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

Ladies and gentlemen, good day, and welcome to H2 and FY '26 Earnings Conference Call of Vaidya Sane Ayurved Laboratories Limited. [Operator Instructions] Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I would now like to hand the conference over to Dr. Rohit Madhav Sane, Chairman and Managing Director from Vaidya Sane Ayurved Laboratories Limited. Thank you, and over to you, sir.

Thank you. Thank you, sir. Good afternoon, everyone, and thank you for joining the Vaidya Sane Ayurved Laboratories Limited earnings call to discuss our performance for the second half and year ended 2026. I would like to begin by expressing my gratitude to all of you for taking time to join us today. On behalf of the management team, I would like to extend a warm welcome to all of our investors, analysts and stakeholders joining us today. We appreciate your continued trust and interest in our journey as we work towards building India's leading evidence-based ayurvedic disease reversal platform. I have with me on call today Dr. Vidyut Bipin Ghag, the Whole Time Director; Mr. Narendra Pawar, the Chief Financial Officer; and AdFactors PR team and our 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 we are excited to share our business updates, financial performance and strategic outlook. Over the last 2 decades, Madhavbaug has built a differentiated healthcare ecosystem focused on reversing noncommunicable lifestyle diseases through a unique integration of ayurveda and modern diagnostics. Today, our network spans more than about 320 clinics across Delhi, NCR, Uttar Pradesh, Madhya Pradesh, Maharashtra, Gujarat, Goa, Karnataka. Out of these, 24 are company-owned clinics and 46 are OPD centers and mini clinics and 250 are the franchise clinics. There are about 4 company hospitals and 2 franchise hospitals. The franchise hospitals, 1 in Surat and the other in Kolhapur. Over about 134 beds total and a strong ecosystem of 450-plus ayurvedic physicians across 14 states and union territories. We have successfully treated over 10 lakh patients till date, more than that, while continuing to strengthen our scientific credibility through published clinical research and technology-enabled patient monitoring. Over the last few quarters, our strategic focus has been on transforming our revenue mix and improving the unit economics. Historically, our business was largely driven by preventive healthcare programs with relatively lower ticket sizes. However, we have consciously shifted our focus towards specialized disease reversal programs targeting cardiac disorders, diabetes, hypertension, obesity and related lifestyle disorders. So these therapies generate significantly higher annual revenue per patient, typically in the range of INR 50,000 to INR 60,000 compared to preventive care programs, which are largely in the range of INR 10,000 to INR 13,000 annually. In FY '26, we have generated about 1,18,223 new patients. Our medium-term target is to reach about 2 lakh new patients annually till 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 INR 50,000 to INR 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. This transition is not only improving our average realization per patient but also allowing us to better utilize our doctors' expertise, strengthen patient outcomes and improve profitability across the network. We believe this strategic pivot will remain one of the most important long-term growth drivers for the company. On the operational front, our Khopoli -- our hospital business continues to scale steadily. We currently operate hospitals in Khopoli, Nagpur, Vadodara and Visakhapatnam with a combined capacity of more than about 134 beds. Our near-term objective is to increase this capacity to 250 to 300 beds over the next about 12 to 15 months through expansions in Khopoli and Nagpur as well as scaling up the operations at Vadodara Hospital also. The Khopoli expansion remains a key focus area for us, supported by CGHS approval and active cashless insurance tie-ups, which continue to support occupancy and patient accessibility. Simultaneously, our other hospitals are progressing well towards insurance empanelment with major insurers and TPAs, which we expect to significantly improve utilization and patient inflow over the coming quarters. As we have consistently communicated, hospitals represent the next phase of growth for Madhavbaug. Hospital-based disease reversal treatments offer stronger monetization opportunities, higher patient engagement and improved EBITDA contribution. Over the medium term, we expect our revenue mix to gradually evolve from the current clinic-heavy structure towards a more balanced 50%-50% mix between clinics and hospitals. At the same time, we continue to expand our clinic footprint through our asset-light franchise-led model. We expect to add approximately about 30 to 40 franchise clinics in the next year or so. This model enables us to scale