Vijaya Diagnostic Centre Limited (VIJAYA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Vijaya Diagnostics Limited Q1 FY '27 Earnings Conference Call hosted by JM Financial Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Abin Benny from JM Financial Limited. Thank you, and over to you.

Thank you, and good morning, everyone. I'm Abin Benny, and on behalf of JM Financial, I would like to extend a warm welcome to all of you on the first quarter FY '27 earnings call of Vijaya Diagnostics Centre Limited. At the outset, I would like to thank the management of Vijaya Diagnostics for giving us the opportunity to host the call. We look forward to having an engaging and insightful discussion on the company's quarterly performance and the outlook. From the company, we have with us today Ms. Suprita Reddy, Managing Director and Chief Executive Officer; Mr. Narasimha Raju, Chief Financial Officer; Mr. Dhiren Gala, Head, Investor Relations and Corporate Development. With that, I would now like to hand over the call to the management for their opening remarks. Over to you, ma'am.

Thank you, Abin, for hosting the call. Good morning and thank you all for joining us on the call today. Before I move on to a detailed business update, I would first like to welcome Raju back, who's rejoined as our Chief Financial Officer, and I'm sure he doesn't need any introduction to the investor community. Moving on to the business update. I'm pleased to start on a positive note as we delivered a solid year-on-year revenue growth of approximately 22.8%, supported by volume growth of nearly 16.5% in Q1 FY '27. Coming to PH, we're very happy to inform that we have delivered year-on-year growth of approximately 18%, primarily driven by network expansion. Happy to announce that during the quarter, we also added one hub center in Gachibowli, Hyderabad with 160-slice cardiac CT with superior infrastructure. During the quarter, we further expanded our network with the successful commissioning of 4 spokes across Hyderabad, AP and Pune. In July, we added another 2 spokes. I'm pleased to announce that in July, we also commissioned our flagship hub in Bengaluru located at JP Nagar, where we have introduced advanced imaging technologies, including a digital PET-CT with an inbuilt cardiac CT and also 75-centimeter wide bore 3T Omega MR. The 75-centimeter ultra-wide bore design allow the parent to remain directly inside the gantry with the child, ensuring maximum comfort, eliminating anxiety. It also enhances comfort for a lot of claustrophobic as well as bariatric customers. The hub also houses a full-fledged state-of-the-art automated lab, which will serve as a central lab facility for our Bengaluru network. Our CAPEX plan includes commissioning another 9 hub centres and 10 to 12 spoke centres out of which we have already commissioned 2 hubs and 6 spokes till dates. We will be continuing our efforts to strengthen the technical and mid senior level leadership team across our network to help scale in a sustainable manner. With that, I now hand over to Raju to walk you through the operational and financial highlights. Thank you.

Thank you, ma'am. Good morning and a warm welcome to everyone. It's a pleasure to be back to the Vijaya family, and I look forward to meeting you too. Now I will take you through the financial performance and key developments for the quarter ended June 30, 2026. The consolidated revenue for current FY [indiscernible] at INR 331 crore reflecting a strong revenue growth rate of 22.8% year-on-year, and this strong revenue growth was again driven by test volume growth of 16.5% year-on-year. Balance growth was due to change in the test mix and increase in realization. Hyderabad continued to outperform, maintaining its strong growth momentum at 17% year-on-year revenue growth, Pune also delivered 18% growth year-on-year. Coming to the geography-wise revenue contribution for the quarter, Hyderabad contributed 67%, rest of AP-Telangana contributed 20%, Pune 6%, West Bengal 4%, and the rest of the geographies contributed 3%. During the current quarter, the revenue growth has been driven by both radiology and pathology segments reflecting the robustness of our B2C focused integrated business model. The B2C revenue stood healthy at 92%, our radiology business stood at 37%, the revenue per test and revenue per footfall stood at INR 503 and INR 1,860 respectively during the current quarter. EBITDA for the current quarter stood at INR 98 crores as compared to INR 74 crore in the corresponding quarter in the previous year reflecting a year-on-year growth rate of 34%. The EBITDA margin stood healthy at 42.7% in the current quarter with an improvement of 360 basis points year-on-year. The profit after tax for the current quarter stood at INR 53 crores reflecting a growth of 37.6%. And the PAT margin also stood healthy at 23%. As you are aware, we commissioned 10 hub centres during the previous year and the pace at which most of these hubs have ramped up has exceeded our own expectations. The momentum has continued into the second year as well with pathology revenues now beginning to scale alongside the radiology. This strong execution has given us the confidence to deepen our presence in these new markets and replicate the expansion strategy demonstrated last year. Accordingly, we plan to commission 9 hub centres, 10 to 12 spoke centres and our state-of-the-art Punjagutta reference laboratory. In addition, we intend to acquire land in one of Andhra Pradesh's key medical hubs for setting up another hub center for future expansion plans with an estimated investment of INR 8 crores to INR 10 crores. Overall, we expect our CapEx to be approximately INR 190 crores to INR 195 crores for this expansion. We continue to maintain a strong balance sheet with a surplus cash position of approximately INR 330 crores, consistent cash back generation of close to 26% to 27%, and a healthy revenue ratio. This resilient financial foundation enables us to pursue our expansion strategy with confidence and maintain a disciplined approach to capital allocation. That's all from my side. I now request the moderator to open the line for Q&A.

