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

Ladies and gentlemen, good day, and welcome to the Jupiter Life Line Hospitals Limited Q3 and 9-month FY '25 earnings conference call. [Operator Instructions] Please note that this conference is being recorded. This conference may contain certain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Dr. Ankit Thakker, ED and CEO of Jupiter Life Line Hospitals Limited. Thank you, and over to you, sir.

Thank you. Good evening to everybody, and thank you for joining us on our earnings call late Friday evening to discuss our business and financial performance for the quarter and 9 months of FY '25. I hope you could look at our financial results and presentation which have just been posted on the website and stock exchanges. I am accompanied by Mr. Anand Apte; our Chief of Business and Strategy, Ms. Falguni Shah; our Business Controller and Ms. Suma Upparatti; our Compliance Officer and Company Secretary. We move to the updates of this quarter. As part of our IPO objectives, we had an aim to establish new hospitals to take the total group tally to about 2,500 beds in Western India. We have already spoken about our Dombivli and the second Pune Hospital, which has given you visibility of 2,200 beds. We are now pleased to announce the acquisition of over 2-acre plot of land in Mira road. This will mark our sixth hospital and the third in the MMR region. This land was procured from the open market through a local landlord financed entirely through internal accruals and equity reserves and has a cost of approximately INR 75 crores. Our plan is, as always, to establish a full-service multi-specialty quaternary care hospital, which will have a capacity of around 300 beds. The projects estimated CapEx will be about INR 400 crores which will include the land. The financing of the remaining CapEx will be subject to the planning approvals, Board approvals, et cetera which will be communicated to you from time to time. Mira Bhayandar region is a densely populated residential locality with a significant unmet demand for quality health services. Currently, the area lacks comprehensive high-end health facilities compelling the residents to rely either on the local secondary care centers or they need to travel to Thane or Mumbai for advanced medical treatment. The new hospital we propose there will cater primarily to the micro markets of Dahisar, Mira Bhayandar and the Vasai-Virar region and will address a critical health care gap in that area. The second hospital of Pune in Bibvewadi has now received the regulatory approvals. And from next month onwards, that is March of '25, we hope to start construction for that hospital as well. The first phase with a capacity of 200-odd beds should be operational in calendar year '25 -- '28, sorry. The Indore hospital has recently added 78 new beds on 1st of January '25. This brings the total bed capacity in Indore to 309 beds. We have executed this 1 quarter before schedule. And the CapEx for this development was a little under INR 25 crores that translates to roughly INR 30 lakhs per bed for the new phase of construction. The Dombivli project is advancing as per plan and is expected to be operational around Q1 of FY '27. The numbers for this quarter, income for this quarter stood at INR 322 crores, which is a 17.7% increase Y-o-Y, EBITDA [ INR 76.4 crores ], which is a 21.5% increase Y-o-Y. The EBITDA margin this quarter is 23.7%. The PAT margin is INR 52.5 crores, which is a 20.1% increase Y-o-Y. The PAT margin is 16.3%. For the 9-month consolidated numbers the revenue was INR 934.8 crores, a 19.5% increase year-on-year. The EBITDA for 9 months so far is INR 218.3 crores again, a 22% increase. The margin -- EBITDA margin is 23.4%. The PAT is INR 148.6 crores increase of 13.2% year-on-year, and the PAT margin so far is 15.9%. The ARPOB for 9 years has -- this year has been INR 59,100 as compared to INR 53,600 in the same period last year. The ALOS is now 3.88% as compared to 3.92%. The occupancy for these 9 months was 66.7% compared to 63.2% last year. The overall volume has increased from [ 651,500 to 727,500 ]. The payer mix is Insurance represents 55.4% of the revenue, 43.5% comes from self-payers and government schemes at 1.1%. So these are the big highlights. With this, I open the floor for Q&A. Thank you.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amey Chalke from JM Financial.

Congrats to the management on good numbers. So first question I have, Ankit, is on the margin side. What levers do you have considering like Pune is also occupied about 35%, Thane is also more or less optimally occupied. So what levers do we have to improve margins, which would take like margins to [indiscernible] 35%?

So I lost your voice a little bit. But from what I could gather, you were asking for levers for margin expansion in all the 3 units. Is that correct?

Yes, yes.

Okay. So in Thane, there is just one lever that is inflation linked price hikes, in Pune, besides inflation-linked price hike, there is a second lever also for occupancy growth, which you could see that in this quarter is around I think 60% or so -- 65%. And in Indore, besides price hike and occupancy, the third lever is case mix optimization, which I believe should last for another year, 1.5 years. So these are the 3 levers in different units.

So our margins for Thane unit will be more than 25%, right?

It should be something like that, yes.

