Metropolis Healthcare Limited (METROPOLIS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Q4 and FY '24 Earnings Conference Call of Metropolis Healthcare Limited, hosted by JM Financial. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amey Chalke from JM Financial. Thank you, and over to you, sir.

Yes. Thank you, and good morning, everyone. On behalf of JM Financial, I, Amey Chalke, welcome you all for Metropolis 4Q FY '24 Earnings Call. With us today, we have the Metropolis senior management team, represented by Ameera Shah, Managing Director; Mr. Surendran Chemmenkotil, CEO; and Mr. Rakesh Agarwal, CFO. I will now hand the call to Ms. Ameera ma'am for her opening remarks. Over to you, ma'am.

Good morning, everyone, and thank you for joining us on the Q4 FY '24 earnings call. Today, I'm joined by our CEO, Surendran; Rakesh Agarwal, CFO and SG, our IR advisers. We've uploaded our updated results documents on the stock exchanges and the website, and I hope everyone had an opportunity to go through the same. Talking about the industry trends, the diagnostics sector is expected to grow at about 10% CAGR over the next 5 years. The organized segment of the industry is estimated to grow at a faster pace, marked by a transition from unorganized entities to larger organized care. Between 2020 and 2022, the industry also witnessed an influx of new entrants, attracted by the perceived high margins and return profile. However, most of them had realized that while entering the market is easy, scaling our profitable revenue poses a significant challenge for new entrants. And while aggressive pricing can play a role in creating the wellness market, it has not proven to be a [indiscernible] A-listing. Health care players have the hope of acquiring customers via wellness and then converting them to A-list customers. However, the conversion rate [indiscernible] low single digit. And therefore, these players have also now increased prices of wellness packages. Even globally, companies like [indiscernible], which were focused on wellness in '23 and being focused on wellness DNA testing have been struggling as very few businesses into pure wellness space build credibility amongst doctors or net profit. On the contrary, Metropolis and similar established players have benefited from an increase in post-COVID wellness trends and having strong brand recognition and developing an omnichannel plan have been able to increase the share in the wellness segment. We've also seen hospital change into diagnostic segments in regional pocket where we believe their consumer brand is relatively stronger. While the perception is that they already have lab testing infrastructure on DoctorConnect, and therefore, can easy pivot into diagnostics, the reality is that in health care, each area is executed on and doctors perception of expertise doesn't translate easily from hospitals to pathology experts. Also hospitals face some inherent structure challenges like the difficulty in attracting prescriptions from specialized doctors outside the hospital due to fear of patients loss to the doctors inside the hospital. Also another challenge they face is on account of differential pricing inside and outside the hospital. With these continuing challenges, hospital entrants have largely focused on B2B business for routine and semi-specialized space by using aggressive pricing strategy, which tends to be focused on the tail end of the B2B customers who care more about pricing over other areas. While competition persists in the space, there has been a recent trend towards reduced competition intensity and no rational pricing strategy. Interestingly, the emergence of organized players in the industry has prompted a noticeable shift in customer attitudes towards organized diagnostic players. As a result stand-alone labs operating in the unorganized sector have experienced a decline in market structure. This shift highlights the growing preference among customers for the reliability, efficiency and use of technology offered by the organized entity. Trending a specialized diagnostics business is all about your expertise behind the scene. It's not only about offering the largest test menu but having the institutional knowledge for testing in each therapeutic area that produces a better quality report compared to others. At Metropolis, we are focused on the fastest growing therapeutic areas such as transplant, neurology, nephrology, gastroenterology, oncology, et cetera. Additionally, to the future review, we are investing deeply to build world-class testing in areas like genomics and molecular diagnostics which is the future of the industry. Looking at these trends and opportunities in the industry, the opportunity for Metropolis is to continue to outpace the industry and peers, which will happen via organic and inorganic growth. For accelerated organic growth, we will do the following: We will focus on being the pioneer in new test enhancement and amplify our engagement with specialty doctors to grow our specialty volume. Number two, we will also expand our collection center network in the new cities, which will be largely Tier 2 and Tier 3 markets of India. Three, we will heighten our service standard and digital market initiatives to improve the productivity of existing centers. And four, we will expand our B2B preference not only in India but also to new markets outside India using our global reference lab in Bombay as a specialty hub for testing. This will be an asset-light model, which will be moving samples from outside India to Bombay for testing. When we look at inorganic growth, we will assess M&A opportunities for three lessons. Number one, we will