Yatharth Hospital & Trauma Care Services Limited (YATHARTH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Yatharth Hospital Q3 FY '25 Earnings Conference Call, hosted by Nuvama Wealth Management Limited. [Operator Instructions] Please note that this conference is being recorded. Let me draw your attention to the fact that on this call, company's discussion will include certain forward-looking statements, which are predictions, projections or other estimates about future events. These estimates reflect management's current expectation about the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause company's actual results to differ materially from what is expressed or implied. I now hand the conference over to Ms. Aashita Jain from Nuvama Wealth Management Limited. Thank you, and over to you.

Thank you, Steve, and good day, everyone. I, Aashita Jain from Nuvama Wealth Management, welcome you all to Q3 FY '25 Earnings Conference Call of Yatharth Hospitals and Trauma Care Services. From the management, we have with us today Mr. Yatharth Tyagi, Whole-Time Director; Mr. Amit Kumar Singh, Group Chief Executive Officer; Mr. Nitin Gupta, Chief Operating Officer and President Finance; Mr. Pankaj Prabhakar, Chief Financial Officer; Mr. Neeraj Vinayak, Head Strategy and Investor Relations; and Mr. Sonu Goyal, Financial Controller. I now hand over the conference call to Mr. Yatharth Tyagi for his opening remarks, and we will then open the floor for question-and-answer session. Over to you, Mr. Tyagi. Thank you.

Good afternoon, and a very warm welcome to Yatharth Hospitals and Trauma Care Services Limited Earnings Conference Call for the quarter ended December 31, 2024. We have uploaded our presentation on the exchange and the company website, and I hope you all might have received and have had an opportunity to go through it. I'm pleased to report that Yatharth Hospitals has achieved robust growth in revenue surpassing 30% year-on-year, Y-o-Y, and EBITDA surpassing 20% year-on-year growth for the 9 months ended FY '25. Our expanding network of super specialty services alongside the successful integration of the Greater Faridabad hospital has been instrumental in driving this momentum. I'm glad to share that we have completed payments for 2 newly acquired hospitals in New Delhi and Faridabad, adding approximately 300 and 400 beds, respectively. Our focus now remains on operationalizing these hospitals by the next quarter. We are intensifying our efforts towards the procurement of state-of-the-art medical equipment and advanced robotics systems. This strategic initiative is designed to elevate the quality of care provided and to ensure that our facilities remain at the forefront of medical innovation. In tandem with these advancements and with the addition of new beds, Yatharth brand is now attracting leading doctors and specialists across NCR region, reinforcing our position as a trusted health care provider. A key notable achievement this quarter for Yatharth Hospitals was a successful kidney transplant facilitated through one-of-its-kind transfer of a kidney from Faridabad to our hospital in Greater Noida in just 20 minutes and 40 seconds by creation of a 46-kilometer green corridor. Our commitment to clinical excellence is demonstrated by several other noteworthy cases. We performed the first cochlear implant surgery on a 5.5-year-old girl with the case of bilateral congenital hearing loss from Turkmenistan. A female patient from Africa with complex heart conditions, including severe mitral stenosis, severe [indiscernible], a sinus venosus, atrial septal defect and a partial anomalous pulmonary venous connection with severe pulmonary artery hypertension and right heart failure. After intense medical operation, she successfully underwent surgery, which involved replacing the mitral valve, repairing the valve as well as closing the atrial septal defect and rerouting the whole right pulmonary vein through the expertise of our surgeons. In another scenario, our team conducted a coronary artery bypass grafting procedure, where 3 bypasses were put on the heart targeting LAD, PDA and the ramus intermedius in case of a Dressler's syndrome. These cases reflect the high standard of care and the hospital's advanced capabilities in handling intricate medical cases at Yatharth Hospitals. In line with our vision to continuously introduce the most cutting-edge technology for our hospitals, we have this quarter added interlaminal spinal endoscopy in Noida Extension and started therapeutic nuclear medicine and radiotheranostic lutetium therapy at Yatharth Hospitals. This cutting-edge therapy integrates diagnostic imaging and targets therapeutic solutions providing a highly effective treatment for certain cancers, such as neuroendocrine tumors and prostate cancer. Where all therapy fails, these therapies will enable Yatharth Hospitals Oncology Department to offer high-end oncology specialization services. I'm happy to share that our focus on patient-centric, high-quality health care, combined with strategic acquisitions and investments have helped us achieve an ARPOB of INR 30,614 in 9 months financial year '25, with Noida Extension Hospital registering the highest ARPOB at INR 37,608, up 12% Y-o-Y, while Greater Noida Hospital INR 34,584 is up 21% Y-o-Y. Our newest Greater Faridabad hospital has ramped up very well and has been successfully integrated in just 7 months of being operationalizing. It has the revenue growth contribution to 5% of our overall group's revenue and has an ARPOB of INR 34,365 for Q3 FY '25 in initial days of hospital's commencement. Finally, I would like to take this opportunity to provide an update on the income tax matter and addressing the recent market rumors. IT Department had conducted a search operation in 2023 and as part of their standard procedure, a certain amount was provisionally blocked by the department. Till last quarter, a majority of those funds, which were provisionally blocked, have been released and have been unblocked. In the recent development, a new assistant commissioner assumed responsibility of a case, which was pending for 2, 3 months in between and has, in the similar line, provisionally attached some of company's assets. The issue was informed to the stock exchanges after receiving notice from the authorities. Further to our intimation, during the QIP, an amount of INR 6.23 crores from the attached FDs were indeed allowed to be utilized by the company from the income tax authorities. We are actively cooperating with the authorities to expedite the resolution of this matter and do not anticipate any significant material, financial or operational liabilities arising from these proceedings. Furthermore, Deloitte has already been appointed as our internal auditor since last quarter, and our teams have been actively working towards their suggestions for strengthening our financial systems and risk controls. Moreover, in line with the previous communication regarding the appointment of a leading auditing firm as a statutory auditor, I'm pleased to inform you that we are on track to finalize the top 6 auditing firms from the upcoming new financial year and the company will be having the new top 6 auditors. We believe that Yatharth Hospitals is well poised and a focus on patient-centric, high-quality health care, combined with strategic acquisitions and investments in medical field, will drive long-term value for our stakeholders. The company remains on track into fulfilling all the parameters and targets that it set for itself in the field of delivering high-end patient care in the regions that we operate. I will now hand over the call to our CFO, Mr. Pankaj for financial updates.