Got it. So sir, should we be assume that these margins are typically the optimal margin for the locality you are taking across doctors et cetera?

Correct.

Sure. And the second question I have is Thane particularly considering there was only 1 Jupiter corporate-driven hospital. Now 2 more are coming up, at least they have announced their plan. So in terms of talent, et cetera, you are comfortable? Or do you think that inflation could be there on account of the competition on the doctors and the nurses, talent, et cetera?

So I think Thane with a population of close to 30 lakhs or 3 million now has enough number of doctor representation out of those 30 lakh people who live here. So the native medical talent of pool in Thane is pretty high. And even today, there are, to be honest, very good doctors in Thane, who don't work with Jupiter, right? Because there is only as many who can be affiliated 200 or 300, 400 bed hospital. So I don't think either from the demand side or from the talent availability side, there should be any challenge either for us or for the newcomers. For the last couple of quarters, we have said that besides 1, even if there are a few more in Thane, the demand is sufficient to neither bother us nor bother the new entrant. So yes, that is -- we continue with our view.

And the second hospital, which is coming up is closer to the Ghodbunder road? Or where is the exact location?

Which one?

The second hospital, the land which we acquired, is it closer to Ghodbunder road or is it?

The Jupiter land you're saying?

Yes, yes.

Yes, so. Yes, you must have read Ghodbunder. So Ghodbunder is a -- not Ghodbunder road, it is the name of the area in Mira road, so it is in Mira road. It is not on Ghodbunder road. It is an area called Ghodbunder, in Mira road.

[Operator Instructions], we have the next question from the line of Pranav Chawla from Ambit.

Sir, can you just briefly highlight what are the hospitals that are there in our pipeline? And what will be the commencement timeline? And in every phase how many beds are we planning to get operational?

So I will definitely walk through it, but we have included 1 slide in the presentation for this. If you want to have a clearer picture at any date. Currently, we have 3 hospitals, Thane, Pune and Indore. Thane capacity is 377 beds, Pune, 386 and Indore is planned for 431 currently operating 309, so it has a scope to add 122 more. The new hospitals that are coming up, Dombivli is planned for 500 beds, Pune 200 and Bibvewadi is planned for 500 beds and Mira road is planned for 300 beds. So if you add all of them up, it goes to 2,494, which is close to 2,500 for all practical purposes. So that is the pipeline.

And which year do these hospitals come in?

Dombivli Q1 FY '26, '27, Pune sometime calendar year '28, Mira road sometime calendar year '29.

Okay. Sir, and what would be our case mix? What would be our largest therapies -- top 3 therapies?

So we are, what do you say, full-service multi-specialty hospital where you don't have any focused therapy area in any of the hospitals and all the branches are well diversified.

[Operator Instructions] The next question is from the line of Abdulkader Puranwala from ICICI Securities.

Sir, my first question is with regards to your expansion plans. So while we look at your history, you have been adding hospitals say, 1 hospital in each of, say, 2 to 3 years span, while going ahead, what we are talking about is having 1 new hospital almost every year. So what I would like to know is basically what could be the P&L impact of all the 3 hospitals coming in? And at same time, with the kind of the CapEx what you have lined up, which is nearly, say, INR 1,400 crores for these 3 hospitals. How do you plan to fund the entire CapEx?

Thank you, Abdul. So -- for the CapEx question, currently, we are sitting on something like INR 250-odd crores, INR 250-plus odd crores of cash on our books. And I told you that the 9-month EBITDA this year is INR 218 crores with whatever simple extrapolation you want to do over a 5-year period, you will see that the current cash and the internal accruals, which we will generate over a 5-year period will add up to the required CapEx number. So as far as we are doing these 3 hospitals because they are also greenfield, which means the money has to be invested in a staggered way, not upfront. We will be able to deploy cash as we generate it through the running hospitals. So we will be able to maintain the debt-free status and fund these 3 hospitals. At a future date, if there is something interesting in terms of opportunity, then the Board will evaluate it from time to time whether we need to fund more opportunity through debt, equity or whichever way. So that is on the CapEx question. The P&L question is that I think industry average currently is that most new greenfield hospitals in the country are breaking even maybe sometime in the second year with small EBITDA losses -- or some EBITDA losses in the first year. So from the current EBITDA numbers of the 3 hospitals you can project some blips in the first year of operation of each hospital and stabilizing in the second year and becoming positive in the third year. So with that, I think you will be able to build some kind of model.

Got it, sir. That is well understood. Sir, second question is with regards to your Indore. So now that you have been able to add -- beds a quarters ahead. When should we expect the balance 111 beds to be added at this facility?