[Operator Instructions] We have our first question from the line of Siddharth Kay from Tusk Investments.

Ma'am, my first question is regarding the number of centres. So as of Q1, the total number of centres is 166. So could you just give us a breakup between this how many hubs, how many spokes? And does this include collection center as well?

So in the total of 166 centres, we have 51 hubs and 115 spokes with approximately 26 processing units.

So the 26 processing unit is part of the 166 number, right?

Yes. Processing centres are part of the hub centres and these act as the cluster labs to process all of those samples across those geographies.

So then when we say collection centres, so don't we have any collection center number? Or is it…?

We don't do plain collection center formats at all. So the smallest center will also have ECG or X-ray. So all of those centres put together come in the spokes of 150.

And the acquisition from the Pune PH Diagnostic, though it had 12 collection centres. So that also had the spokes model with the ECG and…

The 12 collection centres of PH after acquisition also gradually have been upgraded, and most of them have added some amount of imaging and cardiology into it.

And my second question is regarding the CapEx. The 2 hub centres that we commissioned this quarter, what was the combined CapEx for the 2 centres?

As we mentioned, in the current quarter we commissioned 2 hubs, one in Bangalore - the state-of-the-art hub center with 3 Tesla wide bore. And also, we installed a digital PET-CT with an inbuilt cardiac CT as well. And also we have added the state-of-the-art laboratory as well which will act as a central lab for the entire Bangalore region. So for this center, the estimated CapEx was approximately INR 30 crores of what we incurred in the current quarter. And the second hub center what we opened is in our core geography in Hyderabad at Gachibowli. Again, it's at a prominent location which is close to the financial district and Hi-Tech City. To suit to this location, we also have done slightly superior infrastructure as well at this center. And this center has also got 160-slice cardiac CT as well in this hub center apart from the basic radiology equipment like ECG, X-ray, ultrasound, mammography, etc. So the CapEx for this center was INR 9 crores in the current quarter what we incurred.

[Operator Instructions] We have our next question from the line of Abdulkader from ICICI.

Just wanted to understand in your opening remarks you mentioned about doing a CapEx of close to INR 190 to INR 195 crores, and then getting some [ banks ]. So what exactly are we doing there, if you can elaborate would be helpful.

Yeah, sure. Abdul. As mentioned, in the next 12 months we're planning to add close to 9 hub centres and 10 to 12 spoke centres, out of which we already added 2 hub centres as of now. And also coming to the spokes, we added 6 spokes across our network. Also further, we're also planning to set up a hub center at one of the key [ PHC ] locations in Andhra Pradesh as well. So there, since we are not able to secure a leased location, we might invest INR 8 crores to 10 crores to purchase the land to set up another state-of-the-art hub center which will be close to medical facilities over there. So the overall CapEx is INR 190 crores is the estimate, Abdul. Out of which, as I said, the major CapEx is towards the JP Nagar Bangalore facility which will require INR 30 crores. And the balance, 8 hubs will be in the range of INR 15 crores to 16 crores will be the CapEx for the other hub centres. And also as mentioned in the last call, we are also setting up a state-of-the-art reference laboratory in Punjagutta. So the CapEx for this lab is also included in this overall CapEx of INR 190 crores.

So Abdul, just to add to what—as you're aware, we commissioned 10 hub centres during the previous year. And the pace at which most of the hubs have ramped up has exceeded our own expectations. The momentum has also continued in the second year as well with now pathology revenues scaling alongside radiology. So this strong execution has given us the confidence to deepen our presence in these markets and replicate the same expansion strategy which was demonstrated last year.