acquire firms where we can get cutting-edge capabilities and skills within the technical testing skills and sales through our large distribution network. Number two, we will acquire ethical and strong local brand B2C players in market but we don't have a strong consumer plan in order to establish a foothold to growth. Many of the local firms lacks prudence in capital allocation and scaling operations to the next level. We intend to evaluate such targets nationwide and do multiple bolt-on acquisitions that will create accelerated growth. This would largely be in the regions of north and east but also could be in specific cities in south and west as our industry is hyper local and not regional in nature. And number three, we could look at acquiring good quality brick-and-mortar firms, which are subscale and making inadequate profit and use our management skills and advanced testing capabilities and strong brand recognition to scale these businesses and turn them around. For multiple acquisitions, we adhere to predefined internal parameters encompassing IRR, growth prospects, EBITDA, PBT margins along with drawn on capital and return on equity to assess possible acquisition. Thankfully, there has been a moderation in valuation expectations compared to the COVID period, and we will be open to using options of internal cash accrual, external debt and our own stock to complete deal. We will be financially conservative in allocating capital or raising debt. Currently, we see a fair number of opportunities to buy assets, which meet our strategic and financial checklist and to capitalize on this opportunity of consolidation, the company plans to alter its dividend payout from historic 30% to 35% of tax to 15% to 20% of tax for the next couple of years. Cash will be retained by the company for accelerated growth opportunities in terms of selective M&A, which we believe will fuel growth in the future. Once these growth initiatives are successfully executed, we will restore the dividend payout of historical levels, if not higher. Should there be a case of nondeployment of the fund for M&A, we will prudently return to cash for reputable option. Over the past 2 decades, we have successfully completed 23 acquisitions along with strategic high profile and have generated high IRR for the company. While most were done at very reasonable valuation, it will be integration and the ability to drive a high organic growth from them that really form part. Since the integration of our most recent acquisition, Hitech, core revenues have shown significant growth and with synergies and operational efficiencies, we have been able to enhance EBITDA margins also by 4%. Going forward, we are confident in our ability to do deals at fair valuation and integrate them well and execute plans to generate positive IRR from a traveler. Over the past many years, my focus has been on professionalizing the company and to accomplish this as an augmenting our talent pool from within the health care domain and from outside. In pursuit of this objective, I dropped Suren on board approximately 18 months ago to spearhead our business execution efforts. With his extensive background is running scale to consumer-facing and distribution operations, Surendran has assumed full responsibility for driving the implementation of Metropolis strategy. Over the past 15 months under his guidance, Metropolis has grown faster than industry and peer and significantly broadened its geographical presence setting the base for future growth. Mr. Surendran and CXO team now firmly established and demonstrated a strong track record of execution results. We believe it is the opportune moment to delineate and separate government from operations and run the firm as a promoter-led and the professionally managed company. Promoters in India who have successfully done this before has generated large value for shareholders, and I believe this is the right direction to go for Metropolis as well. Accordingly, as I will be transitioning into the role of an Executive Chairperson and Whole-Time Director. In this capacity, my responsibilities will encompass driving the strategy of the business and monitoring it, strengthening governance, strategizing capital allocation, including driving M&A activities, acquiring talent and fostering the culture of Metropolis. Meanwhile, Surendran, our CEO, will lead the execution of all our operational initiatives by reporting to me. Surendran and I have worked together in this construct for the past 15 months, and we complement each other well. Together with our strong Board, we will prioritize governance, strategy and sustainability initiatives aiming for even greater achievement. Let me also take the opportunity to thank our Founder and Chairman, Dr. Sushil Shah, who will now transition into the role of Chairman Emeritus. Under Dr. Shah's leadership, Metropolis has emerged as a trusted pathology brand earning recognition from both medical professionals and consumer solidifying its position as an industry leader. Dr. Shah's visionary leadership, commitment and dedication have been instrumental in shaping the company's success. In his new capacity as Chairman Emeritus and Director on the Board, Dr. Shah will continue to provide invaluable guidance to the Board and team, drawing upon his extensive medical experience and expertise to offer mentorship. We express our heartfelt gratitude to Dr. Shah for his years of service and support in propelling Metropolis to global heights. With this, I hand over the call to Surendran to take you through the quarter and the year gone-by and give some flavor of our strategy for FY '25 and beyond. Thank you, and over to you, Suren.

