Unihealth Hospitals Limited ($UNIHEALTH)

Ladies and gentlemen, good day, and welcome to H2 FY '26 Results Conference Call of Unihealth Hospitals Limited, hosted by Kirin Advisors Private Limited. 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 are not the guarantees of future performance and 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 [indiscernible] from Kirin Advisors. Thank you, and over to you, ma'am.

Good day, everyone. On behalf of KirIn Advisors, I welcome you all to the H2 FY '26 Conference Call of Unihealth Hospitals Limited. So management team, we have Dr. Akshay Parmar Founder and Managing Director. Now I hand over the call to Dr. Akshay Parmar for opening remark. Over to you, sir.

Thank you, Saki. Good day, everyone, and thank you for joining us today. FY '25, '26 has been a landmark year for Unihealth Hospitals and a significant step forward in our journey to build a leading integrated health care platform across India and East Africa. Throughout this year, -- we remain focused on expanding our health care footprint, strengthening our clinical capabilities, enhancing operational efficiencies and creating long-term value for all our stakeholders. I'm pleased to share that we delivered another year of group which was strong and driven by healthy patient volumes, increasing demand for specialty health care services, improving utilization across all our facilities and continue the momentum across our hospital operations and allied health care businesses. Our diversified model, spanning hospital operations, health care consultancy, pharmaceutical exports, medical value travel and health care infrastructure development continue to demonstrate its scalability and resilience. Looking specifically at second half of FY '26, consolidated total income grew by 18.4% year-on-year to INR 67.5 crores. The EBITDA increased to INR 24.2 crores and while profit attributable to shareholders grew by 19% to INR 10.7 crores. Despite investments towards expansion integration initiatives, we maintained a healthy profitability and continued to generate strong operating performance across our businesses. For the full year FY '26, consolidated total income increased by 34.6% to INR 137 crores. EBITDA grew by nearly 49% to INR 58.8 crores, and profit attributable to shareholders increased by approximately 83% to INR 25.8 crores. EBITDA margin expanded by 400 basis points, 42.9%, reflecting the strength of our operating model, better service mix operating leverage benefits and disciplined execution across the organization. Beyond financial performance, FY '26 was transformational from an expansion perspective. During the year, we successfully commissioned our Navii Mumba Hospital finalized the lease for our upcoming 200 Nasik facility and completed the acquisition and commissioning of UMC Hospital in Entebelanda. These milestones have significantly strengthened the platform and doubled our overall bed capacity from approximately 200 beds at the beginning of FY '26 to around 400 beds today. While Africa continues to be a key pillar of our growth strategy, our health care facilities in Uganda are witnessing increasing patient traction across specialties, supported by growing health care awareness and rising demand for quality medical services. We also achieved an important clinical milestone during the year with the first successful IVF to invert at UMC Victoria Hospital highlighting the growing capabilities of our specialty health care programs and our commitment to delivering superior patient outcomes. In India, we continue to lay a strong foundation for our next phase of growth. The commissioning of Navi Mumbai and the progress on the Nasik project reinforce our confidence in the long-term opportunity within India's health care sector, rising health care expenditure, expanding insurance penetration, demographic trends and the increasing need for quality health care infrastructure continue to create a favorable environment for sustainable growth. As we move into FY '27, our focus will be on accelerating utilization across our expanded network, integrate newly added facilities strengthening specialty and social care offerings and driving future operational efficiencies with a larger health care platform, a stronger balance sheet, expanding clinical capabilities and a clear road map for growth . We believe Unihealth is well positioned to capitalize on the significant opportunities across both India and East Africa. We remain committed to our mission of providing quality, affordable and accessible health while creating sustainable long-term value for patients communities, employees and stakeholders. Thank you, and I will now be happy to take your questions.

[Operator Instructions] First question is from line of [ Nilesh Thakar from Profit Tundra Financial. ]

Sir, I have a couple of questions. Like in last con call, you mentioned about the Tanzania second care facility, which will be operational by FY '26 and there was 1 more proposal for 100-bed facility, which was in advanced stages of takeover. So any update on that, sir?

Sure. So the second care facility or the specialized hospital, 20-billion facility, which is coming up in Moana, the infrastructure is completely ready. We have applied for the licenses with the regulatory authorities in Tanzania, and we are waiting for their feedback to come in right now. We are expecting that license to come in any time in the next 3 to 4 weeks following which we will be commissioning services. There has been a delay of about a quarter. This was mainly because Tanzania had the general election with 5-year central government elections in November, December, I think early November, due to which post mid-September, all the bureaucratic offices were nearly in a shutdown, they resumed only post the Christmas break in mid-Jan. So there was a significant backlog at year-end. Unfortunately, in Tanzania, the committee which approves these licenses, they meet once in a quarter. So we had to lose out on 1 quarter before we could get the licenses. But now the application has been submitted and we are just awaiting their approval. The first site visit has happened. We are waiting for the second site visit, which is part of the entire process following which the licenses should be received. So hopefully, in the coming 4 weeks or so, the licenses should be there with us and we should be in a position to commission services. With respect to the 100 bedside hospital that we had mentioned in the previous con call, the commercial discussions and negotiations with the counterpart have completed and have concluded the draft agreements are being shared between the 2 parties. We are now waiting on the legal and statutory approvals and the replies from the counterpart. The entire process in Tanzania for this is likely to take another 2 to 3 months following which we should be in a position to sign the dotted line and take over the operations. Since it is an existing facility, the moment we take over, there will be addition of revenue and a lot of other benefits for the group. We will be undertaking -- the existing facility in a course of to quarters after we've taken it up. So that's the update on the Tanzania front for both the 20-bed specialized hospital and the negotiations of the discussions for the 100 bit Toshiki hospital in that is [indiscernible] .

My second question is regarding that -- I was just going through the segment results actually, especially Uganda. There is a dip in revenue by around 17%, but PBT is a drop by almost 46%, sir? Any liight you can throw in that will be really helpful, sir.