And second one on Pune. So if I look at your Pune growth, you know it's close to 23%, while PH's, you know, growth rate has improved. But if you have to understand directionally then, you know, in what in frame, if you could help us mark that, that PH will start growing in line with what your average growth in Pune currently is?

So Abdul, just to correct on that point, the Pune geography in the current quarter grew at close to 18%, from close to INR 10.8 crores to INR 12.8 crores. And also, in the coming 12 months we're also planning to add 2 more hub centres as well. And also we have plans to add few more spokes in that network. So definitely we expect that. The growth momentum will continue in Pune geography.

And a final one if I may, so on margins, so this quarter margins were quite significantly elevated, and given the expansion plan what you have, would you still guide for around 40% kind of EBITDA margin range?

Yes, Abdul. The existing—since the existing cluster have been growing at a very good rate, the operating leverage is being played out. So that's the reason why we could achieve this healthy EBITDA margins of 42.5% in spite of we adding last year close to 10 hubs. The drag, if any from those 10 hubs would have been close to like a 0.5%. But because of the operating leverage that we're getting from the existing clusters, example like Hyderabad geography grew at healthy 17%. So because of this the operating leverage is playing out every quarter and that is helping us to get this above 40%. So even if you get like a 40% to 45%, even if there's a drag from the Future expansion, another one, one and a half percent, we are fairly confident of achieving the above 40% EBITDA margin.

We have our next question from the line of Anshul Agrawal from Emkay Global.

Just following up on the previous participants question on margins. The hubs that we sort of commissioned in FY26 now that pathology revenues would have sort of started to trickle down and these hubs would revert to our portfolio level pathology contribution of revenues. We don't foresee any margin dip in those hubs because of this.

Raju, here. We don't foresee any deep from these hub centres because 60% to 70% of our cost is coming from the fixed cost base. So most of these centres as we announced in the previous calls they've already achieved the break even. That means already fixed costs have been already absorbed. And as you know, our cost of metal consumption on blended basis is close to 11%. So your contribution is 89%. Any further revenue in these hub centres from a pathology business side will directly flow to the EBITDA level. So we don't foresee any okay. Deep at the margins level because of the pathology revenues growing up in these hub centres.

So no depend the hubs that we added in FY '26 and in the current year the hubs that will add obviously on a largest base of network, the margin dip would not be expected in the range of what we sort of witnessed in Q1 '26. Would that observation be correct?

So Anshul, remember in Q1 we had launched 6 hubs, all came at one point of time. But during this year you would see CapEx being in a staggered and a phased manner. So we don't foresee, you know, a significant impact on account of these hubs during the current year or any of the quarters.

Second question I had was on the land that will purchase in AP this is no deviation from our strategy of leasing properties, right. This is just a one off case wherein we're not able to secure a lease and hence we are buying the land.

So like we mentioned earlier there are certain regions of interest that we would like to go in and rest of AP, Telangana and Hyderabad and keeping the requirements of the long lease and the infrastructure like we've mentioned earlier, if we find a place that's suitable and this is an area where we've been trying to open a center for the last almost 6 to 7 years. So when we found this piece of land which is ideal in size and also in terms of location is located in the medical hub of that particular region we said it makes so it's one of its kind but it's going to be a state-of-the-art hub center for Andhra.

And this land would likely be purchased in the current year and the INR 190 crores CapEx includes this acquisition cost.

Yes. It does, it does.

Second question that I had was on the wellness share ma'am. Now last year we did 14.8% and this quarter itself we are at 14.8%. Would it be possible to sort of add some color on how we are able to sort of ramp or sort of crack up this crank up this lever? I have gone through the presentation but any additional color on any specific age cohort that is sort of driving this and is this a structural sort of lever that we all of diagnostics differentiated.

I would say yes, more than structured. Like I said pre-COVID times we used to be around 8% and with the awareness, more migration and lot of education in the tier-2 geographies itself. Now if you see this 15% some of it is actually contributing from the tier-2 geographies which was not what we would see in the early on days. So this is, that's also reason why we do not basically have this process of upselling or pushing packages. So the number that you're seeing here 15% is pure wellness revenue coming in from customers who are wanting to come and avail one of these packages. So there's only two things that we do differently differentiated in this is one is a digital initiative that we Continuously try to educate and then you are seeing a lot of the newer hub centres get more advanced cardiac CTs. So what's happening is early on the packages would probably end at an ultrasound 2D echo TMC. Now you are seeing packages go all the way from your basic urine blood investigations all the way up to whole body imaging. That could be in MR. That could be in a CT. That is also the reason why you are seeing a little additional costing in Gachibowli center. Because we've tried to work little differently with the center in terms of the look and feel of the center, the experience itself and also packaging it in ways where the packages go into multi organ screening. So this is something that we will be taking forward into Bengaluru, Pune, rest of the geographies that we are as we understand the probably the requirements of the customers better.

