Vaidya Sane Ayurved Laboratories Limited (MADHAVBAUG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the H1 FY '26 Earnings Conference Call of Vaidya Sane Ayurved Laboratories Limited. [Operator Instructions]. 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 the date of this call. The statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I would now like to hand over the conference to Dr. Rohit Madhav Sane, Chairman and Managing Director from Vaidya Sane Ayurved Laboratories Limited. Thank you, and over to you, sir.

Okay. Thank you, Ashi. Good afternoon, everyone, and thank you for joining the Vaidya Sane Ayurved Laboratories Limited Earnings call to discuss our performance for the first half of FY '25-'26. I would like to begin by expressing my gratitude to you all for taking the time to join us today. I have with me on call Dr. Vidyut Bipin Ghag, the Whole-Time Director; Mr. Narendra Pawar, our Chief Financial Officer; and Adfactors PR, Investor Relations team. We have shared our results update presentation. I hope you all must have received it. We appreciate your interest in our company and are excited to share our business updates, financial performance and strategic outlook. So a bit talking about our company, Vaidya Sane Ayurved Laboratories. Vaidya Sane Ayurved Laboratories operates under the well-recognized brand name of Madhavbaug, a pioneering health care institution that seamlessly integrates the principles of traditional ayurvedic medicine with modern diagnostic methodologies. Madhavbaug was founded in 2006 with a single vision to make disease reversal a scientific, accessible and trusted part of India's health care system through Ayurveda. Nearly 2 decades later, that mission continues to guide us. Today, we operate a nationwide network of more than 320 clinics and 4 hospitals across 8 states and union territories, treating over 10 lakh patients suffering from chronic noncommunicable diseases such as cardiac ailments, diabetes, hypertension, thyroid and obesity. Our hybrid model integrates modern diagnostics like 2D Echo, CT angiography, stress test, cardiac output monitoring along with various ayurvedic panchakarma therapies, diet programs and herbal medicines. We also leverage technology through our MIB Pulse app, which now serves more than 2.5 lakh patients for digital monitoring and follow-up. Our research-driven approach has resulted more than 150 research papers, scientific research papers published in reputed national and international journals such as Lancet, Indian Heart Journal, and that itself validates the clinical efficacy of our protocols. As on September 30, 2025, the company operates about 320 clinics across Maharashtra, Madhya Pradesh, Uttar Pradesh, Gujarat, Goa, Karnataka, Delhi and Chhattisgarh. Out of these, about 22 are company-owned and 45 are about OPD clinics and mini clinics, while 255 are franchise clinics. We also operate 4 cardiac prevention and rehabilitation hospitals, one at Khopoli, second at Nagpur, third at Vizag Visakhapatnam and the fourth at Gujarat Vadodara, supported by a team of more than 450 Ayurvedic physicians. So we are empaneled with more than 9 PPAs and 12 insurance companies to offer cashless facility at our Khopoli as well as our Nagpur hospitals and the other 2 hospitals also are slow and gradually getting up with these kind of PP and insurance company tie-ups. We remain one of the few ayurvedic institutions in India with NABH accredited facilities, including our flagship Khopoli Hospital, which continues to be the benchmark in heart disease reversal. So coming to our operational and strategic highlights. Year FY '25 was the year of consolidation and strengthening our foundation. During the first half of FY '26, we have seen steady improvement in patient inflows, operational efficiency and profitability. Our enterprise continues to grow on 2 key pillars, clinics and hospitals. Clinics continue to be the backbone of our business. They operate under a dual structure company-owned and franchise models, allowing us to scale with minimal capital expenditure. Our franchise network has performed well, maintaining 80% to 85% patient retention and a documented 65% disease reversal rate in total. We plan to add 40 to 50 new clinics this year and another about 70 to 80 clinics in the next year, strengthening our presence in Tier 2 and Tier 3 cities through Ayurvedic doctors as partners. Hospitals form the next growth engine. We currently have about 110 beds across Khopoli, Nagpur, Vadodara and Visakhapatnam. The ongoing expansion at Khopoli and Napur will take capacity to 250 to 300 beds over the next 12 to 15 months. And we are targeting about 1,000 beds nationwide in the next coming 2 to 3 years. We recently opened Vadodara Hospital, has ramped up strongly with 25 to 30 admissions per month and is planned to expand to about 100 beds in the coming year. Our fund raise through convertible warrants is earmarked primarily for the hospital expansion. Approximately INR 25 crores of the CapEx will be deployed across Khopoli and Nagpur facilities, combining owned and rental as well as PPT models for efficient asset utilization. I'm pleased to share that we have taken an important step in our international expansion journey. The Board has approved the signing of memorandum of understanding with Maxura Healthcare, which is in Malaysia to jointly establish and manage an Ayurvedic therapy center in Malaysia under the brand Maxura Ayurveda Healthcare. This collaboration marks our first overseas venture and reflects growing global recognition of Madhavbaug's clinical expertise and holistic health care model. Under this agreement, profits at the end of each financial year will be shared in a 70-30 ratio between Maxura Healthcare and Madhavbaug, respectively. This partnership not only enables us to take authentic ayurvedic therapies to international markets, but also strengthens our strategic goal of making Madhavbaug a global name in integrative and preventive health care. I would also like to inform all our shareholders that the Board has approved the shifting of our corporate office from Bhoomi Velocity, Wagle Estate which was in Thane West to Mahavir