efficiently with limited capital deployment while strengthening our reach in underserved and high demand markets across India. Our digital ecosystem also continues to play an important role in improving patient engagement and clinical outcomes. Our MIB Pulse application and our proprietary Power MAP analytics platform are helping us monitor patient adherence, track outcomes and create a more data-driven healthcare ecosystem. The MIB Pulse platform has already crossed more than about 1 lakh to 1.5 lakh downloads and continues to support long-term patient retention and treatment monitoring. On the manufacturing side, our subsidiaries, Dynamic Remedies and UV Ayurgen Pharma, continue to strengthen our vertically integrated model, in-house manufacturing ensures quality consistency, supply assurance, cost optimization and faster development of standardized ayurvedic formulations and diet kits. Products continue to remain an important contributor to enterprise revenues while also supporting margin expansion. During the year, we also took a strategic step towards strengthening our healthcare platform with the proposed acquisition of Parasnath Healthcare, OPC Private Limited. This acquisition aligns with our long-term vision of expanding our healthcare capabilities, enhancing service offerings and strengthening our presence in the integrated healthcare ecosystem. We believe this proposed transaction will create operational synergies, broaden our reach and support sustainable growth going forward, subject to completion of definitive agreements and applicable regulatory approvals. Another important milestone during the year has been our international expansion initiative through our Malaysia partnership with Maxura Healthcare. This marks the beginning of our global journey and validates the scalability of our evidence-based ayurvedic disease reversal protocols in international market. We believe this asset-light model can become a template for future international growth opportunities. In addition, we have also initiated investments in Urja Neuro Care, which will focus on neurological disorders such as Parkinson's, paralysis rehabilitation and Alzheimer's care through ayurvedic approaches. This creates a strategic diversification opportunity while leveraging our clinical expertise and research foundation. Looking ahead, we remain confident about our growth trajectory. For the year FY '27, we continue to target revenue of approximately INR 170 crores to INR 180 crores, supported by stronger patient additions, increasing hospital utilization and contribution from new clinics. Over the medium term, we see significant potential to scale revenues towards INR 250 crore to INR 300 crore by FY '28, while aiming for EBITDA margins above 20%. Our long-term Mission 2028 and Mission 2030 remain firmly on track. We aspire to bring 5 crore people under our care ecosystem through 1,000 clinics, 10 hospitals across India and beyond. With rising awareness around preventive healthcare, increasing evidence of lifestyle diseases, growing acceptance of ayurveda, and strong government support through the AYUSH ecosystem, we believe Madhavbaug is uniquely positioned to capitalize on this large and growing opportunity. Before I conclude, I would like to sincerely thank our doctors, employees, franchise partners, patients, investors and all stakeholders for their continued confidence and support. We remain committed to delivering sustainable growth, strong clinical outcomes, operational excellence and long-term value creation. Now, coming to the clinical performance before I end. The half year performance of FY '26 -- H2 FY '26 revenue from operations for H2 FY '26 is INR 56.96 crores as against INR 48.12 crores in H2 FY '25. Year-on-year increase was about 18.37%. This growth has mainly driven by higher patient engagement, improved therapy adoption and robust growth in wellness product sales. The EBITDA, excluding other income, was INR 6.80 crores in H2 FY '26 against INR 8.56 crores in H2 FY '25. The profit after tax was INR 4.15 crores in H2 FY '26 as against INR 3.38 crores in H2 FY '25, year-on-year increase of 22.7%. The PAT margin was at 7.29% in H2 FY '26, increase of 26 bps year-on-year. The basic EPS stood at INR 3.95 in H2 FY '26. The full year revenue from operations for FY '26 is INR 106.91 crores as against INR 89.92 crores in FY '25, year-on-year, a increase of 18.89%, driven by sustained patient additions, growing acceptance of Ayurveda healthcare solutions and continued strengthening of our clinical network. The EBITDA, excluding other income, was INR 15.42 crores in FY '26 as against INR 14.32 crores in FY '25, increase of 7.63%, driven by better cost control, especially in employee and raw material expenses, along with an improved product mix. The profit after tax was INR 8.99 crores in FY '26 as against INR 7.15 crores in FY '25. The basic EPS stood at INR 8.51 in FY '26. So now we are happy to take your further questions.