Thanks, Ameera, and good morning, everyone. Let me take you through the business highlights for this quarter gone by and along with the strategies going forward. For quarter 4 '24, we are happy to report 11% year-on-year growth on reported revenues and a 15% year-on-year growth in our core revenues with corresponding volume growth of almost 7 percentage and on 7% on account of product mix change in realization benefit. We have delivered industry-leading volume growth over the last 9 quarters and are optimistic about the growth trajectory going forward. Our B2C revenue have grown faster at 20% year-on-year basis and quarter 4 with a volume growth of 7% and the 13% increase in RPP, attributable to the recent price increase implemented in January and shifts in product mix. We are pleased to report that the price hike has been effectively absorbed. And despite this increase, our volumes are maintained at a growth rate of 7% plus. Alongside our revenues from Mumbai market have grown by 20 percentage, underscoring our increased market share and brand pull in our core geographies. Our specialized and wellness testing grew by 17% and 22%, respectively, on a year-on-year basis, in line with our strategy of expanding our specialized and wellness business. Despite some competitive intensity on B2B side, we have been able to grow our B2B revenues by 11% for quarter 4 with corresponding volume growth of 7%. The discounting in the B2B segment has reduced as compared to full year '23 and B2B volumes have grown positive recovery. More and more players are preferring trusted labs with experience on the track of better service and quality of diagnosis. Let me shed some light on the network expansion and outcome of the same. Over the past 2 years, we have dedicated efforts to extend our presence across India. In the last 12 months, we have added 24 new labs with 7 labs added in the last quarter. Our plan for the current financial year entails addition of another 25 more labs in strategic locations to target underserved markets, thereby aiming for accelerated revenue growth and market share expansion. In tandem with lab expansion, we are focused on expanding our collection center network and distribution channels. Full year '24, we have added more than 550 centers, including 150-odd centers in the last quarter alone. Our footprint has expanded from 307 towns in April '23 to 600 towns by the time we exited last year. With all these efforts, we have been able to grow our revenues from other cities by 34 percentage for the quarter 4 and 28 percentage in full year '24, respectively. Growth from the other cities largely on the back of growth in revenues from Tier 2 and Tier 3 cities. Our new labs are also showing robust growth over the last 2, 3 quarters with revenue contribution of 4 percentage for the full year '24. In addition to prioritizing network expansion, volume and revenue growth, we have placed equal emphasis on efficiency, productivity and margin improvement. We are pleased to announce that our reported EBITDA margin stood at 25.5% for the quarter 4 '24. Prior to factoring in CSR and ESOP, this is 26.5%. And if we add back the dilution cost in the short term by the new lab, our EBITDA stood at 27.4% for the same period. We maintain an optimistic outlook regarding the sustenance of quarter 4 margins in full year '25. Upon the completion of our accelerated lab and network expansion by the end of '25, we are anticipating that the enhanced revenue stemming from both existing and new labs will further enhance our margin profile post full year '25. Speaking of our organic strategy, we have been focusing on basically 4 or 5 big things, infra expansion into new markets to target accelerated growth with lab, network and expansion of distribution channels. We have been focusing on technology transformation, both on the front end, consumer-facing for convenience to customer experience with improvise and also to strengthen our back-end, digital infrastructure to improve our service levels. With increased focus on technology and digital marketing, we have been able to acquire new customers via the digital route and revenue contribution led by digital channels has showed robust growth in full year '24. We have also revamped our 2 health wellness packages to suit right for consumer needs with focus on bundled testing packages, curated for specific target audience and also upselling to existing customers. We have also taken multiple initiatives to enhance our service levels for B2B customers. We have set up dedicated relationship managers and special programs for our B2B clients, along with centralized help desk, B2B partner portal for strong support system, et cetera. As a result, we have seen an increase in B2B volumes with rationalization in discounts over the last 2 to 3 quarters. Lastly, as highlighted by Ameera earlier, we have strengthened our leadership bench, simplified the organization structure and have fortified our organization's capacity for efficient planning, execution and leadership continuity. The wealth of experience and diverse background that these senior professions bring from various industries enriches our collective knowledge, knowledge base and enhance our ability to navigate complex challenges and seize the opportunity. Their contribution extend beyond formulation of strategies and play a pivotal role in executing the road map ahead of us. Going forward, is the brand strength of Metropolis, talent pool, trusted partners for doctors and consumers, coupled with aggressive expansion plans foray into adjacencies with opportunities of inorganic growth, we are optimistic of outnumbering the industry growth in terms of revenue growth and profitability. With this, I'll hand it over to Rakesh for the financial update. Thank you.