Good afternoon, everyone. Yatharth Hospital has delivered growth in the both revenues and profitability for the quarter and 9 months ended December 31, 2024. Let me first take you all through the results for the quarter. During the quarter, Yatharth Hospital achieved a revenue of INR 2,192 million, reflecting a substantial growth of 31% year-over-year and a growth of 1% quarter-over-quarter, driven by growth in our occupancy and ARPOB. Notably, our Noida Extension Hospital registered highest growth with a remarkable 43% Y-o-Y increase in revenue, now contributing 36% to our top line. Our inpatient volumes were up by 36%, while our outpatient volume were up by 12% Y-o-Y in the quarter. We have also made significant strides in advancing our tertiary and quaternary care services. Earlier this year, we introduced a new radiation PET line at our Noida Extension Hospital and robotics across our Noida Extension, Greater Noida and Greater Faridabad Hospitals. These investments have significantly boosted our oncology revenue, which now -- with oncology now contributing to 21% to Noida Extension's revenue and 10% to group's overall revenue, a 150% increase from last year. The shift towards high-value super specialty services have driven a 4% Y-o-Y increase in our ARPOB, which now stands at INR 30,652 for quarter 3 FY '25. Notably, Noida Extension achieved an ARPOB of INR 37,886, driven by the 70% contribution from our super specialty services, reflecting our focus on high-end health care solutions. We remain optimistic about our Greater Faridabad facility, which now contributes about 5% to our top line and its ARPOB contribution, evident from quarter 3 ARPOB number of INR 34,365. Our EBITDA for the quarter improved by 18% Y-o-Y to INR 549 million. However, our EBITDA margin this quarter were at 25.1% compared to 27.8% last year. The reduction in EBITDA margin for the quarter was on account of operational losses at our Greater Faridabad unit, which became operational in mid-May. Adjusting for Faridabad losses, our EBITDA margin would have been in the range of 26% to 27% this quarter. Overall, our profit grew by 3% Y-o-Y at INR 305 million, a relatively slower profit growth recorded due to an increase in depreciation [Technical Difficulty].

Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go ahead.

Our EBITDA for the quarter improved by 18% Y-o-Y to INR 549 million. However, our EBITDA margin were at 25.1% compared to 27.8% last year. The reduction in EBITDA margin for the quarter was on account of operational losses at our Greater Faridabad unit, which became operational in mid-May. Adjusting for Faridabad losses, our EBITDA margin would have been in the range of 26%, 27% this quarter. Overall, our profits grew by 3% Y-o-Y at INR 305 million, a relatively slower profit growth recorded due to an increase in depreciation expense here in the quarter, in line with our ambitious bed capacity expansion plan and addition of state-of-the-art medical equipment at our leading hospitals. Coming to 9 months numbers. Our revenue grew by 32% Y-o-Y to INR 6,487 million. Our inpatient volume were up by 32%, while our outpatient volume were up by 12% Y-o-Y in 9 months. Our overall group occupancy also increased to 61% in 9 months FY '25 compared to 53% in the same period last year. Notably, our Noida Extension in Jhansi-Orchha have shown impressive occupancy growth reaching 60% and 50%, respectively, compared to 42% and 20% in the same period last year. Our EBITDA for the 9 months period stood at INR 1,632 million, up 22% Y-o-Y, while EBITDA margin stood at 25.2%. Our profit for 9 months period stood at INR 911 million, up 21% Y-o-Y. Our balance sheet continues to remain strong with a net cash position of INR 5,605 million with the fund infusion from the QIP. We remain confident to not only sustain the growth momentum in revenue and profitability, but also towards capitalizing opportunities ahead to achieve operational excellence and expanding our presence in North India. Thank you. With this, I would like to hand it over to the moderator for question and answers.

[Operator Instructions] First question is from the line of Ritika from Perpetuity Ventures.

Sir, I had majorly 2 questions. One was that the ARPOB was 4% Y-o-Y this quarter. So how is this projected to grow? And even in Noida cluster I see now a drop in revenue, so how is that -- what is the major reason for this? And around the income tax thing, so what my understanding is if you have a provisional attachment, you can release it through bank guarantee. So is there any plans of that? And what is your maximum, like, what is the valuation of your provisional attachment?

Right. So the first question on the ARPOB, as the company has demonstrated good ARPOB growth year-on-year. Similarly, this 9 months have shown good ARPOB growth. This is primarily due to increase in our super specialty business and specifically oncology is now contributing to a larger share driving this good ARPOB growth and also reduction in our [indiscernible] business, which we have collectively chosen, which is leading to a good ARPOB growth. And we feel the 10% ARPOB growth that the company has seen Y-o-Y for last year should be sustainable for the years to come ahead. Similarly, your second question on the Noida cluster. So the Noida Extension Hospital actually has shown good growth and continues to show good growth. Similarly, Noida, Greater Noida have been increasing. If you look at the quarter -- Q2 compared to Q3, Q3 has always been a leaner season for us in the past and across the industry. So it is in line with that. But even then, we have sustained and, in fact, increased a bit in the revenue. That is due to the addition of our the newer hospital that is in Greater Faridabad as well as growth in our -- some of the existing hospitals is concerned. Coming to your third question on the income tax matter. So the provisional attachment of the assets, we do not require to submit any amount to get them released. We have been assured by the Income Tax Department that they will be anyway being released very soon, and we are in constant conversation with them regarding this provisionally unblock of the assets, just like our provisioning block of the amount a year ago had been released. We have been assured by the department that this provisional blocking of assets will also be released, and we do expect a very positive outcome very soon from the department. And there are no plans to give any FDs in exchange of this.