Yes. So one, there has been a dip in H2 from -- in the ganirevenue. The main reason for that is twofold. One, again, there is a Christmas break, which comes in Uganda or practically almost entire Africa, where from tenth of December till almost mid-June, there is a significant lean period that we experienced because people who can afford usually tend to travel out for holidays out of Africa, people within the city, local African local citizens. They also tend to go to their native place or the village out there. to celebrate Christmas 1 wants to be in the hospital. So other than emergency cases, a level of elective work gets pushed on to beyond the Christmas holiday. This year, just like Tanzania, even Uganda had their 5-year elections, which were held on fifth of Jan. So practically, the Christmas break extended till almost the end of January, the results were, I think, a week post 15th of Jan. -- following which things started resuming and opening up. So from that perspective, we did lose about 1.5 months of good productive period because of which there has been a consolidated dip in the overall revenue for H2. Now the decrease in PAT is more substantial. There are 2 reasons to this. One, after we have a particular breakeven revenue, anything beyond that usually contributes to 60%. That revenue contributed to 60% towards the profit margin. With a dip in the overall revenue, the erosion at the PAT level is significant because the fixed cost remains the same. So that is 1 reason. Second reason is that we have undertaken significant infrastructural expansion in that project. So there's been a lot of expense towards maintenance upgrading wheat in rooms, upgrading the operating rate rooms, which is an ongoing process. So a significant part of that expense was taken up during the second half of the year because we've upgraded the almost 10 years since we commissioned it initially. So from that perspective also, there's been added on expenditure towards the maintenance of the facility, which was recorded in H2 of this financial year, which also has increased the expenditure a little bit and contributed to the dip in the corporate after tax.

Sir, my last question is regarding the Nasik and Mumbai facility, sir. Like if you can just give a rough throw some light on like when this both will be like breakeven? And any -- like broad guidelines like next 2 years, how the growth will be going further -- going forward will be really helpful.

Surely. So Navi Mumbai was commissioned as a soft launch in October 2025. but we received the critical licenses related to allowing us to operate our ICUs only by the middle of Feb, I think 15 to 16 was when we received last license, which allowed us to open up ICU. So we have been fully operational since mid of Feb in terms of critical services. In terms of the surgical load, we've been able to do significantly well. We've been able to ensure that significant critical procedures in the cardiac space, that is the cardiac bypass in the neurosurgical space is trading out to me. All these kind of procedures have now been successfully done. We recently delivered first robotic total replacement also. So from that perspective, the revenues have been growing, the occupancy at Marumbi has been growing. And we expect to operationally breakeven in Navi Mumbai sometime by the end of quarter 2 of this particular financial year. That's by 30th of September. That's the internal target where we expect and anticipate operational breakeven for the NaviMumba facility, considering the numbers that are there right now. The initial average revenue per bed per occupied bed that we were expecting in Navi Mumbai was in the late 20,000, about 27,000. But we've been able to achieve higher average revenue per occupied bed in Navi Mumbai at present as well. So from that perspective, it has given the team significant confidence that going forward, we should be able to break even by the end of the second quarter here. In terms of nothing the update is that we are expecting above hospital registration license to be received anytime in the coming 5 to 10 days on the higher side. Coupled with that, our FDA license for operating the pharmacy in the required licenses to operate the ultrasound and CT MRI machines are also anticipated to be received by the end of this month. So we should be in a position to commission that facility for services by the start of the coming quarters as the first week of July is what we are targeting. Once we do that, we targeted operational breakeven period for that surety will also be within 12 months. Once the facility has been commissioned first quarter has gone by, we'll be in a much better position to understand the dynamics on ground of how they are shaping up. how the occupancy is growing and how the average revenue per occupied bed is being realized by the company. But yes, this is what we are looking at and anticipating. In terms of our basic guidance, Navi Mumbai facility for this financial year, we will be targeting an average occupancy between 55% and 62% of this trend. The average revenue per occupied bed that will we target for it would be in the range of about INR 32,000 to INR 35,000. This is the revised target from the earlier INR 27,500 to INR 30,000 that we were looking at. And this is precisely based on the revenues that we are generating right now. from the occupied bed at Navi Mumbai.

And like just broad guidance next 2 years, how we should look at the growth because they're like we are actually adding in Tanzania, 100-bed then and I think Nasik will be operating at. So next 2 years, how we should see crowd if you can give us some light in it.

So the target is the same that we have been sharing with all the stakeholders since 2023. But in the next 2 years that by the calendar year end 2028, we will be targeting 1,000 commission beds, of which we understand that by -- as of now, we were 400 beds by the end of this financial, we will be inching towards roughly around 600 beds or so in terms of commission bid capacity. So if I look at 2028, I would have 600 commission beds, which will be either -- which would have broken even operationally or would be towards the mature stage and another 200 to 400 beds, which would have been commissioned in that particular year. So on an average, if I'm looking at 60% occupancy on a consolidated basis for all those beds put together. And maybe on a lower side, about 55%. I'll be looking at about 500 beds, which have been occupied. The targeted revenue per occupied but again would be some in INR 30,000 on a consolidated basis, which would amount to, say, about INR 1.1 crores on an annual basis. that would be the target that the team has set end for the calendar end 2028, that's FY '28, '29 in terms of the top line. Since we are a mix of some facilities which are now fairly old have broken even or operationally mature and are expanding the margins. On a consolidated basis, as a mixture of mature facilities and recently commissioned facilities, we do expect the margins to be in the early 30s even at that stage and we would have about 250, 300 mature beds, 200 beds, which would have broken even and about 300-odd beds who should have been recently commissioned. So in that mix, we do expect the EBITDA margins to stay around the early 30s lease on a consolidated basis. So yes, that would be the approximate thought process for the company's management and move towards 2028.

[Operator Instructions] The next question is from the line of Deepak from [indiscernible.

Congratulations on a great set of numbers. With very, very question, Akshay. So what is your rationale for building hospitals in India. You've been a leading player in Africa. Why are you not excluding African market instead, which has a big huge gap. I understand India also has a big opportunity in terms of health care. But why India and not rollout in Africa.