Thank you, Suren, and good morning, everybody. Let me share some of the key financial performance for the quarter. Reported revenue for quarter 4 financial year '24 stood at INR 313 crores, a growth of 11% Y-on-Y. Our core revenue, excluding revenue for COVID and COVID allied and PPP contract grew by 15% Y-on-Y for Q4 financial year '24. Our core revenue for financial year '24 grew by 13.3% Y-on-Y with 9% volume growth and approximately 4% on account of price increase and product mix change. Reported EBITDA for the quarter stood at INR 79.7 crore as compared to INR 69.2 crore, a growth of 15%. The reported EBITDA margin for Q4 '24 stood at 25.5%. EBITDA margin adjusted for ESOP, CSR and new lab margin dilution stood at 27.4% for Q4 financial year '24. EBITDA for the full year stood at INR 84.6 crores with EBITDA margin of 23.9%. One-off expenses of INR 6.8 crores has been booked on account of whistleblower and Aam Aadmi Mohalla Clinic provision for financial year '24. PAT for the quarter stood at INR 36.1 crores with margin at 11.6%. PAT for the full year stood at INR 128.1 crores with 10.8% margin. Moving on to balance sheet. We are happy to share that we have paid all our debt in the last quarter and had 0 debt as on 31st March 2024. We have a net cash surplus of INR 117 crores as on 31st March 2024. Our working capital days have reduced from 14 days on March '23 to 7 days on March '24. Our OCF to EBITDA has improved by 3% and stood at 105%, indicating a higher cash conversion cycle. The company has aligned the accounting year of its 4 overseas subsidiaries with the Indian accounting year with effect from 1st February 2024. Because of this change, the accounting year for the purpose of consolidation, which will henceforth be 31st March, for that transition year, that is financial year '23/'24, the accounting impact of this change is an increase in revenue of INR 18.27 crores and PAT by INR 0.4 crores. That's all from my side. With this, I open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Anshul Agrawal from Emkay.

My first question is on the quantification of any sums that we would be keeping aside for this M&A activity in the next 2 years?

So currently, we have, I think, approximately INR 120 crores cash on our book, if I'm not mistaken, Rakesh. And we'll obviously be using this internal accrual plus raising debt or using stock of equity. It's difficult to obviously quantify an amount as of today because there are a bunch of things being evaluated. But my sense is that if we ever do look at raising debt, we would not look at it beyond 2 to maximum 2.5x our EBITDA. And if we were to use obviously stock of currency, then that could potentially play out well as well if the stock price is valuable for us. So I don't have an exact number for you at this point because there are many things in the pipeline. But we'll obviously look at each deal from an IRR and ROCE, ROE perspective.

Got it. And while you have outlined the strategy behind selecting these M&A targets, would there be any specific region that we would be planning to target?

So as I mentioned, we have 3 strategies for the M&A and one of them is our geographical expansion strategy, right, which will finally be in. We would look at obviously north and east, which are the markets where we would like to expand to a sort of a B2C route. That's one of the opportunities that we are sort of looking and one of the lens of M&A. But these are, as I said could also be in south and west of India because there are still markets in south and west certain cities in which we may not have a strong B2C brand. And entering those markets may also be useful. So I would say primarily north and east but also south and west for the geographical expansion strategy. The other 2 strategies, which are about technical capability, which obviously could be anywhere in the location in the country and the third one, which could be a regional player or any other kind of player, could be in any part of the country because we're looking at taking businesses which may not be necessarily providing the kind of profit on their own, either because they're subscale or need better management and picking those up and actually sort of being able to turn them around under our management skills and scale of customers.