Okay. So what is the lien amount currently?

Sorry, what is the...

Lien amount with the Income Tax Department?

It is close to INR 60 crores.

The next question is from the line of Parth Kotak from PLUS91 Asset Management.

I have a couple of questions. The first being regarding recent acquisition model from Delhi and Faridabad. Could you elaborate on the projected timelines for achieving breakeven and payback for these hospitals? And how do you plan to ensure operational efficiency given the significant CapEx outlay of about INR 220 crores for Delhi and about more than INR 150 crores for Faridabad?

So this is in line with our strategy of expanding in our areas, where we have a strong presence. The decision for acquiring another hospital in Faridabad was the fact that this is the area that we have studied very well. We have already started a hospital in Greater Faridabad last financial year, last quarter. So we understand the market and just trying to replicate that we have already done in Noida. We expand from one part to another within the same city and become a leading player in that region. So that's why the Faridabad upcoming hospital, which is a 400-bed hospital, which will have cancer treatment, something a Greater Faridabad hospital couldn't have. So we will leverage the brand completely in that area. Similarly, the Delhi hospital, also, which is located strategically very well in Model Town. Both these 2 hospitals are planning to start from the 1st April. That is the first day of the new financial year. And we feel that, in the past, our hospitals have been able to break even somewhere around 18 months to 2 years' time. And I think these 2 hospitals will also be in a similar timeline as far as that is concerned. And as far as the payback is concerned, usually, it takes 4 to 5 years for our hospitals in the past to be -- to have that payback. So we would assume that both these 2 hospitals will be similarly on those lines.

Sir, just one follow-up on the steps being taken to address the initial operating losses at Greater Faridabad Hospital? And when can we expect that to turn profitable?

So I think Greater Faridabad Hospital should be able to turn profitable in the next financial year -- before the closing of the next financial year, somewhere between 9 months ending of next financial year. In fact, we are quite happy with the progress of that hospital already not just in Q2, but as we speak -- not just in Q3, but as we speak in Q4, that hospital is looking very promising because now we have all the empanelments that are required. We have recently received certain government empanelments in that hospital within the last few weeks, which are even adding more occupancy growth to it. And even the NABH inspection has been completed in the past few weeks, which will empanel us to tie up with more government empanels. So quite happy with the progress of the Greater Faridabad Hospital, and it should be able to break even somewhere in 9 months -- close to 9 months of next financial year.

Perfect, sir. Sir, last question, rather a basic one. First of all, thank you for giving the beds capacity and census beds in the current presentation. If you could just help us understand the difference between the two, that would be really helpful.

So the certain -- in a hospital, the certain beds are we call it daycare beds. It's like all emergency beds, all dialysis, where patient comes and have a short stay or probably only the day stay. So those beds are not considered in a census bed. So census beds are those beds when the midnight occupancy you take where the patients are admitted is completely IPD. So any hospital takes a midnight occupancy that patient is staying overnight, right? So that is the difference between the total bed and a census bed.

The next question is from the line of from Hiten Boricha for Sequent Investments.

I have a couple of questions related to this income tax matter. So first question is what was the total amount blocked at the time when it was blocked? And you mentioned, majority of this fund has been [ unblocked ] for now. If you can quantify what was the total amount blocked? And second question is, also there were [indiscernible] the company being attached. So what is the value of the asset?

So at the time when the income tax audit started, this is around 12 to 13 months back, because the company had recently raised funds from the IPO, there was amount with the company at that time in the form of FDs. So there was an amount, so that's why it was provisionally blocked. Even after repaying of the bank loan at that time, the company's book had an amount very close to INR 250 crores. So because it was the amount that the company has raised, it was on the books that time in the forms of FD. So there were provisional attachment on that. And slowly that all amount has been released and only a matter of INR 50 crores to INR 60 crores right now it's provisionally blocked. And second, as far as the blocking of the assets is concerned, right now, again, because when the new officer took over our case and reopened up file, that time there was no FDs with the company in the tune of what it was a year back. So that's why they provisionally blocked the assets. And I think the asset valuation is to see and can be seen from the NSE and the BSE depending upon the number of shares because we have earlier disclosed also the exact number of shares that are being attached. So the valuation can be taken from that.