2 or 3 important is: one, the 3 stands strong where the routes are -- so for nil, the routes have been in India. So as we started growing, we realized that perhaps India is something that we would want our presence to be felt. But more importantly, I mean, that was on a lighter note. More importantly, Africa is a very interesting space. But the challenge out there is we're talking about 54 countries in the continent. Each country with diverse socioeconomic and geopolitical backgrounds and risk factors. So all in all, there are about 5 to 7 countries where investments are worth the money, majorly concentrated in East Africa, where our focus is. So we are expanding rapidly in Africa, but the challenge arises in scalability -- so while Africa has high margins, the scalability for the next 5 years is going to be limited in terms of bed capacity. We cannot look at a 5,000-bed strength in Africa alone because 2 challenges arise. One is the paying capacity Second is the limited population in each country. So if I'm looking at Uganda, it has got a population of about, say, [indiscernible] people, 55-odd million people, of which the paying capacity boils down to a very small percentage. And to cater to those requirements, then on the higher side, about 200, 250 beds will be good enough. So each country that we go into, depending upon what the health care scenario in that country is -- so Kenya, which is a national health insurance of Tanzania, which has a national has insurance, the bid capacity increases to, say, about 500-odd beds in that country, which can comfortably breakeven and give us very good returns. But beyond that, in that country, we see a bottleneck rising. So from that perspective, if we are to look at a longer vision of 5 to 10 years where we intend to have, say, 3,000, 4,000, 5,000 beds eventually as a group, then that scalability option is not there in Africa, which India has. Second, if I am to expand rapidly in Africa, there are 2 important aspects that we need. One, we need to control and optimize our supply chain management. Second, we need access to very good bench strength of manpower at the technical and the Doctors are fine in Africa, they're all trained in U.K., U.S., a lot of them in India as well. So local African doctors are well trained. It's not a challenge. The challenge arises when it comes to technical manpower, nursing staff and the administrative or the management manpower. And to create that good bed strength -- sorry, benching so that we can expand rapidly in Africa, we thought strategically India was a good base where we can have our hospitals. We can develop that manpower. And eventually, we can position that manpower into Africa whenever a new opportunity in the project comes up because that's the tried and tested manpower, which would buy the have absorbed the culture of Unihealth. and we would be very comfortable putting that manpower into Africa as compared to hiring someone very fresh and positioning them in a challenging environment in a relative term. So from those perspectives, we thought 1 was scalability Second was the requirement on a strategic basis where India plays a pivotal role as we expand. Third, geopolitically India beinga and Indian-listed entity. -- the comfort zone that a lot of our stakeholders will also actually have is going to be India. Lastly, when I talk about larger funds, health care is being dominated by a lot of private equity funds impact funds, whether it's in India or in Africa. So Unihealth is uniquely positioned where we've got a strong bandwidth in Africa, which all the other peers in India, though we've got a much larger size in India did not have that African angle yet. So while we are expanding from our existing capacity to 1,000 beds, the idea is in the first phase, we will be looking at an equal expansion where by the end of '28, we will be looking at 500 to 600 or 550-odd similar capacity in Africa, 400 to 500 beds, so that we are able to ensure higher returns from Africa and the potential to scale up rapidly in India.

Understood. Understood. Very well thought out strategy, Akshay, I must say. Just a related question to this. Since we don't enjoy that kind of brand equity with, let's say, a MAX or Apollo or let's say, any other hospital in the best joys, how would we generate demand in terms of how would we ensure that patient keeps coming to us? And what is the kind of speed spot that we are kind of looking at between all these players, they do we want to play in price point, which in terms of which particular specialty are we planning to play in this entire range -- specially in India?

The approach that we are looking at on the strategy is multipronged and multifold. In India right now is first phase one, what we've done is we rightly agree that the brand is not as well recognized as strong as we other peers in the market, whether it's Apolo Max, Medano Fotis, that is the limiting factor, but that we are playing to our advantage. In the sense that, one, we are limiting ourselves to a bed capacity between 50 to 200 beds. All these major players are right now targeting bed capacities, which are 250, 300 and beyond. So we want to be that big facility, which has the right mix of infrastructure. So whether it's a 50-bed facility in Navi Mumbai or 200 beds in Nasik, or 125 beds that we intend to put up in Pune sometime later. So all these facilities will be stand-alone multispecialty silica fully equipped with bioTheators, cat labs, the entire range of diagnostics state-of-the-art ICU. So in terms of infrastructure, we are positioning ourselves at par with the busy players, ensuring that the doctors and the patients, the 2 important aspects of ensuring that the business is doing well, are well catered to. In terms of doctors, we are able to give them the infrastructure that an Apollo or Fortis has. We are better off in terms of providing them with agility and flexibility that a larger corporate setup sometimes is unable to do because of a variety of factors. So that is something that we are able to cater to we are able to allow them to thrive and prosper from a commercial perspective also in a better manner as compared to the larger corporates. There is a very big chunk of doctors in the age bracket of 35 to 50 which is stuck in the midrange. You go to an Apollo, you've got a head of unit or a head of department who is in the mid-50s. He's got another 15 years of active life. So that seat is not going to be empty for another 10 or 15 years more or so. Now someone who's in the late 40s is very well equipped. So at that point, he is doing well in terms of money. He's got a good patient base, but that fame and the name that he wants. That is something that he is not seeing in the coming future in Apollo or Max or Medanta, that is where we are also positioning ourselves. So we are able to give them that bandwidth. From the patient's perspective, we are focusing more on the quality of care. So I'm not debating whether an Apollo quality of care would be substandard or Fortis quality of care that be an issue. What we are looking at is with a smaller setup, we are able to optimize the protocols in a much better manner, ensure that the patient to attendant patient 2 staff, patient-to-nurse ratio is better off that their requirements are created to in a faster manner because I would unlike a hotel or a restaurant, a patient will never try again. One bad experience is therefore like -- so you had 1 bad experience. You do not come back or go back to that hospital. That is what we are trying to avoid at Unihealth and create that as a -- so these are some of the aspects on which we are playing. Obviously, the rates are an important factor in all of this because that's the entry point. So yes, we are positioning ourselves significantly in a cost-effective manner as compared to an Apollo or a Fortis or the immediate geographic competitor that we have in the particular city that we are. So depending upon what their offering, we are better of -- so the patient is at an advantage. We are allowing the doctor some flexibility. Now what happens in a corporate hospital is the doctors get a bunch of patients. There are doctors were very famous who get patients who are from the highest stat of the socioeconomic ladder, and we also from the lower start of social economic ladder. We are not able to cater to the lower half at that hospital because the corporate cannot provide that kind of a flexibility in terms of pricing, in terms of the commercial aspect. Plus there is a fear in that particular patient that goes and gets admitted to a large corporate setup, the bill is going to go out of his hand. So that is again somewhere where we're able to successfully convince the doctor to give UMC that chance and get that patient and we honor the commitment that we made to the router because our overhead is significantly lower. Our head of department are, I would call them in age bracket, which is at the senior managerial level at an apple today. So from that perspective, my overhead cost, my admin costs are better off than Apollo. So I'm able to play with the pricing of tart better without impacting my profitability long run.