Got it. My second question is on any indicative broad margin guidance for FY '26 post our network expansion plans?

See, I think we are comfortable with our Q4 margin. We believe that we will be able to sustain that into the next year and hopefully try to expand it as the volumes grow and we're able to execute some synergies. So I think 25.5% to 26% margin cumulative, I think, is sustainable.

This would be reported margins, right?

That's right.

[Operator Instructions] The next question is from the line of Amey Chalke from JM Financial Limited.

Ma'am, there was a period when nationalized diagnostics change where we impacted with the qualification of e-commerce players who are cutting the prices. Now we are seeing the trend where most of the nationalized chains or larger chains who are having good physical presence are outgrowing the market. Is this only linked to pricing in your assessment or anything else which is also driving this trend?

See, I think when health tech firms came in, it was during COVID or some of them which had started just before COVID, and it was a black swan event that really gave rise to digital usage, which obviously we saw it in many industry players. We saw it in ed-tech, we saw it in food tech, we saw it in many industries, right. And we saw it in health tech as well. Now mostly because a lot of the unorganized centers were closed because they couldn't operate due to lack of employees, et cetera. And it gave rise to more of the home testing, home collection, especially for COVID. Now in some industries, obviously, that could -- that trend consistently sustained. But in our industry, once COVID sort of came down, people actually preferred to go into brick-and-motor labs and actually give their sample. While the home testing, home collection has grown compared pre-COVID, it has still a minority share compared to more people walking into brick and mortar. So pricing was never really the key. Even at that time, the health tech firms used convenience as a way to really drive their business. What they used pricing for was for wellness, expanding of the wellness market. Because in the wellness market, there's no need and you're actually doing a push product to create a need of preventive health care. And when they used pricing to create that kind of awareness, as I mentioned, it helped the incumbents a lot because it actually created a new market that didn't exist before, which was a preventive care, which was earlier a very small market. So there's actually been beneficial to the incumbents as well. But that preventive care market while it's growing fast, it is not growing at the pace it was growing in COVID anymore. So I think for the health care firms really now the question is about where should they really play, what is going to be really unique -- what they bring to the table? And I think many of them are figuring out what that means for them. From our perspective, pricing has never been the most important thing in health care. Because at the end of the day, you fall sick once or twice a year. And the more sick you are, the more critical your illness, you're really not looking at who's giving you something INR 50 or INR 100 cheaper. You're looking at who has best labs to get the best diagnostics usually recommended by your doctor so you can get treated quickly. I hope that answers the question.

Sure, ma'am. And the second question I have is on the expansion side. You have been saying that we are adding around INR 20 lakh, INR 30 lakh over 1 year. Why not INR 40 lakh or INR 50 lakh or why not INR 10 lakh? What is it that decides this number? Generally for businesses, there is a capital limitation to expand or management mandate or maybe a lack of a part of it or some of them are not ready to take the financial hit. What is it in our case that decides these factors organically? How much labs will we be adding going ahead? How do we decide?

I'll give you my input and Suren can come in as well. Look, in my opinion, the only reason there's no science behind this number INR 30 lakh is that earlier we were -- until about FY '19/'20, we were only adding about 4, 5 labs a year. You have to remember the lab is only a factory which does the testing. So demand generation really happens. When you go to the customers, you build collection centers and you are able to build the demand and build collection centers. The hard part is not in building a lab. Could we set up 100 labs in a year? The answer is yes. The question is, can you generate demand in all those locations because for an average lab, you need at least 20, 30 centers and B2B customers to be able to fill that lab. So really, it's about getting the right quality of talent on the front end, training them and to be able to go and scientifically sell to doctors and generate that demand and set up those collection centers. Unlike other industries, which have ready distribution, whether it's pharma or modern trade, in our industry, we have to set up each distribution point. So it's not like a product that we just push through an existing distribution. So really, that's where the time goes in getting to right talent training and setting up the distribution and generating income. Suren, anything you want to add to that?