[Operator Instructions] Our question is from the line of Priyansh Miri from [ NJP Family Office. ]

Hope, I am audible?

Yes, you're.

Sir, congrats on a good set of numbers. You are diversifying and executing really well on different verticals within the ayurveda service line. Sir, my question first is more on accounting part. So in the results we published, we have 3 separate sister entities of different ownership. So can you give some detail on the 3 sister entities that we have in the company? And what are our long-term vision with those? Are we going to merge it or spin it off? What is the business strategy with those?

So as of now, the sister concern companies majorly are related to the manufacturing processes. The one which is Dynamic Remedies, which manufactures the medicines, while the other is the UV Ayurgen, which manufactures the food. As we go ahead, we haven't yet planned for the actual actions yet about whether we are going to merge it or whether we are going to take it ahead through a different route. The whole action plan is not yet completely decided. But in next few maybe months, I'll be able to decide that in a very right manner about what is to be done. But that is what is the progress till now.

Okay. Understood, sir. Sir, just a kind suggestion being a investor in your company, like if we simplify the corporate governance, right, so -- because like even for legit reason, right, to expand our back-end medicine manufacturing and all, even if we transfer some funds from our existing listed entity to other sister entity, those doesn't sits well with a lot of institutional investors, right? So if you can even at expense of diluting our blended EBITDA because these are just a manufacturing, like you're saying, if it simplifies the overall corporate structure, your company would be viewed much more with good lens, right, among investors. That is one kind suggestion, sir. Another one, sir, question is on the financial sheet that we submitted. So in that, the other expenses more than 50%, sir, of our expense. And not enough breakdown was given, right? So can you -- if you have the detail handy, can you please explain what are the further component within those other expenses around 50...

The details are not handy with me, but I can tell you a few things about it. This other expense majorly includes the marketing expense as well as the clinic expenses as well as the professional fees that usually -- the senior doctors usually that they get. And rest of that has the rent as well as GST and other rates and taxes. So that is majorly. So majorly, that gets grouped into other expenses.

Understood, sir. Sir, one more question here also, like if you can communicate to your auditors side, like it's a good practice, even if you are not giving a breakdown of other expense, it should be maybe around 10% at max of your total expense, right? If it is more than 50% and no split is given, then it becomes hard, right?

[Technical Difficulty]

Sorry to interrupt, sir. Your voice is breaking.

Can you repeat it?

So 10% absolutely. If at all, we don't consider marketing expense into it. It will come down to 10% only. When the marketing gets included into it, it goes more.

Just as a small -- yes, these are the small regime classification or details, right, that we might have. If we improve on this, this will surely show better, right. On our side.

We'll do. We'll do. We'll do.

One last question, sir, on your hospital mix. You mentioned like by FY '28, we are targeting around INR 240 crores to INR 260 crores, right, as a revenue. So what percent would be from hospitals?

By FY '28, about INR 250 crores is what -- in that case, I am looking for about -- in that case, we'll be having about 150 beds in the Khopoli Hospital itself. Wherein about -- I'll be looking for about 50-odd percent of revenue from the Khopoli Hospital itself. So if at all we talk about the actual figure, yes, it would be somewhere about INR 100 crores should be expected -- INR 100 crores to INR 125 crores should be expected from the hospitals itself.

Okay. And then blended ARPU -- average revenue per blend will would be around INR 50,000 to INR 60,000 that we're expecting in dollar term.

In the hospital, you mean to say?

Yes. Yes.

In the hospital, it would be -- the blended ARPU is going to be about, yes, INR 70,000 odd.

Next question is from the line of Dhananjai Bagrodia from Alchemy.

Just wanted to understand, you spoke about franchisees, what is the unit economics for them? Like how does it work for a franchisee cost and revenue? And what is their numbers like?

Okay. In case of a franchise generates a turnover of INR 100, normally INR 35 to INR 40 come down to the company. So that is the broader division between the -- our revenue as well as their revenue.

No, I get that part. But what are -- today, this is the highest royalty rate or revenue rate where you INR 40 and INR 100. What is the cost? And what is -- what are you all helping them? Just so that we can understand by the way of franchises.

Yes, yes. I'll tell you. So in this -- this is not the only royalty that I'm talking about. We give them all the support related to the medicines that they need to support the patient's health as well as the therapy kits that they need to perform the panchakarma procedures as well as the marketing efforts that we do for them to get the new patients to their clinics as well as the research papers that their names usually have into those research team is with us as well as other supports like the logistics as well as any kind of senior medical support, any kind of non-improvement in the patients that improvement for which our senior medical doctors go to their clinic, all such kind of support has been included in it. And hence, it comes down to 40, which majorly includes the medicines that they purchase.

So just to understand, let's say, for a franchisee, what is the cost per [indiscernible] be?

I'll tell you. For example, consider a franchise usually gives us about 35% to 40%. So consider a franchise about to earns about INR 10 lakh.

I got it.

I'll explain you. I'll explain you. So on an average, a franchise salary usually goes from about INR 1 lakh to INR 1.5 lakh per month. The rent differs from geography to geography, but we can consider INR 50,000 to INR 125,000, INR 150,000 a month max. And the remaining goes into some kind of ancillary expenses. So if a franchise earns about INR 10 lakh a month, out of which about INR 3.5 lakh to INR 4 lakh is paid to the company, more about INR 3 lakh odd goes into other expenses. So on an average, about INR 2 lakh, INR 2.5 lakh is what the franchise carries at home.