So we've just added 78. We might add one more ICU about 10, 11 beds soon. But after that, there is no immediate plan to add more beds. So we were around 60-odd percent of occupancy before these beds got added. With the addition of these beds, we would have slipped into 50 kind of occupancy. Till we don't come back to 60%, 65%, we will not be discussing new bed additions. Once we reach that 60%, 65% occupancy, we'll think about new beds.

Got it, sir. And just final one, if I may. So with regards to your Dombivli now that it will be commercialized in Q1 of fiscal '27. So by what time would be the doctor hiring and other nursing staff will start?

So I think 1 quarter before 3 to 6 months before you start talking in the quarter before you start, you should start getting people onboard. So that is a typical timeline for all new greenfields.

[Operator Instructions] We have the next question from the line of Anjana Shah from Shah Investments.

So sir, I wanted to understand that a competitor is planning to enter the Thane market as our neighbor. So how do you perceive this competition? And what strategies do we maintain to have our market position intact?

As I answered in the earlier question that I don't think this is any great strategy, to be honest. I think the inherent demand itself is quite high in this region. And as the time passes there is a definite replacement of unorganized and secondary care, nursing home beds with organized and corporate, multi-specialty hospital beds. So a combination of the replacement of some beds, and the unmet demand will mean that neither us nor them will have to have any extraordinary strategy. It is just you are here to serve the needs of the community. And the community has a lot of unmet need. So yes, I think it is much simpler than you think.

Sure. Sure. Also, sir, we're working towards setting up 3 new hospitals. So with respect to funding, how do we plan to finance these? Would we like bring on some debt on the book? Or would we raise further equity or would it be like a mix of both?

So as I just answered Abdul for these 3 hospitals we will not need more debt. Internal accruals and cash reserves will be sufficient to fund them. If we do take on additional projects, then we may need debt equity or a combination of it. But when those opportunities arise, we will evaluate them at that point.

[Operator Instructions]. The next question is from the line of Anya Desai from Bright Securities.

I just had 1 question. Can you please share the ARPOB and occupancy rate for Q3 FY '25?

ARPOB and occupancy rates for Q3 FY '25 is with me, but I need to pull it out, hold on. So we have 65.7% of occupancy. The ARPOB is INR 61,750. And what was the third question?

No, that's it. I just wanted to know for Q3 of FY '25.

65.7% and INR 61,700.

[Operator Instructions] We have the next question from the line of Jigar Shah from Elevate Research.

Sir, I have a couple of questions. In 9-month FY '25, what was our total CapEx, excluding recent land acquisition?

9-month FY '25, what was our total CapEx, excluding the new land, you are saying?

Yes, yes, yes.

It should be around INR 100-odd crores, I think, towards Dombivli and Indore, I think. I don't have the exact number on me now, but it should be around INR 100 crores.

Okay. That helps. Secondly, with the Dombivli hospital set to commence operations in FY '25, what level of EBITDA loss do we anticipate during initial couple of years?

So we don't have a formal guidance on EBITDA loss currently. But we do think that first year should be EBITDA negative and second year should be EBITDA breakeven, that is what we have for now.

[Operator Instructions] We have the next question from the line of Karan Mehra from Mehta Investments.

Yes. Sir, most of my questions are answered. I only have 1 question. If you can provide some insight into the demographics of the Mira Bhayandar locality and how it influences our hospital growth potential. If you can throw some light here would be helpful.

Sure. So Mira Bhayandar, I don't know, are you from Mumbai?

Sorry.

Are you from Mumbai?

Yes, I am.

So you would understand some geographies I talk about. So you are familiar with Thane I guess. So just like Thane is to the Eastern suburbs of Mumbai or the central line of Mumbai. Mira Bhayandar is to the Western part of Mumbai. It is a dense residential neighborhood, which essentially houses people who go to work in Western Mumbai. It is not a commercial hub. It is mainly a residential hub. It is a very dense community. And it does not really have health care facilities of great stature today. Mira Bhayandar as a municipal corporation should have, I think, a population of somewhere in [ ZIP code ] of 15 lakhs then it is surrounded by 2 other dense areas. One is Dahisar on the South and the corporation of Vasai-Virar, Nala Sopara, Naigaon on the North. So with all of this together with -- in, say, 30- to 60-minute driving distance, you would again have a population of 2, 3 million, people who currently are essentially Mumbai heights in their mind, but don't have the facilities of health care in the place they live. So this is the problem that we are trying to solve.

Thank you. [Operator Instructions] I would now like to hand the conference over to the management for closing comments. Over to you, sir.

So thank you, everyone. I hope the questions were answered satisfactorily. If there are any more questions, you are most welcome to reach out to us or the SGA team, our IR advisers. I wish all of you a very happy weekend ahead. Thank you.

Thank you. On behalf of Jupiter Lifetime Hospitals Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.