Business Park at Teen Hath Naka in Thane West itself with effect from 24th September 2025. This relocation will provide us with a larger and more efficient workspace to support our growing team and expanding operations. Accordingly, all books of account and statutory records of the company will henceforth be maintained at the new address. In addition, the Board has also approved 2 important business proposals that further strengthen our health care delivery network. The first relates to the capacity expansion at our Nagpur Hospital, where we'll be adding 5 additional beds at an estimated investment of INR 55 lakhs, enhancing our ability to serve more patients in that region. The second is the launch of a new initiative, Urja Neuro Care, a specialized neuro care facility that will focus on integrative treatments for neurological disorders, combining modern diagnostics with ayurvedic protocols. The estimated cost of the project for this new vertical is going to be about somewhere INR 1.8 crores. From the patient perspective, we are witnessing a robust uptake. In this year of FY '25, we had about 82,000 new patients in the year -- in this first half of FY '26. We have already achieved over 60,000 to 65,000 new patients, and we expect about 1.2 lakh to 1.3 lakh new patients by the year-end. Our medium-term target is to reach about 2 lakh new patients annually by about FY '28, supported by stronger brand awareness, digital engagement and increased insurance coverage. A key strategic shift has been our move from preventive wellness to disease reversal programs, higher value interventions where average patient billing ranges from 50,000 to 60,000 annually. This aligns better with our doctors' expertise and the clinical outcomes we are known for, helping us achieve both better patient results and stronger financial returns. Marketing spend has been well managed around 14% to 15% of revenue, supported by our national brand ambassador, Mr. Sonu Sood and the new digital campaigns. We are seeing encouraging returns on these initiatives, and we intend to scale them prudently in the next year FY '27. We are also deepening insurance partnerships. Our Khopoli Hospital is now almost very close to get CGHS approval and fully cashless. Nagpur, Visakhapatnam and Vadodara Hospitals are expected to complete their empanelement with leading insurers in the next 6 to 7 months. This will significantly expand patient accessibility and improve occupancy, which already stands at 75% to 80% across hospitals. On the manufacturing front, our subsidiaries, Dynamic Remedies Private Limited and UV Ayurgen Pharma Private Limited, now produce our proprietary Ayurvedic and nutraceutical products in-house. This ensures product quality, availability and higher margins while supporting our growing diet kit and herbal medicine business. We are working on ready-to-cook and ready-to-eat formats of our diet products, enhancing convenience for patients and retail scalability. Now coming to our financial performance. Revenue from operations in this first half of FY '26 is INR 49.94 crores as against to INR 41.80 crores in H1 FY '25, year-on-year increase is 19.48%. This growth has mainly driven by higher patient engagement, improved therapy adoption and robust growth in wellness product sales. The EBITDA, excluding other income, is INR 8.62 crores in H1 FY '26 as against INR 5.76 crores in H1 FY '25, year-on-year increase of 49.59%, translating to a healthy EBITDA margin of 17.26%, reflecting operational discipline and better cost optimization. The profit after tax was INR 4.84 crores in this year H1 FY '26 as against INR 3.77 crore in H1 FY '25 last year. So year-on-year increase has been of 28.26%. The PAT margin was at 9.68% in H1 FY '26, which has increased of 66 bps year-on-year. The basic EPS stood at INR 4.56 in H1 FY '26. For H1 FY '26, we continue this momentum with growing patient footfalls, improving bed utilization and higher average ticket size. We are confident of delivering 20% revenue growth this year and maintaining EBITDA margins above 15% continuously, trending towards 20% by FY '28 with PAT margins about 10% to 12%. For FY '26, we expect revenue across -- to cross about INR 115 crores to INR 120 crores, driven by higher hospital utilization and clinic additions. We are targeting an EBITDA margin of around 17% to 18% and PAT near to about 10% to 11% for the full year, improving further at scale and operating leverage play out. By FY '28, our total revenue potential stands at about INR 250 crores, split roughly 50-50 between clinics and hospitals. Our long-term mission of 2028 envisions reaching 5 crore people, operating 1,000 clinics and 10 hospitals and reaching to maximum number of patients for disease reversal, supported by strong digital and manufacturing capabilities. Our marketing and branding investments of around INR 7 crores, including Sonu Sood's campaign are being amortized prudently over 5 years. We will continue to maintain tight working capital control, leverage our integrated manufacturing units for better gross margins and focus on cash flow generation to fund our growth internally. I would like to emphasize that our focus remains unwavering to deliver clinically proven holistic health care while maintaining financial discipline and sustainable growth. Our approach of integrating modern diagnostics with Ayurveda continues to set us apart, and we are confident of scaling this model profitably across India. To summarize, Madhavbaug today stands at an exciting inflection point, financially stronger, operationally more efficient and strategically positioned to capture the next phase of growth in India's traditional health care market. We are confident that our expansion in hospital growth as well as into the franchise clinics, the digital integration and clinical research leadership will help us create long-term value for our stakeholders. We are confident in our strategy, our people and our purpose. And we believe the coming periods will continue to reflect the strength of our model and the trust of our patients placed in us. Thank you once again for your time and continued support. We are now happy to take your questions.