Okay. And sir, how many franchisees do you have at the moment?

Somewhere about 180 to 190.

What was the same number when you say, 3 years ago?

Almost the similar thing.

So, numbers have not increased?

We haven't increased as of now, last 3 years.

Why is that so?

In last 2, 3 years back, when the marketing was deranged to a certain extent, we have now tried to get that marketing back into action. Now this year, when the marketing increases and the new patient footfall increases to the existing clinic, then we'll be starting with increasing the number of franchisees. As well, we are concentrating majorly on the hospital growth, the hospital bed growth as of now. So we are not investing our money in having new company clinics. So we'll be looking of franchise clinics. So the growth is slow in case of franchise clinics. But the reason is that we have stopped because I want to nourish the existing franchise clinics with more number of new patients. Once that happens, then we'll be growing with the number of franchise clinics in the newer geography.

And sir...

Interrupt Mr. Bagrodia. May I please request you to rejoin the queue, sir. Several participants are waiting for their turn. Next question is from the line of Darshil Javeri from [ Crown Capital. ]

Sir, just wanted to understand in terms of H2, why has our EBITDA fallen so much if I compared to H1 and even compared to last H2, sir? So like what do we look at the steady-state EBITDA? Because we are saying about 20% but I think in H2, you are around -- without the other income, you were at around 12%. So sir, just wanted to understand, sir.

So it was about the introduction of the new call center that we had introduced. That call center was an extra expense on this whole plan, and that has been the major reason. No other reason other than that.

Okay, sir. So currently, what is the extra cost of it because call center would be a cost center...

INR 50 lakh to INR 60 lakh a month.

Okay. Okay. It would be around INR 50 lakh to INR 60 lakhs a month, right?

Okay.

Fair enough. So sir, in FY '27, sir, revenue is very clear, sir, but what is the steady-state EBITDA margin that we can do, sir?

More than this, reaching towards 20.

Okay. We'll be reaching towards 20, sir. Fair enough, sir. And sir, sir, any thoughts for us to do quarterly calls because, sir, what happens when we come out with the results, we would be more aware about this cost center in December, something the reaction wouldn't be such wild. So if -- because now we are also a growing company. So if possible, we could do a quarterly call, that would be really beneficial.

Sure. Sure. I'll try for that. Surely, I'll try for that.

Yes. Fair enough, sir. And just last question from my end, sir. So currently, a lot of people are now coming into this segment. So do you see that there is going to be some competition or because of a lot of more people coming in, we'll have to even enhance more marketing expenses. Any kind of rough marketing ad spend target in FY '27, sir?

Yes. About FY '28, I'll give you. The whole plan would be reaching about 2 lakh new patients is what we'll be planning for. So on an average, it would be somewhere about INR 2,000 per new patient acquisition is what we'll be planning for. So somewhere about INR 40 crores to INR 45 crores of marketing expense is what is to be required to reach to that level.

That would be per year or total over the next year, sir?

Per year.

Okay. Okay. Okay. Fair enough, sir. Fair enough. So then that would drag our EBITDA more because we haven't spent that much currently, right?

No, we haven't spent that much. But if a level of about INR 180 crores is what we reach. So in that case, about INR 40 crores to INR 45 crores of marketing plus INR 40 crores to INR 45 crores of COGS, that's about 26%. Plus it would be about INR 25 crores odd of HR, manpower expenses and maybe 10% of the total turnover would be the other expenses. That would reach somewhere about INR 140 crores, INR 150 crores odd of total expense. So about INR 30 crores still stays back in this full calculation. So somewhere about 18%, 19% EBITDA can be expected.

Next question is from the line of Akshat Mehta from Seven Rivers Holding.

My first question is on the FY '27 revenue target that we've given INR 170 crores to INR 180 crores. Can you just break that down a bit as to how you achieve that between hospitals, between franchise clinics and hospitals also between number...

Your voice was not clear to me. Can you come once again?

One second, sir. Is it better?

Yes.

Sir, I was asking that the target that you've given for FY '27 for INR 170 crores, INR 180 crores, can you just break that up a little bit as to how you will achieve between hospitals and between franchisee clinics and hospitals between number of beds and the ARPU as well?