Next question is from the line of [ Priyam from Trinetra Asset Management. ]

Sir, I just wanted to understand, so we had a plan to sort of decrease that referable days over time in the Africa business. Just wanted to understand how is that working out and India the sort of immediate results that you can see maybe in 7 or so.

Right. So yes, the intent was there to reduce the receivable days -- now the strategy was twofold. One, definitely, we are banking on the revenues and the lower receivable days that are going to come in from the new ventures, whether it's NaviMumbai Nasik or Tanzania at a later date. So all these put together on a consolidated basis, the receivable days in these projects are going to be significantly lower than we are experiencing in Uganda. So on an overall basis, the balance sheet is -- and the cash flows are going to be much better as we inch towards the next 4 to 6 quarters. So that is 1 strategy that is getting played out because in 2023 post Wisting itself, the management was very clear in its thought process that in this 5-year period, while we're undertaking rapid expansion, the idea was also to limit our exposure in terms of the contribution to the tokeconsolidated top line from any 1 geography outside India to less than 1/3. So right now, though, Uganda is contributing almost 80%, 85%. And we go forward into this financial year, the contribution from India is likely to increase significantly with Navi Mubai, Nasik being functional. Hopefully, Tanzania will start joining in from Q3. And all of that put together will ensure that the percentage contribution from Uganda comes down. So despite the reliable days and Uganda being significantly higher, on a consolidated basis, the balance sheet start becoming stronger, the cash flows start becoming stronger. That was one, a 5-year vision that the company had charted out in 2023, and we are successfully moving towards that. The second was over the last 2 or 3 quarters, -- this will be the fourth quarter. Is that as the government van payments itself were being structured such that as compared to what they were paying earlier in a quarter they were trying to ensure that those payments get doubled or tripled up every quarter. So over a period of 4 to 5 quarters, they're able to bring down the receivable days from 320 or to about somewhere around 200, 180. That bracket, eventually, the target being 150 days. We achieved significant success still quarter 3. Unfortunately, because of the general elections, obviously, a lot of stances was there when it came to quarter 4 of the financial year -- the second half of quarter 3 and quarter 4, and that is where, again, the payments were getting delayed a bit, but we've received a communication from the document that all that delay is likely to get covered up between Q1 and Q2 of this financial year. So we are expecting a payment of about INR 9 crore to INR 10 crore in the coming week or so from the ministry. And post that, we are expecting a significantly larger chunk of payment to come somewhere in the month of July. That is what the communication has been to always put it across till the time the funds don't hit the bank. I don't want to start thinking out loud about it. The first payment, as I've mentioned, is already in process. So that is likely to come in line soon. The second 1 that they've promised in July, that is something that we'll have to wait and watch, but the intent is there. The reason also being that Uganda a few years back found oil, there's a very huge amount of investment coming in to develop that oil drilling and it's transferred from there to the port and Tanzania from where it's going to be shipped out. So there's a lot of point to that is coming in. from the Western countries, and that comes with certain riders as always. And 1 of the riders out there is that they have to improvise on some of these metrics that are there. So payment for health care service is 1 of those key metrics that the government is mandated to improvise over a period of 2 to 3 years, which in terms of intent, they've initiated doing it. The practical application, we may be able to see it only by the -- perhaps the end of this financial year.

Sure. Okay. No, that's good for hear. And so for Navi Mumabi is the annual run rate that we're expecting as of today? I mean it's been roughly 2, 3 months. How is the occupancy at the ground level in...

So the occupancy and the revenue at Navi Mumbai over the 3 months on an each month basis has increased by about 25-odd percent. -- again, in India, there's a typical saying that the month of April and May or mid-March to May is a relatively leaner period in health care. Reason being that in March, what we school exams going on, so no 1 wants to get the electric done, then you want to go to your holidays or your mama house how we put it. And that's again where the elective surgeries tend to be fewer in number the numbers start picking up from the end of May, just before the school reopens, which we've actually witnessed in Navi Mumbai. And now with the monsoon set coming in June, July and August is a period when there are likely to be significantly higher cases in the medical ICU or in terms of viral infections dengue, malaria, all of that. So all put together, the growth factor that we anticipate in the coming quarter is going to be somewhere around 30% to 40% because the base line is very small right now. But yes, the first 3 months, each month, we have grown significantly. For the financial year that we ended till 31st March, Navi Mumbai was able to contribute just INR 3 crores revenue which we would generate over a period of year a couple of months that we were fully operational. So we got the final license in mid-Feb. That is when we were able to open up our ICU. So typically, if I'm to say just about 2 months proper services, we were able to generate a rough occupancy of about 10% and a revenue of about INR 3 crores. The average revenue per occupied bed that we generated, we initially thought it would be something around INR 27,000, INR 28,000 that we've been able to generate in the early INR 32,000. INR 30,000, INR 32,000 is what we've been able to generate that is again a promising factor for us internally that we can look at breaking even faster than what we initially thought because the revenue per patient or the revenue per occupied bed is going to be slightly higher than we anticipated in our full cost.

[Operator Instructions] Next question is from the line of [ Hitesh Daga from CAGR Quest Capital. ]

Yes. I have just 2 questions. 1 is on the -- I think in [indiscernible] I think the pooling consulting service is a little bit -- so my question also to what is getting completed and what is the probability of us getting the management of that hospital. I'm assuming that the note they might outage management of those people to kind of -- is there a good chance that the remote or management contract and I'm assuming that the Pune facility that you were talking about, that's a greenfield. I think that's a phone separate from this one. And second question is around competition in terms of written the losses actually because we have been hearing that tenant's competition approaching of loan doctors taking place. And kind of what are we doing to kind of maybe -- part and in that situation, how do we get good doctors in a business?