Just a follow up on this, what would be the price point of these premium wellness packages for us at the portfolio level?

Again like we said, we don't do deep discounting on this. Probably on an MRT they would be a little lower than about 20% is the highest. So a package of an angel would approximately range anywhere between say INR 8,000 crores to INR 10,000 crores.

And with improving share of wellness, our patient level or a test level realization will only inch upwards.

Yes it will.

[Operator Instructions] Next question is from the line of Alankar Garude from Kotek Institution.

Firstly if you look at Bangalore, it's been almost a year since you entered the market. Can you talk about how the competitive landscape has been both on pathology as well as radiology and if you can comment on your learnings over the last one year and how do you expect the market to play out over the next 3 to 5 years?

The competitive landscape I think is more or less the same across most of the geographies that we operate in and Bangalore has been no different. But Bangalore keeping the limitations of probably the difficulties of the city itself in terms of your traffic logistics. You've not seen large brands grow in Bangalore where a single brand has about 30, 40 centres. So they are locality specific chains that have 5 to 6 centres concentrated in one cluster. So to understand the market better, like we mentioned earlier, we chose 2 geographies since we were new to the market to understand customer requirements, one in HSR layout on one corner of the city and Yelhanka on the other corner of the city. Both of them exceeded our expectations, broke even in the first year itself. Now we said keeping the growth of Bangalore being we will probably read Karnataka as our next core geography after rest of AP Telangana. Keeping that growth and the plan in mind. He said we require a fully automated lab first to create a hub -- to create the infrastructure before we go on expanding and adding on new centres. And that is when JP Nagar has happened with this INR 30 crores CapEx investment which is again like a state-of-the-art hub center like Punjagutta and Hyderabad for us in Bangalore. JP Nagar center has infrastructure which is first of its kind not only to Karnataka but many states. So the 3 Tesla Omega is the first in Bangalore and the digital PET with a cardiac CT is also the second. Only a hospital has it and the first diagnostic to have it there. Now there are two things here to add to the wellness. Full body imaging in an MR and the cardiac CT gives you the full body imaging in CT. So they're not only going to be serving as prescription based diagnostic facilities but also probably inching towards wellness there. Now next once the lab settles and gets accredited, you will see a lot more hubs and spokes coming up in Bangalore itself and then we start looking at home collection. So this is basically setting up Bangalore for the next 5 year journey. That is where we see ourselves on Bangalore.

Just one follow up there would be if I compare the different locations you are present in, the different cities mean, would you say that Bangalore in terms of the overall market dynamics is more closer to Hyderabad than any of the other cities you are present in and maybe another one there is if you can compare and contrast Hyderabad and Bangalore in particular and I mean does Bangalore, apart from the micro market point which you mentioned, can it be as big as Hyderabad for us? Conceptually if I look at the next say 10 to 15 years.

Definitely. Bangalore and Hyderabad are very correlated to each other especially because I would say the southern part of India. So initially when we entered Maharashtra with the Pune acquisition, we said we needed a little more time than the guidance that we had given because it is a new market and we are trying to understand the needs of that localized market. But if you look at south India per se, like we mentioned earlier, the way the markets operate, whether it is probably Tamil Nadu, Kerala, Karnataka, Andhra, Telangana will all be similar because we tend to probably like I mentioned earlier, for a simple headache we go and see a super specialist and try to finish it in the first instance itself instead of waiting it out. And also a lot of like you see the wellness bit growing in tier-2 jobs geographies. That is because of the basic awareness among clientele and the importance that is given towards healthcare. So tier-2 geographies, the hubs are also ramping up because of availability of these super specialists across these tier-2 geographies. Look at Gulbarga in Karnataka, it's comparable to say a Nellore or a Karnool for us in Hyderabad geography. So they are definitely similar. If you say what do you look at for Vijaya in the next 10 to 15 years it's going to be definitely eastern part of India and Karnataka. Both of these are probably enough for the next 7- to 8-year plan to go as deep as Hyderabad. And these 3 states will definitely give us the numbers that all of us would be looking at.