No, I think you've covered it all, Ameera. I think if at all, I can add one more thing is see setting up the lab does, I mean, start from the day you start working on the infrastructure of the lab, but it actually starts up more than the year before. We have to enter into a city. We need to familiarize with the Metropolis reports and we need to get the channels appointed and then we do start getting some level of customers and revenue from that market. And once the revenue reaches a particular level, that's the time when we start looking at putting up a lab there. So I think the whole process takes a little -- it's slightly time-consuming, and it's based on analytics. It's based on a lot of hard efforts. And hence, it may be prudent for us to do it more judiciously and at the right places and at the right pace. So like Ameera said, the previous 2 years put together, we have set up 30 labs. And last year alone, we set up 24, 25 labs. So we definitely speeded up the process and this year, again, we are going to put up another 25 labs. So the required speed has almost has been brought in. And once we get this as our norms and even if there's an opportunity to get into any other market in the coming years, we will look at it. But otherwise, we are pretty happy with the current pace and also our ability to turn around the new labs into profitable ones in the -- about 2 years' time.

[Operator Instructions] The next question is from the line of Kunal Randeria from Axis Capital.

So Ameera, just one of the points you made that a sick patient definitely looks at quality and not really the price. So while I'm completely with you on that. But on the wellness front, do you think the pricing is a lot more important factor than it is in safeness and perhaps where some of the online labs would have an advantage over traditional players?

Sure. See, on the wellness side, if you remember, there is no one kind of customer. There are different kinds of customers, right? If you look at the customer segmentation, you have a more health conscious customer or brand conscious customer who's not educated and aware. Usually, they will prefer scheduling a health checkup once a year and they're going to spend INR 2,000. They are not thinking, let me go and spend only INR 1,200 with somebody new who have not experience and take a chance on my health check because you have to understand why are you doing a health check is to find something early that you are able to then treat so that it doesn't become a much bigger issue. So there is a large amount of trust that is required whether it is in illness or whether it is in wellness. But in wellness because the doctor is not involved, consumers can be a very variety. So the health conscious, educated customer will still choose a brand which they are trusting. Slightly less aware customer may say that look, let me go on price because [Foreign Language]. That might be their perspective. And those people, those customers who have a wrong perception that all results are the same may go for a lower price and choose somebody who is sort of giving a more discounted price, right? But finally, the question is that if it's being done at a discounted side, is there a structural cost advantage that health tech players have? And the answer is no. Actually, there is nothing differently being done that makes it cheaper, only probably the levels of quality control and quality will be different between the top incumbents and maybe some of the health tech players. Now there's no structural cost advantage in actually doing it the way they are doing it. And therefore, it is about burning cash in the short term to acquire customers and then hoping that those customers will come to you again and again or hoping that those customers will convert to illness, and that's how you'll recover your money. So I think it's more of a difference in business model than I think it was really a structural cost advantage that they have.

Sure. Just taking forward from there, does your B2B business include some business from the online players?

I'm sorry, I couldn't hear you.

So sorry, I meant does the B2B business include the business from online players, and they may order have been generated on the website, but you would be -- maybe your lab would be analyzing the sample.

Yes. So the B2B business includes some of the online price and aggregators, but that contribution is very, very low for us. It's largely through the B2B labs and hospitals that we generate revenue on B2B segment.

Sure. Sure. And just one more question if I can. So just taking forward the discussion on lab expansion. So I think in the previous quarter, you had shared that you've added somewhere, I think 50 labs in the last 3 years. And these 2 acts a dilution to your EBITDA margins, it's around 100, 120 bps, right? So the fact that you are going to add more labs in the future, does your sort of guidance speak these expansion plans for the next 2 to 3 years?

Yes. So like I mentioned in the last year, the 24 labs that we added at the EBITDA dilution of roughly 1%, right? And the next 1 year also, we will add another 25 labs, and we will have an equal amount of dilution of the EBITDA of 1%. But the guidance that we have said, 25.5% to 26% is already considering that lab addition-related dilution. So that's how it will go. Maybe after full year '25 and beyond that, and I think our lab addition may not be at this pace, and hence, we will be able to see a little more expansion of the margins beyond full year '25.