[Operator Instructions]. The first question is from the line of Mr. Keshav from BHH Security Private Limited.

I have 2, 3 questions you need to give me that time. So basically, doctor has outlined that he's going to use the funds for from INR 250 crores -- from 150 beds is going to make it. So can you just outline your strategy for hospitals in detail? What exactly are you going to do with the hospitals? How is the growth for hospitals looking like? Right now, we are having 4 hospitals. We are saying that we are going to use the money for expanded capacity of Khopoli and Nagpur hospitals. What about the rest of the country? Have you identified any hospitals, any places where we could have hospitals? Do you have a strategy wherein you could convert a big clinic into a 10-bed hospital? Can you talk about the hospital space?

Okay, Yes Keshav. So answering this, the last question I'd like to answer first. Like now there are several existing franchise clinics, which are interested in converting themselves into a 5- to 10-bedded hospital. Already one of the franchise clinic at Kolhapur has upgraded itself into a 5-bedded hospital, which is very close to get all the insurance approvals also. And a few of the insurance companies have also tied up and cashless as well as reimbursement facility has already begun in that hospital also. And talking about the other hospitals, right now, as you rightly said, we have about 110 beds functional with us as of now. And in the coming 12 to 15 years, we'll be having 100 more beds at our Khopoli hospital.

12 to 15 months?