Okay. So only INR 60 crores is blocked, right?

Yes.

And what was actual number -- actually, your line -- you are not audible properly, sir. What was the initial number when it was actually blocked?

Close to INR 250 crores.

INR 250 crores. Okay. So sir, what was the...

Because that was the amount that was available on the company's balance sheet that time as the FD. So the whole amount was provisionally blocked that time. It was not that there was a certain measure of this is what they want to block. There was no thought process that they would block based on certain calculation, nothing. It was just whatever FD was there at that time, at the company's balance sheet, was blocked, and we had that FD because we just came out from the IPO fund raise. It was all provisionally attached. It was not frozen or seized.

Okay. Okay. So sir, can you quantify what is the total monetary demand or money which is demanded by the authority? Just to understand this matter clearly...

There is no demand of any money or authority so far. See, for a company, if there was, it would have been the easiest thing for us to do. We would have just paid that penalty. It would have been a minute penalty, and this closes this matter for us as early as possible. But because the case is going on and usually any income tax matter in India takes 2 years of time. We are 13 to 14 months into it, and we are quite hopeful and this is what we have been told that before the end of this calendar year, our matter will also will be closed.

Okay. Sir, one last question on this matter...

But before that, even the provisional attachment of the property, we are expecting that to be revoked very soon. We are not waiting for that for many months, but we have been assured by the department that it would be released very soon. So we don't need to wait for that for the end of the calendar year.

And just last question on this matter. So you mentioned something about QIP money. So we have utilized -- they have allowed us to utilized INR 6 crores something from QIP money. So just for the sake of clarification, is QIP money also freezed by the authority, or we can utilize that money at any point of time?

It is not at all seized or provisionally blocked. In fact, when the company went to QIP, we even discussed with the IT Department that we are planning a QIP route because we are acquiring new hospitals, we want to expand. And the IT department is completely okay with that. They gave ahead the permission, you can go all ahead, raise QIP and utilize it as per the objective of the company. If there was any issue from that side, they would have not allowed the company to take the QIP route, or when the money was raised from QIP, they could have also chose provisioning blockade, but they have not blocked it. In fact, from the QIP amount that the company has raised, company has already utilized maximum of that amount. The bank loan has been repaid. The acquisition cost has been paid for both the 2 hospitals from the QIP money, and we still have that money free to be utilized.

Okay. Okay. No sir, the reason I asked this question, you clearly mentioned something that INR 6 crores was allowed to be used by authorities. So that was...

That is from the INR 60 crore amount that was earlier being blocked. So post QIP, even certain amount of that INR 60 crores has also been released.

The next question is from the line of Ranvir Singh from Nuvama Wealth.

Congratulations to management for showing good operating performance. My question was related to IT-related issues, I think, mostly has been clarified. Sir, another question, during this quarter, the EBITDA include anything related to acquisition cost or any one-off cost in this quarter?

No.

Okay. And secondly, that INR 50 crore liability -- the tax liability is currently is as per their assessment. So how confident you are whether ultimately you have to pay it or you are fighting it to reduce it to minimum level? Or how is your confidence level there?

Just a clarification, the INR 50 crores to INR 60 crores that is provisionally blocked is not the tax liability that has been asked from the company. It is provisionally blocked as earlier stated. But we do expect this also and the assets to be released very soon. The ultimate amount will be much, much less, which will be insignificant for the company's operational performance and the financial aspect. And this amount is not the liability that the tax has asked for the company to pay.