Right. So PR, you rightly mentioned is a consultancy project that we've taken up. At present, that the total bed capacity for that project is roughly going to be about 750-odd beds. The project is broken up into 2 halves. One is a private win, which is going to be about 150 odd beds and the other 1 is a teaching hospital, coupled with medical MBBS, college. So that is going to be somewhere around 600-odd beds. The groundbreaking ceremony was done by Honorable Shri Amitji Shah Home Minister earlier last year, and we expect construction to begin the explanation to begin now. So by the time the project actually comes up for commissioning is going to be a good 5 years from now is what I'm anticipating it may be sooner by about 6 months or it may get debt 6 months. In terms of management of that particular project, yes, there is a possibility because it's being seeded by a nonprofit Section 8 company where the trustees of the directors are -- do not come from the health care service our ground, and they are all in an honoreposition. There is always a very strong possibility that they'll be looking at outsourcing the management. Now whether we stand a good chance, we stand a fairly good chance we have been associated with the projects since 2019 when it was conceptualized. So yes, it's a coin off, I would say that we are 51% there to put in a strong proposal from our side. But yes, only time will tell, we'll get that or no. In terms of our bed capacity expansion plans, if that happens, that is definitely Phase I for us. We are not considering that any time in Phase I because that project will go only somewhere around INR 2,031 or INR 2,032 -- so from that perspective, we haven't considered any of the possibilities of that bed capacity coming under our fold right now in our projections or our thought process or plans -- so that's about the PHRC part. Second is the part where you mentioned about retaining of doctors. So is the competition is tough. It's very strong. The challenge is there. So where we are working is 1 giving, like I mentioned sometime earlier, flexibility to a lot of doctors. So a lot of doctors have come up with challenges where they bought the patients but those patients are not able to pay for the services at a corporate hospital. They are looking at a price bracket, which is a little cheaper, they do not typically even belong to the charitable part of health care services. So they are better off than going to a government or or teaching hospitals, but they are not at par with the services costs at larger corporate. So that kind of patient base, the doctors need a playing area, which is where UMC is coming in to ensure that the doctors have the comfort we are investing heavily into infrastructure. So we are giving the -- like they said, the big boys, the toys that they need. So they are happy from the technological aspect part of it, they are happy from the infrastructure part of it then comes to the commodity part where we've given them flexibility and we are coupling it up with a system where their deals are settled on a daily to a weekly basis. So from a cash flow perspective, it is a little stressful on the company initially, but the doctors are very happy because now unlike a corporate, they are not running to the accounts department at the end of the month. to cross-sell their views and everything. The moment the patient is discharged the bills, the payments reflecting the bank account of the doctor. So that is also allowing a lot of doctors to develop a lot of comfort since we are an unknown entity when it comes to India. This is also a very valid thought process that the doctors have [Foreign Language] will we get our payments on time will be able to run around. So that is how we are navigating this -- and 1 good feedback from 1 good doctor pulls in another 10. So that is what we witnessed in Navi Mumbai where we've got more than 130 consultants on panel today. What we are also doing for these consultants is giving them a very strong on-ground full-timer team. So whether it's Navi Mumbai or whether it's going to be Nashik, we've got round the clock full-time senior doctors in our internal medicine department, in our general surgery, Orthoplix, spine and cardiology, which covers almost everything in terms of particular care. We've got a very strong intensivist who is there associated with Navi Mumbai, and we're going to follow the same pattern in Nasik and all the other facilities. So whenever a surgeon wants to admit the patient supposed to perhaps perform a cardiac bypass surgery. His job is going to be those 6 to 8 hours, post that for the next 5 days, it is the team in the hospital, which the hospital is providing, which becomes critical to the outcome for that patient. And that is again where UMC is heavily investing and ensuring that at manpower is of the top quality, we end up paying a little more for that particular bracket, so that the consultants are comfortable bringing in critical patients, operating them and being reassured that the post of care will not be compromised. So these are the factors on which we are playing to ensure that they retain the doctors are retained. But again, we are fairly new. So only after another period of, say, 12 to 18 months, -- these statistics will be absolutely clear on whether our strategy has been successful or we are looking at bottlenecks in this. But we are quite positive about this. And large factor is that being doctors ourselves, I mean, Dr. Anurag and myself be graduated 16 years back. So there's a lot of contemporaries, a lot of juniors, a lot of seniors who are now well established, and they are more friends and less of consultants in the typical - for us, it's fairly easy to pick up a call, give them the assurance, give them the comfort because we've known each other since almost 20-plus years now. And that is what pulls them in and then 1 good doctor pulls in 10 more. So that is how that entire chain has been created at UMC and that is how we're looking forward to banking upon it in terms of the differentiator between us and the competing corporate hospitals.

Next question is from the line of [ Chaitanya Gadia from prolific investments. ]

So just 1 or 2 questions. One, I wanted to understand that the Nasik facility, what is the status on ground. Everything is ready, machinery installed and they are just waiting for approvals?

The machines and everything is ready. The infrastructure is completely ready. The only 3 critical equipment, which is yet to be delivered is the MRI, CT scan and ultrasound because they need the PCP and DT approval from the municipal corporation before these machines can even leave the premises of the selling company. So from that perspective the moment those licenses come and the machines are all ready, we will be getting them delivered. So we are looking at the first bunch of licenses to come in any time in the next 5 to 7 days, followed by the second round of licenses to come in before the end of this month. In that case, we will be equipped to start of our OPD services, basic diagnostic services and basic inpatient services. The ultrasound machines will get delivered within a week of submitting the licenses. So there won't be much of a delay in that. It's only the CT and MRI, which post delivery, installation and commissioning is likely to take a period of about 1.5, 3 weeks. So all in all, put together, by end of July, in terms of every single aspect of the facility, it will be fully operational and commissioned. We've got a lot of learnings from Navi Mumbai, which we've implemented in Nasik in terms of the time line management. So we've been better when it comes to Nasik in time line management. Unfortunately, we lost out on about 2.5, 3 weeks because there's an ongoing census, which has been undertaken by the central government for which a lot of lower-level staff bureaucrat have been reputed and that resulted in a lot of critical staff being absent in critical departments because of which the movement of file was getting staggered and delayed. But yes, the inspections at the first level have all been completed earlier this week and we are expecting the license. So the official fee for the license has already been paid for 2 days back. Hopefully, in the next 5, 7 days, we should be handed over the registration license.