Sure. But any maybe indicative number you can give at beyond '25, how many you plan to add and what part of the country you're targeting?

We will be adding around maybe 6, 7, 8 labs beyond '25. And we will go to specific markets that we want to penetrate further. And this number could be definitely well under 10. That's our current estimate.

Got it. Got it. And sorry, just one more if I can. Ameera, Mumbai is the biggest market, yet your revenue has been growing in double digits. I just want to understand what has been driving it? Are you adding more centers? Or is it more packaged steps. How is it, and what should we expect going forward?

Let me answer this for you. Basically, 3 things. One is our distribution expansion in Mumbai continues, right? And we are expanding enough number of service centers and collection centers in Mumbai, and we still see there's a good opportunity going forward, and we'll also get into the peripheries of Mumbai. And we believe that now we could rather set up a collection center for every 2.5, 3 kilometers in Mumbai. So we really clearly see an opportunity to further expand in Mumbai, and that will continue. And the second one is, of course, we are our specialty business, Mumbai has got all the top of the hospitals in the country, and hence, in our engagement with the doctors in the top hospitals is getting amplified and we are trying to expand our business on the B2B segment also here. So -- and also the third thing is our existing centers. We are not allowing the productivity of the existing centers to drop despite the increase in the number of centers that we're adding. So we have a very, very clear and dedicated focus on expanding the productivity of the existing centers. So a combination of these three things as what is actually driving our volumes in Mumbai.

So can you remind us how many centers you have in Mumbai and how do you plan to add in the next 2 to 3 years?

Mumbai, we have about 430 centers we have in Mumbai, and we want to take this number to 500 plus in the coming year or so.

[Operator Instructions] The next question is from the line of Shyam Srinivasan from Goldman Sachs.

Just the first one is, Ameera, on the opening remarks, you talked about the 2 kinds of competition. I'm just more interested in the hospital-based competition, right? So if you could elaborate, I think you made two points, but just elaborate one was on B2B and the other one was the dissidence between pricing of hospital labs versus outside -- inside and outside. So if you could just clarify on those two points or elaborate on that, please.

Sure. So if you see today as a customer, if you walk into a top sort of 20, 30 hospitals, you will find the prices of pathology of test inside these hospitals are significantly higher, you can say, 50% to 100% higher compared to, let's say, Metropolis or other incumbent prices outside. So there is a much higher pricing when you actually go to the hospital and do these tests. So when hospitals go outside to consumers, some cases they're choosing to have a lower pricing than they go to consumers outside. But that, as you can understand, creates a business for customers and for consumers, right? Because there's no logic why or there's limited logic why the pricing is so different inside and outside of hospitals. And that actually limits the hospital's ability to actually control the pricing outside because they already have very high pricing inside the hospital. So that becomes one structural problem and one fundamental issue for hospital. The second issue for hospitals that I mentioned was that you have to remember that the hospital business is about bringing patients to a hospital and then doing everything under the edges of the hospital, right? But so there are doctors which are sitting outside, there is a gynecologist sitting outside the hospital. And that gynecologist refers that patient to the hospital. The worry will always be that listen will the patient then go to a gynecologist inside the hospital. And therefore, there is sometimes that has to be a concern for doctors outside the hospital to refer those patients to the hospital or to the hospital collection center. So these are the 2 structural issues that hospitals may face and in the B2C side of the business. And therefore, I was saying that many of them have focused much more on the B2B side of the business. And either they are going to small hospitals, nursing homes, like those in INR 5 lakh business, INR 10 lakh business of topology per month and trying to do management contracts for these small hospitals, which we find in our experience tends to be a very, very poor margin and poor receivable or -- and therefore, we don't do that business much at all or it tends to be on the B2B side, where you're going to the customers which are on the tail end. Because if hospitals go to the other top hospitals and say, you give me your business, there's a competition there, so that doesn't happen. So they have to go to the labs which are the unorganized sector to say that, look, why don't you outsource a thyroid or a vitamin D, more common test to me, and that tends to be more price-sensitive. So these are some of the sort of challenges that come up with the B2C and the B2B side for any business.