Okay. Okay. Right. And secondly, currently, we have a fairly good level of cash, at INR 60 crores something. So how we are going to utilize it because 2 acquisitions we have already done. So within a year, or do you have any timeline in your mind when you are looking for an acquisition? And what kind of acquisition we you looking now?

So this amount -- certain of this amount is already marked to the medical equipment that we will be putting into the 2 newer hospitals. So even the acquisition costing of those 2 hospitals has been paid, but new medical equipments will be deployed in those 2 hospitals in the matter of next few months as we are planning to launch them very soon. So oncology machines, robots. So a lot of amount will go into those medical equipments. And the remaining amount is for the company to utilize as general corporate expenses, which we can utilize if there's an upcoming acquisition of another hospital or if there's a greenfield land acquisition that we want to do. But we have already marked at all objects of the money that we will be utilizing from the amount raised in the QIP.

As on December we have earmarked an amount which will reflecting in the balance sheet, which has been subsequently being utilized for the objectives mentioned in the QIP.

Understood. So even after paying all amount because before QIP also your balance sheet has been very strong. And -- so after utilizing all what you have planned, still, I think you will have some cash surplus. Now here, the question is that if we acquire a running hospital, obviously, the cost would be much, much higher. And if we acquire the hospital, like Faridabad we have acquired, then it will take a time to actually reach a breakeven or to optimize this. You also need some -- if you just acquire just a building, then a lot of investment of that also is required. So this is some uncertainties are there in our mind. Now going forward, what we understand that after Q1 FY '26 when we will be integrating these acquired hospitals, what would be the EBITDA look like to your assessment?

So see, as far as your previous question is concerned, the cash will also be utilized to fund our brownfield expansion, right? So our Noida Extension Hospital, the Greater Noida Hospital are also undergoing capacity increase. The Greater Noida Hospital work has recently started also. So that is company also do from the books -- the money that the company already has in the books. We will not be requiring any new funding or debt for that. And second, yes, when the new hospital starts, there would be certain EBITDA dip that the hospitals would be making. But then we do expect our existing running hospitals, especially of Noida Extension and Greater Noida, to increase as far as EBITDA is concerned. So at the group level, we feel somewhere what we have delivered right now in this quarter of EBITDA margins should be sustainable in the coming years also.

So in Greater Noida we have already expanded there...

I'm sorry to interrupt Mr. Ranveer, can you please come up in the question queue for further questions. The next question is from the line of Mohit Mehra from Guardian Capital.

First question is what are the number of operational beds for Fidelis?

It is 200-bedded hospital. And we are operationalized close to 170 beds. That is the census bed in that.

Okay. So the census beds are fully operationalized, almost?

Yes.

Okay. Got it. And the second thing is on this income tax matter. In 2Q notes, you had said that the amount attached was INR 33-odd crores, and now it's almost doubled. So what -- and also assets have also been attached. So what's going on there?

So INR 33 crores and INR 50 crores, these amounts refer to separate FDs. So when -- we earlier mentioned that it was close to INR 250 crores at the time of the IPO that has been come down, and it has come down since then. Similarly, as we have earlier mentioned that now because the case was pending for a few months, there was no officer to preside over our case. And when the new officer came, he reopened the files and had provisionally blocked the assets. See, what's more important is that as we earlier mentioned that the company is free to utilize the money that we have on our books, whether it's through QIP or the internal accruals. And we are quite -- as earlier stated, quite hopeful that within a few weeks, this attachment of the assets will also be released. This is by our constant communication to the income tax department. They are well aligned with the company. They have supported our QIP growth strategy. And we are quite hopeful that not just this matter of attachment will be finished within a few weeks, but even the whole income tax matter will be closed before the end of this calendar year.

Okay. So that's almost one whole year. I don't understand this, the money that was initially attached was that INR 250 crores or INR 70 crores because in the 4Q results, I think you mentioned INR 70-odd crores?