Okay. Got it. Second question is basically, when we are setting up hospitals in India, we had a kind of a thought process. You know that Africa being whatever market size it is, there are some machines which won't make any sense to deploy it there. So our thought process was to get finally incoming medical tourism, whatever we are not able to treat there to get them to the Indian hospitals. So you think maybe it's an early stage or how successful we have been until now or will be in the future to catch this area?

So we have been fairly successful owing to that being the first vertical for us as a group, we started with medical value travel or medical tourism. And that's why we've got significantly deep inroad into that industry altogether when it comes to Middle East and Africa. I'd be happy to share that we've already used a fair number of international patients at Navi Mumbai over the last 30 days. In fact, 1 of our international patients ended earlier today morning and as we speak, is getting his evaluation done at the hospital, -- there are more than 250 live inquiries that we are sitting on from a bunch of countries in Africa, whether it's Nigeria, Uganda and Tanzania, Kenya, so yes, the movement is there. Definitely, once an inquiry comes in by that a patient comes in, it can be anywhere between 30 days to 6 months, depending upon whether it's documents are in place, we've got the funding in place -- but yes, eventually, by the end of this financial year, we should now position where we'll have significant international patients coming into both our facilities, whether it's Navi Mumbai or Nasik we do anticipate patient flows to come in from for both these units. Right now, we've successfully received patients from Uganda we successfully received patients from Tanzania. So the 2 countries which we initially targeted, we've been able to turn them around. Right now, the focus is on Kenya and Nigeria as well. And then as we move ahead, we will be looking at Middle East once the overall travel situation in Middle East eases a bit post this entire war scenario, which is ongoing. So maybe at that point of time, start focusing more upon the Middle Eastern countries like Oman and Iraq and all of those from where there's a significant flow of patients that come in.

Got it. Sorry, just last question. I understood the bed forecast that you had given 800, 2,000 beds. So on a conservative basis, our top line is 132 -- can we look at that growing at 15%, 20% -- 20%, 25%, what and conservative estimate you can give us?

I do agree with your estimate and should that or beyond twofold reason: one, there's going to be a basic amount of growth in the existing facilities. We are adding on some super specialties in countries like Uganda where we have a mature facility now like we did with IVF now we are doing with a neurosurgical microscope and the cardiology setup ophthalmology is already in place out there. We expect the first bunch of carat surgeries to happen sometime in the coming months. So from that perspective, there's going to be some amount of growth that happens in the existing facilities plus the addition of beds. So put together, yes, what you've mentioned is a likely forecast that we are going to witness. Hopefully, we'll be surpassing that.

Next question is from [ Sahil Garg from CCV Fund Managers. ]

So my first question is on the operating margins. So like in FY '25, the operating margins were in the range of 33%, 34% in '26 it like clients see 41-odd-percent. And then you are targeting the operating margins like you were mentioning earlier to the participants on the call, the operating margins would be early '30s. Why there is so much volatility in our mind as we invested, what minimum margin we should take like something which can...

I'll first answer the volatile aspects. So right now, when we've grown from the mid to early -- I mean, mid to late 30s to early 40s, it is because right now, the contribution from newer beds is not there. So whatever contribution has come in has come in from facilities which were mature. So the moment the revenues in those facilities starts growing, like I mentioned to 1 of the earlier participants that 60% of that particular revenue gets added on to the margin. So for example, if a breakeven point for a particular facility is INR 1 crore rupees. So INR 1 crore obviously a negative. -- once I cross the INR 1 crore, then I break even the movement at touch INR 2 crores, and I go beyond, then whatever I'm adding on the contribution towards margin is much higher because my costs stagnated my costs are more or less similar. The only variable that's added on is the cost of goods sold. That's the cost of consumables and pharmacy, which does not on a consolidated basis and exceed 30%. So 30% is that cost 10% to 15% is the escalation in utility and manpower. So about 40%, 45% is on the higher side. So that is 1 reason why we've seen the growth from the mid-30s to the early part -- now coming back to the point where I mentioned that on a consolidated -- going forward, we will be looking at early 30s. That is because at that point of time, compared to the 200 mature beds that we are talking about, we're going to have a total bed capacity of roughly 800 of which 200 to 300 will be mature. Another 200 would be just about breaking even and on remaining 200, 300 that have been just commissioned, where there are going to be significant operational challenges initially losses coming in. So on a consolidated basis, the mature facilities will be able to take in the shock or absorb the negatives from the recently commissioned or all facilities and the ones which are breaking even will continue at 18%, 20%, 22% margin sort of a thing. So from that perspective, we are looking at not going below 30%. It can be early 30s or mid-30s. That will again depend upon how efficiently we operate these facilities. So that means that every time there will be some expansion, the margins will be volatile in the letter because some hospitals will be in the mature so much plus a energy and might be going towards breakeven.

So 30% is something you are like pretty sure...

That we've been working upon. So about 2%, 3% should be the baseline. Again, there's a contributor that we've got medical tourism being 1 health care consultancy, being 1 pharmaceutical distribution as being one, where we are not taking those revenues or margins into consideration right now. But consultancy does work on almost a 60%, 65% margin distribution works from 30%, 35% margin. So all those put together also will ensure that we do not reach the 30% mark. Now whether we are at 32%, 33% of the late -- that is something which will be lately proportional to how soon we can break even and generate revenues from the new operate.

Okay. And below the invite level, what kind of PAT margin we can expect like something which can be achieved because...

Considering our rapid expansion phase, there's going to be some amount of finance cost which is going to come in. Depreciation is going to be significant because we're going to rapidly be adding on newer equipment and since some of these subsidies on a leasehold basis, and we are in the India's accounting standard, there's the depreciation on those facilities as well. So put all these together, we can comfortably look at somewhere around early -- I mean, 10%, 12% PAT margin is what my anticipation would be, but it will hover between 8% to 12%. -- depending upon the number of beds that we've added on in that particular period of time. So whether it's a quarter or half or the financial year the number of beds that we add on, that 2%, 3% will depend upon that variation. .