Yes. We will have 100 functional beds extra at Khopoli that will make us 150 bedded in Khopoli itself. Plus we'll be planning to have more 80 beds in our Nagpur hospital. So the Nagpur hospital in total will become about 100 bedded while the Vadodara Hospital, which is about 20, 25 bedded right now, that will also be planned to be converted into about 100-bedded hospital in next 12 to 15 months. So in total, if at all we talk about, the Khopoli Hospital becomes 150 bedded plus the Kondhali that is Nagpur hospital becomes 100 bedded plus the Gujarat Hospital becomes 100 bedded and the 20 existing beds at Vizag Hospital will stay as it is. We are still searching for much more bigger place at Vizag, but still we calculate it as 20. So on an average, that is going to be about 350 to 370 beds that we'll be having in the next 12 to 15 months. Speaking about more hospitals that we are looking out for, yes, we are also trying to expand our hospitals at a few more places. A few more applications have already come in for franchise hospitals from the existing company clinics that -- the franchise clinics that we have, they are upgrading themselves to a franchise hospital. So the next that is in pipeline is the Surat Hospital, which is supposed to get upgraded. And those things are already in place. I am sure that in the next 12 to 15 months, we'll be having several more beds along with these beds, which we are confident about.

Okay. Got that. Now sir, can you talk about your plan for listing on main board because you already completed 3 years in SME board. So plans about listing on main board?

Yes. So we do have plans about going towards the main board. In the next year, I think we should be absolutely ready to go on to the main board. So the plans have been charted out accordingly and the implementation steps have already begun. So I'm absolutely excited about it so that this target should be possible in the next about 6 to 7 months.

Okay. Sir, 2 more questions. Status of preferential warrants, which of institutional investors have applied for. We have 40 lakh warrants, which are going to be issued. So what is the status? Have you got any [ feedback ] any update from NSE as to when they are going to approve it?

Yes. We have got good amount of queries from the NSE. We don't have still an update till when are they going to approve it, but their queries are being answered by our team. And I'm hopeful about it that in the next few days, we should be able to go through.

Got it, sir. Sir, we have done around INR 50 crores of turnover for the 6 months. What are you predicting for this year, your sales? And for next year, can you give us some sense, what are you looking at sales for next year and current year? That's all from my end.

Current year, as I mentioned, we'll be planning to reach about INR 115 crores to INR 120 crores in the current year. That is what we have kept a target for ourselves. So that is how we are planning our steps. And in the next year, again, we'll be growing more than 20% of the existing year and with a steady increase in the total EBITDA margins also.

So that gives you some semblance of what kind of EBITDA margins we could look at for '26, '27?

So that would be steadily increasing. It would be more than what it is right now. We are planning and hoping to increase the EBITDA margins to a good level, and I'm sure I should be able to do that in the recent future.

[Operator Instructions]. The next question is from the line of Mr. Chirag Shah from White Pine Investment Management.

Hello. I hope I'm audible.

Yes, Chirag.

Sir, 2, 3 questions. Just an update. I just missed the CapEx plan that you indicated there, right, addition and how much money you would be deploying in that? And how much money has come on the warrants that have been issued? I presume 25% would have come, right?

Okay. So Chirag, I'd like to answer this. Yes, the NSE approval is pending. So once we have the NSE approval, we will get the 25% coming in our company. Till now, we haven't received it as the NSE approval is still pending. So that is the status of the warrants. About the CapEx, the things are already in place, and we have already started implementing. Today was the day when it was the first break to be laid for the Khopoli Hospital 100 beds extra that we were supposed to start. So today was the day when the puja was conducted. And from today and tomorrow, we'll be starting with the whole construction for the Khopoli hospital itself. So about the CapEx, as you asked, for the Khopoli Hospital, we are building 100 extra beds. And for -- in the next 3, 4 months, we will also be beginning the same for the Nagpur hospital also. So on an average, if at all, we see the cost of construction, we are planning to have about more 50,000 square feet in Khopoli Hospital and somewhere about 25,000 to 35,000 square feet at the Nagpur hospital. So on an average, it would be about INR 25 crores to INR 30-odd crores as a total investment that will be going into these 2 hospitals. While for the Vadodara Hospital, we will not be investing anything because that is on a rental model. And the installation cost obviously would be there at the Vadodara Hospital, but the construction cost will not be there for the Vadodara hospital as it's going to be on the rental model.

Okay. And Vadodara, how much you can -- how much expense will be to it?

