflation-linked growth orbit.

Okay. Got it. And just lastly, on our doctors. So I mean, are we doing anything different to attract more talent to Jupiter, I mean, giving out there -- I mean, so what is the structure like to hiring and retaining them broadly?

I don't know if I can give you anything concrete on that front. It is -- there are a lot of things which are cultural in nature in terms of manpower engagement of all kinds, doctor included. So yes, I really don't have a short answer to this question. But we do have a strong team of doctors in all our units, and we have a very, very low attrition rate in doctors, maybe very, very low single digits. So I don't know if that helps you.

The next question is from the line of Aditi Sawant from ADM Advisors.

I have a few questions on the Dombivli Hospital. So just wanted to understand that as of Q1 FY '25, how much CapEx we have incurred for that hospital, including land?

So we have incurred about INR 95 crores on Dombivli so far.

Okay. And have we started tying up with doctors for the same hospital like when that process usually starts, I just wanted to get a sense on that. And what steps will you need to take to attract footfall initially?

So no, we haven't started engaging with doctors yet. It is too early for that. We'll probably start one quarter before we are ready to operationalize. So that should be a good enough of a time to start team building. As far as attracting footfalls, so I don't know if you're aware of the geography of this region, but kind of an extended training area north of Thane. So both in terms of doctors and the residential community, Jupiter is quite well known and respected as a high-quality provider. So we will definitely enjoy that brand recognition once we start there.

The next question is from the line of Ruchi Gupta from Value Capital.

I have 2 questions basically. And I want to ask you the experience in Indore hospital. Do you think that we will be able to add one more in that location?

So Ruchi, currently, there is no plan to add one more in Indore. But the experience is very encouraging, and we are getting extremely strong feedback and response from the local community and the doctors both. But currently, there is no plan to add one more in Indore.

Okay. All right. One more question. Sir, can you please share demographic of both the locations, which are there at Pune?

So you mean geographical distance between them, what do you want?

Demographic of both the locations.

Demography -- so first one that we are operating now is in Baner, which is west of Pune. That area is a relatively newer developed area of Pune, which is predominantly driven by the IT growth, which happened. So with Hinjewadi on the far west and then Baner, Balewadi, Sus Pashan, Bavdhan these parts of Pune subsequently have developed very, very strongly. So this is a relatively younger and the newer part of Pune with a significantly dense new population. As against that, the new location, which we are doing is in south of Pune, which is a very, very dense residential population, not much commercial activity happening there, but very dense residential population, which is not very new, but the traditional part of Pune. And both the locations are probably maybe around an hour away as a driving distance goes.

The next question is from the line of Rohan from Anand Rathi.

Congratulations on a good set of numbers. So I just had one question. So post 1Q, what is the net cash available with the company?

So net cash at the end of this quarter should be something between INR 250 crores to INR 300 crores.

Mr. Rohan does that answer your question? [Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

So thank you very much for joining us on this call. I hope that we have been able to answer all the questions satisfactorily. But if you need any more questions or clarifications, please don't hesitate to contact our IR team, and they should be able to connect you and answer the questions. Thank you so much. Good day.

On behalf of Anand Rathi Shares and Stock Brokers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.