So basically, FY'26 this was the exceptional year for you in terms of margin because I guess, in content, you did close to 35% of our tax margins and -- now we are expecting 10% to 12-odd percent parka so it's a huge decline in the margin in...

No. So INR 20 crores , INR 25-odd crores in PAT on a INR 137 crore consulted top line we are again talking of about 20%, which I'm seeing as we grow will come down to about 12-odd percent. So that 8% dip is more so towards part of depreciation, which is going come in because of the heavy investment in equipment and some part of the finance cost. Because right now, in Uganda, we are dead, we became in the 30th of September but as we grow, we're going to have some amount of bank funding coming for the equipment that we buy. So a bit of that finance cost and a significant portion of the depreciation, which is going to get factored in as we grow. So that 6% to 8% variation is likely to be because of these 2 factors more than anything else.

Okay. And sir, my second question is considering the Tanzania facility is delayed to do election and everything. So what kind of growth we can expect in FY'27?

So FY '27, we're 150 beds in Uganda, which are fully mature. We are looking at 50 beds of Navi Mumbai, which should break even addition of 200 beds in Nasik, which will be in the early phase. So about, say, which are about to break even or which I would have broken even. And then another 150 beds which are likely to be added on in Tanzania 120 beds out there. and maybe another 30 beds in East Africa, either in Uganda or Tanzania as a secondary care. So all put together, we are talking of about 600-odd beds by the end of the financial year. Consolidated basis because Tanzania and bet is an operational net -- it already has a base on occupancy, it all has a baseline revenue -- so we are now going to go through the early stages of pain when we take that facility over. So whether it's Q3 or Q4, it's going to be a straight addition of some amount of that top line to the book on an occupancy basis of these 500-plus beds, we can expect an occupancy of somewhere around 60%, which will translate to about 300 beds, and we targeted average revenue per occupied but on an annual basis. would be in the range of INR 75 lakh to INR 1 crore. So more so, we are looking at or targeting -- doubling up the revenue. But yes, the next 2 quarters will be important in terms of closing in on the Tanzania bEBITDA and ensuring that Nasik takes off in the manner that we intend to. So based on that, the post the first half of the year, we'll be in a much better position to understand which way the revenues are going for this particular year because always the possibility of a delay of about a quarter and what we plan and intend to do and what is executed.

And margins would be again same like 30% EBITDA margins and 10% the as mentioned, right?

That is the bare minimum that we'll be targeting. The EBITDA margins may go to the mid-30s also. But this year, we are talking about Uganda, which is a mature facility Navi Mumbai, which would have broken even Tanzania, which already has some bit of EBITDA associated with it. So it's not going to give us operational losses at the moment we take over. So from that perspective, it might be in the mid- -- that is what we are targeting, we are anticipating. But yes, I mean, there are multiple factors associated with all of this.

Next question is from [ Shubham Gupta from Prospero Wealth. ]

Yes, sir, go ahead. So sir, I just wanted to check, like this year, how many beds will be operational -- and what is the revenue we can expect this year?

So in terms of operational bed capacity, we will be upward of 420 beds per share. This is taking into consideration 150 beds in Uganda in Niumba 20 Nasik and 20 beds in Tanzania, which is a specialized hospital. Another 100 bps in Tanzania are in the last stage of discussion in terms of the agreement stage. So if that we are able to conclude and get the statutory approvals in time, then another 100 bps will get added on to this. So yes, we should -- we are aiming to cross 100 beds in terms of commission and open bed capacity by the end of this financial year.

Okay, sir. And like out of these beds, like what is the top line we can expect like average...

Average that we are targeting is about 60% on a consolidated basis for these. So we are talking of about 300 beds occupied. -- right based on the present run rate of average revenue per bed and the addition, we will still target around 27,500 on a consolidated basis as the ARPOB, which translates to about of revenue on an annual basis. So roughly around 300 occupied beds at that ARPU is the target that we have as we proceed in the coming few months, the picture is going to be clearer.

So it will be around like on a conservative basis, it will be around INR 250 crores to INR 300 crores of top line that we are targeting, right?

That's what we are targeting, yes.

Next follow-up question is from the line of [ Deepak from Welford Wisdom. ]

Yes, just wanted to understand in terms of hospital start-up costs and revenue trajectory? So let's say yes. So let's say, on the cost side, but I have 3 operating costs that begin accruing before the hospital is even open to patients. Could you walk us through cost buildup, which costs keep in from day 1 of construction or fit out, which will come closer to commissioning and which ones are triggered only when the patient operations began?

Right, right, right. So about 2 months, 2.5 months prior. So the moment we conceptualize the project, there's a team of about 7 to 10 people that gets added on on ground in the first 3 to 6 months. of that project being conceptualized on that is the unit head, the Head of nursing, the Head of Diagnostics, the head of pharmacy. So those heads come in to picture because the other ones are going to be executing the project on ground from the concept to the commissioning stage. Then in the last 2, 2.5 months, we add on significant number of team members because their cleaning starts and they are also needed from a statutory perspective when we apply for the licenses. As a thumb rule for each bed that we put in, the -- on a fully occupied basis, we are looking at about 4 people employed around the clock sort of a thing. So for a, say, 50 beds, we'll be looking at a team setup 200 beds round the clock, which includes right from the CEO to the security guard for that facility. First year, we will be looking at about 60% of this. preoperating, we will be looking at about 40% of the strength. So by the time we operate 50 beds, we would have about, say, 40% of odd people on the payroll. The average expenditure on a consolidated basis for all of these would be about INR 30,000-odd per month. We are talking about roughly around INR 2, 00, 0000 to INR 2,500,000 in terms of manpower cost for a couple of months. for a bed. Again, if you are looking at the 200, this will become into 3, roughly. So that is the preoperative cost. So effectively, for a 50 bed, we plan for a INR 1.25 crore preoperative cost for 125 beds, we plan this to be around INR 2 crores. And for 200 beds, we plan this to be around INR 3 crores, INR 3.5 crores. So that is the propose that we are likely to incur, Part of it is considered as CapEx because we've not yet commissioned the facility First 6 months, more also, the revenues for 3 months are really small. The OpEx remains very similar. The only added factors would be utility expenses and some amount of expenditure towards the upkeep of the facility. That's housekeeping and patient attendant care. So that would add on depending upon the size of facility anywhere between INR 10 lakh to INR 15 lakh somewhere around INR 7 lakh to INR 15 lakh, I would put in a 50-bed would be around INR 7 lakhs. So that is the cost that gets added on. To a large extent, the initial revenue start offsetting part of this part of the employee costs and everything. So this is the basic OpEx breakup -- in terms of CapEx breakup of 50 beds, because we are on an asset-light model, we don't look at buying the land and building for now. So from that perspective, a 50-bed we plan to put up anywhere between INR 15 crores to INR 17 crores of CapEx 125 would be in the range of INR 23 crores to INR 25 crores and INR 200 beds would be in the range of INR 28 crores to INR 30 crores.