So if we have to reach about INR 170 crores, the hospital revenue has to be somewhere about INR 50 crores to INR 60 crores. And the total clinic revenue has to have, say, about INR 100 crores to INR 110 crores. So that is supposed to be the whole plan. So we are heading towards it. We are planning for that.

And in the hospital segment as well, majorly, because of the bed additions that you're doing? Or will you see some single-digit ARPU growth also?

Yes, we will be seeing a single-digit ARPU growth also as well as the number of beds also should increase to a marginal level but that will help us as well as the marketing activities that we are trying to do for the existing hospitals that also will help us to reach to that level.

Sir, my next question is on the marketing cost. So you said that the call center cost around INR 50 lakhs, INR 60 lakhs per month, which is around INR 1.5 crores to INR 2 crores. Apart from that, there has been a INR 7 crores, INR 8 crore jump from first half to the second half of the year in terms of the other expenses. So I'm assuming this is all marketing cost. So when will we kind of see the effect of the marketing cost because this year, we've seen kind of a 19%, 20% of growth.

Right, right. The same, because what happens is 19% to 20% of growth that we see in our books, that is more in the total organization's enterprise growth. So whenever the enterprise growth is about, say, about INR 50 crores odd, out of that 40% comes into the company's books. So the marketing, whatever we do is for the franchise clinics as well as the hospitals as well as all the company clinics also. So whenever the enterprise growth increases by about INR 100, INR 40 comes into the company. So you will always see that kind of drift in between this. But the growth is actually going on, hence, 18% to 20% of growth is seen in the company's books.

But sir, if the percentage is similar, right, 40%, it was last year 40%, this year also 40%. So if it grows from INR 100 to INR 125, that 40% will also grow by 25%, right?

Yes. Yes, you are right.

So that should happen now. So we look ahead in '27, '28?

Yes, '27, '28, we are looking ahead for it.

Okay. Sir, can you help us understand where in the stage of expansion each of the hospitals are that you want to reach to 250, 300 beds.

Yes, I will. Right now, the Khopoli Hospital is 50 bedded, and we have now reached to about the third slab out of those total 7 slabs of the Khopoli Hospital. So the construction is in full pace. And -- so as we go on to the seventh slab before the rain begins in next 2, 2.5 months, what is we are planning for. That will help us to start with the ground floor of the existing construction. So that would happen for the Khopoli hospital as well as for the Nagpur Hospital, we are waiting for the permissions from the government. Once that comes in, we'll be planning to set up the Nagpur hospital also.

Okay. And Vadodara Hospital, sir?

Vadodara Hospital is a rental model. We don't have to spend anything into it. Once we reach to about 60% of the total accommodation in the Vadodara Hospital, we'll be going for the top floor, which has more about 75-odd beds accommodation space existing with it. So that we'll have some more time to reach to that level.

And can you share...

Sorry to interrupt, Mr. Mehta, may we please request you to rejoin the queue. Next question is from the line of Dharmesh Patel from Dhyanam Capital. As there is no response from the current questioner, we'll move to the next question from the line of Vinayak Kudva from Virtuous Capital.

This is Vinayak here. Now, my voice is clear?

Yes, you are audible. Please go ahead.

Yes. So doctor, can you brief more on that if I pronounced properly, Parasnath Hospital, which we acquired. So my question would be, you have mentioned in the result note, it is -- it has got INR 14 crore revenue as of March '26. So one -- first question is what is an EBITDA with this INR 14 crores, hopefully, we are expecting because it is too early to ask you on EBITDA. Second thing, do we have any balance sheet which you can say whether the asset has also come in or how many clinics they have or how many beds they have? So can you brief more on that?

Yes. So these Parasnath clinics are -- is a chain of about 70-odd franchise clinics. And the company turnover is about INR 14 crores odd and the EBITDA that I had seen was about INR 1.1 crores odd was the EBITDA. And these Parasnath clinics are majorly working in joint pain treatment through Ayurveda. So that has been since about 10, 12 years past, these clinics have been there. And they have reached to a level of INR 14 crores of turnover with 70 franchise odd. So in the future, we are again planning to increase...

So first question is -- sorry to interrupt.

No problem.

INR 14 crores is in the books of Parasnath, right? It is not a gross turnover. It is net turnover in the books of Parasnath.

Net turnover.

Perfect. Please, sir. Go ahead, sorry.

So in the future, we'll be planning to grow with the franchise of these joint pain clinics also as well as there is a room to increase the EBITDA margins also as we go ahead, we'll explore it still further.

Same continuing second question, this INR 6 crores what we paid is an equity value to the shareholders from whom we bought 100%, right?