Yes. But that INR 70 crores was already after the release of the amount from the initial amount. See, again, at the time of the income tax audit, it was not that it was frozen or seized. When the audit happened, whatever amount was on the balance sheet was provisionally blocked. It was not calculated. It was not measured. So with time, as the investigation goes on, as the paperwork happens, they keep on releasing a certain amount, which has been reflected by them in the last few quarters. And as per a more important aspect that I mentioned that whatever provisional blocking is there, whether on the amount or on the assets will be provisionally unblocked within a matter of a few weeks.

The next question is from the line of Sumit Gupta from Centrum.

Just one thing on the other expenses. So if I look at this 9-month data, so it was close to around INR 80 crores in 9 months FY '25 versus around INR 60 crores in 9 months FY '24. So nearly -- more than 30%. So what has led to that increase?

So basically this includes a major increase in the doctor payout. So we have added several doctors, as we already mentioned, by Mr. Yatharth. So we have added new facility in Faridabad. So doctor share also increased in Faridabad also. Overall, we have added specialties and doctor in all our hospitals. That is the major impact. If you see in quarter-on-quarter, it's INR 18 crores last year and now coming INR 23 crores -- INR 234 crores, sorry, from INR 178 crores to INR 234 crores, major addition due to the doctors.

So going forward also, we would be -- we can expect this to increase considering we are adding new beds?

Your voice is not very clear. Can you please repeat the question.

Going forward also, we can expect this to increase considering we have done 2 acquisitions...

No, no, no. Not all, no.

See, even at the Faridabad Hospital and all these hospitals [indiscernible] Sumit, that initially, the important is about acquiring the doctors, right? So that homework has already been done. We started the hospital in Faridabad in the month of May. So suddenly, that 1 month, all doctors have been joined. So all these things now the doctors recruitment is completed. Yes, new hospitals, definitely, another Faridabad and Delhi one, we will start recruitment very soon. But as far as existing is concerned, I think this is -- I think, optimally, we are doing it.

No, I'm talking from new hospitals, which are acquired for Delhi and Faridabad only. So from that point of view, I was asking that there might be some increase...

Yes, definitely. Yes. So the Faridabad and the Delhi, yes, the doctor recruitment is going to start. But at the same time, see, the existing one is also growing, right? The Greater Faridabad will start giving us the income and probably whatever the investment in terms of doctor recruitment, which we have done 2, 3 months back, that will start giving us results, right? But yes, overall, I would say, so we understand that what has to be the percentage in terms of the doctor payout and other this thing. So it's going to be in line with that. Since we are growing organization 1% or 2% here and there, but I think it will be very much in line with what industry practices are.

Understood. And sir, what is the doctor strategy for the Delhi hospital? And like I just want to understand because it's a high-growth market and there's a lot of competition in that particular market. So I just want to understand your strategy.

See, the Delhi one, as we had mentioned in the last earnings calls as well, this hospital -- this is a 300-bed facility, is going to be absolutely a tertiary or quaternary care facility going to provide. So definitely, we will have those skill set doctors in our facility because we believe that this area where we are in, that's a very high-end society is there. It's a very old area of the Delhi and around 10, 15 kilometers, yes, there are other big players are there. So we'll have to be definitely in line with that strategy, and we are going ahead accordingly.

Okay. So do you plan, like for the empanelment point of view, so how do you see that panning out over the next 1 year or 2 years?

See, initially, the empanelment is going to take time. Initially 5, 6 months, you will spend on the empanelments, but there's a process -- since this is -- see, this hospital was temporarily set for 3, 4 months only, right? So we don't have to do much of it. So all the paperworks are being done and then the respective wherever empanelments, we have to get it done. The processes are being done now. So as Yatharth has mentioned it, from the April onwards, our OPD and IPD are going to start from this hospital.

Okay. And sir, finally, what is the...

I'm sorry to interrupt, Mr. Sumit, can you please fall back in the question queue for further questions? The next question is from the line of Kapoor from Elara Capital.