Understand. Understand. And similarly, Akshay, on the revenue and demand side ramp-up. How does the hospital typically go about activity services? Like does really start before IPD and within OPD...

Right. So OPD IPD pharmacy diagnostics, we've started everything concurrently. We've not phased out. But yes, IPD starts with very basic cases, something which is purely just what you call malaria, dengue treatment or sic appendectomy or a very basic hernia surgery. The first couple of months going that because there are teething issues. There are issues when there's a new team of doctors and a new team of paramedical team staff, they are selling in their alignment with each other, takes a few procedures to be done. So even we encourage Doctor to get straightforward simple cases for the first month and then start stepping it up like in Navi Mumbai, like I mentioned, October, we started we did our first started bypass in March. So there's about 3 to 5 months of period during which we do the ironing out of all challenges internally by doing simple cases. And then by the 6 months, we start entering into a phase with ready to accept all sorts of critical cases. So that's how the overall revenue start ramping up the occupancy would be barely 2%, 3% in the first month it is likely to go to about 7%, 8% or 6%, 7% second month, crossed 10% by the fourth month or so and then witnessed a significant upswing. This is also a period when a lot of our impanelments with corporate with insurance companies with a lot of charitable foundations, all that takes place. So once we have the license in place, that is when we can start approaching all of these and the standard processes that they have ensure that a timeline of what 3 to 6 months goes in getting ourselves impaneled with some of these. For example, in Navi Mumbai now, we are impaneled with Konkan Railways, we empaneled with a few other corporates. Raster chemical and fertilizer. So that process can dig anywhere between 3 to 6 months. But once that empanelment happens, then there's a significant upswing in the numbers that we witnessed.

And if you could quantify in terms of revenue ramp ramp up what percentage of optimal peak revenue doesn't mean hospital typically first 3 months of operation and where does it stand by the end of year 1? And at what point, maybe from the data, let's say, first patient you typically reach optimal utilization and revenue run rate.

Right. So I would put it in a slightly different context. The breakeven point for us is usually about 50% of occupancy. -- which we intend to target and reach by the end of the first year on a pro rata basis. Initial 3 months like I mentioned, it can be between 2% to 6%, 8%. It depends upon the geography and a lot of other variable factors -- but between the 6 to 12 months, we start gaining significant upswing where the revenues start coming in at between 30% to 40% and eventually, the target is 50%, which is what we intend to achieve anytime between the ninth and the 12 months. That is our breakeven point. For a 50-bed, I would say the breakeven point comes at about INR 2 crores of revenue. The peak revenue that we can target is somewhere around INR 3.5 crores, INR 4 crores. eventually, but that's not purely a mathematics of occupancy. It is also super specialization that eventually kicks in. So in terms of occupancy at 50%, we would target a INR 2 crore-odd revenue to break even -- and then the upswing in occupancy and addition of international patients or addition of super specialty will allow it to further go up. So from that perspective, that is how we pan out that yes, the 50% occupancy or the breakeven point for a facility should be around 12 months, and over between 9 to 12 months, then that growth starts and somewhere by the time we tend to reach the 24th month should be in a position where we are achieving 6...

So sorry to interrupt, we lost your auditing between. Can you repeat the last sentence, please?

Yes. I'm just saying that from a trajectory perspective, -- it is the first 12 months and we try to break even between the 9 and the 12 months by achieving roughly around the 50% occupancy. Post that, between the 13th and the 25th month is when the upswing starts. By the end of the 24th month, the target is to achieve occupancy of about 62%, 64%, which will allow us to have an EBITDA margin in the mid-20s.

Understand. And is there a difference between, let's say, a trajectory of the brownfield health care facility vis-a-vis, let's say, a greenfield or let's say, acquisition?

No, definitely. So when you're looking at a brownfield on acquisition, there's a baseline revenue already in place. There is some amount of EBITDA, albeit it might be really small. But you've got the patient load, you've got a lot of things already in place for you to capitalize. So that's where the operational expertise comes in, that is where you're able to move things faster. So what I would achieve in a greenfield in 12 months or a brownfield, it might be 6 months. what I would achieve in a greenfield in 24 months for brownfield, it might be 12 or 13 months. So -- but then for a brownfield or an acquisition, you are also paying a higher fee upfront. I mean if I am to set up a 50-bed I'm going to spend INR 15 crores or INR 17 crores -- but if I'm to acquire only the operations, I'm negating the real estate. But if I'm going to acquire the operations, it may be somewhere around INR 25 crores, INR 30 crores or more, depending upon at what stage that facility is, what are the revenues that they are generating. So from that perspective, the CapEx is higher -- and that is also the reason why you are to break even or generate profits significantly earlier.

Thank you very much. Ladies and gentlemen, we will take that as a last question. I'll now hand the conference over to [indiscernible] for closing comments. Sakshi may I request you to unmute your line and with the closing remarks.

Thank you, everyone, for joining the conference call of Unihealth Hospitals Limited. If you have any further queues, you can write to us resource.kirinadvisors.com. Once again, thank you, everyone, for joining the conference call. Thank you Akshay, sir. Have a good day.

Thank you.

Thank you very much. On behalf of Kirin Advisors Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.