As of now, it is about 20 beds and more 80 beds can be constructed on the first floor. Right now, we have been occupying only the ground floor.

So in F '28, we'll have 350 beds operational, right, for full year?

Yes.

Because F '27 I think the Khopoli and Nagpur would get ready somewhere in F '27.

Yes.

How much time it will take Khopoli to get ready?

The estimated time is about 12 to 15 months.

12 to 15 months, right? So -- okay. So at least in H2 F '28, all the beds would be available for utilization, right? That how one should look...

Right. Right.

So Nagpur, Vadodara, Khopoli, everything would be available.

Yes.

Okay. And generally, how much time does it take for you to ramp it up because you have to market advertise...

3.5, 4 years, we should be reaching to that level.

3.5, 4 years for optimal utilization.

Yes.

That would be about 70%, 80%, 60%.

More than 70%.

More than 70%. Okay. And as of date, you have 110 beds fully operational, correct?

Yes.

And second question is any thoughts on what kind of manpower you would need to hire because one is creating physical capacity and then the human capacity -- so what kind of people -- how much people you will need to hire for this because it's a reasonable expansion that you are doing.

Yes, yes. So once we start with the Khopoli Hospital all 100 beds, we will need manpower of more 150 to 160 Class II and Class III officers and about 5 to 10 Class 1 officers who will be doctors. So that is already on the paper. So the hiring will begin once we are very close to get these beds operational. But those things would be very well taken care of while planning the EBITDA.

Okay. Okay. And you indicated that you want to reach 20% kind of EBITDA margin by end F '28. If I heard correctly, what is the right...

Yes, you heard it rightly.

[Operator Instructions]. The next question is from the line of Mr. Darshil Jhaveri from Crown Capital.

Firstly, congratulations on a great set of results, sir. So sir, you've given a very clear cut guidance. So just wanted to know generally in the last few -- half years, we've been around INR 50 crores of revenue. So what makes -- what is the growth driver that we'll be able to clock in nearly INR 65 crores, INR 70 crores of revenue in this half year. So how -- what will be the growth driver for that sir.

Okay. So Darshil, the growth driver is going to be the new patient footfall that we are going to drive inside the clinics. So now we have come up with typical plans for driving the patients inside the clinics. So that has not been a challenge now as that was in the past. But now we are confident about getting it very fluent and very easy for the new patients coming in. So if you must be aware about the whole metrics, per new patient entry inside the organization drives somewhere about INR 6,000 to INR 7,000 of revenue per new patient entry. So that is how the revenue will be planned accordingly on the basis of the new patient footfall coming inside.

Okay. But I think by our clinics everything like we are already at a good occupancy. So with the current like 110 beds, we will be able to service them or it's more on the clinic side, sir?

Yes. Majorly, it's going to be on the clinic side. The clinics are utilized about 45% to 55% only. So we have a huge scope in over there. And majorly, the franchise clinics, 85% to 90% franchise clinics that we have, driving more new patient footfall to these franchise clinics as well as company clinics and the hospitals is going to be the major growth driver.

Okay. And sir, when we say that for new patient we launch 6000, 7,000, that's for the full year or like how long do we -- like what the time period for this?

If at all, you talk about the enterprise level, as you must be knowing, it's about 40% of the franchise revenue that comes to the company. So on a whole, if at all, you see INR 14,000 to INR 15,000 is what every new patient gives to the patient considering the enrollment ratio also. So the total average comes to when we calculate about 40% of that comes to us. So that is about INR 6,000 to INR 7,000 is what comes down to the company from this franchise revenue. So when I'm talking about this, it is fairly clear that when a new patient comes inside the clinic, about 30% patients get enrolled in the whole year-long care plans. And this revenue then gets apportioned for the whole year as such. So that's about INR 6,000 to INR 7,000 per patient per year that comes down to the company as a revenue.

Okay. So I think we mentioned around 82,000 new patients came in H1, right, if I heard that correctly. So on an average, if you're going to get INR 6,000 that itself will add around INR 50 crores of our revenue. Is that a fair understanding on my part, sir?