First of all, congratulations on the strong revenue growth. So I had 2 questions. So your top line growth has been quite strong, but I think the bottom line has been muted relatively because I think depreciation has more than doubled on a year-on-year basis. So can you give future guidance on the future depreciation as I think a significant CapEx is still expected in your medical equipment and you are using the written down value depreciation, right? So a lot of depreciation would hit in the initial years. So can you give guidance on that?

So depreciation is the reason why this quarter, the bottom line shows not that much of a growth. But then going forward, yes, even though there would be new medical equipments that are being planned, but the depreciation increase will not be that much significant as it was especially this quarter. Basically, our existing hospital has been stabilized with the capital expansion or the medical equipment. So yes, for the future expansion, there is an increase in depreciation, but not that too much. And also the current depreciation, if you see, there is an increase by 2.5% on account of depreciation that leads to a decline in the PBT percentage by 3%.

Yes. So what would be like a quarterly depreciation run rate, like I say, like INR 17 crores, INR 18 crores or significantly higher like on the current levels?

Quarterly depreciation rate, it will be something around INR 17 crores. INR 17 crores is quarterly depreciation.

Okay. And another question was like what is the -- what's your payer mix for this quarter? And another thing is like your ARPOB gap is like significant as compared to your peers. So that gives us a strong growth potential in ARPOB. Like I understand like there would be a discount compared to your peers who are much more established. But can you give a guidance on like how much the ARPOB can grow year-on-year, so the gap can be narrowed to a large extent?

Yes. So as you had mentioned last time also, so there is a certain strategic call, which we had taken since reducing our government business. And that's what you see as the result of it, particularly in Noida and Greater Noida Hospital, though the occupancy you see a bit lesser that's because of that. But you see both the hospital has done a really good in terms of the ARPOB and also reducing the LOA. That's the result of it, right? And coming to the second question, as you had mentioned, that's a 10% growth. That's what we are expecting in a couple of years. Year-on-year, we'll be maintaining 10% growth in ARPOB. And see, as a group, barring this Faridabad, if you see -- sorry, barring the RamRaja Hospital, our ARPOB with all these hospitals is around close to INR 34,000, INR 35,000. So this is quite remarkable.

And as far as your first question on the pay mix percentage. So we feel that in 2.5 years' time, our government payer mix should be close to not more than 25%. That's what we are targeting and moving towards. And even ARPOB growth, as Mr. Amit mentioned, should continue to be 10% yearly, up at least 3 to 4 years and bridge the gap between some of our peers. And see, another reason was certain new therapeutic areas, which are high ARPOB boosters were not having much volumes for us earlier. So oncology, we started recently, transplant program like liver transplant, bone marrow transplant. These are high ARPOB therapeutic areas. So as their volume mature, our ARPOB is bound to increase much more. And that gap will be bridged in the year to come.

So your current government exposure, how much, like...

"It was close to 40% last year. For the 9 months, I think it should be close to 35%, and we -- that's where we hope to end this full year.

[Operator Instructions] The next question is from the line of Arpit Shah from Stallion Asset.

I just wanted to congratulate the management team for a 31% growth, probably one of the highest in this space. And more surprisingly, if I see the growth, excluding the internal medicine, the growth has been around 47%, which is superb execution from the management team. I just had a couple of questions. What has been our receivables number for end of 31 December? What is that number, if you can share that absolute number?

So receivable numbers, we are at around INR 270 crore and with days around 110.

Got it. And has the government revenues in this quarter declined on a Y-o-Y basis, if you can share any insights on that?

Yes. So as I said, this was our strategic call, which we have taken it. So that is what particularly Noida and Greater Noida Hospitals, we have reduced a bit of dependency on government. So definitely, it has been reduced, which you can see if you can figure it out with our occupancy as well.

And also just to add here, the newer hospitals that we have started, government business is not even 15% in those hospitals. And that's how at the overall group level is how we will achieve 25% in next 2.5 years because now all these new hospitals that we are starting, so Greater Faridabad Hospital or the new hospitals in Delhi and Faridabad from day 1 because we have super specialties now, we have -- we will be having start off. So with the requirement or dependence on the government business, which is sometimes good to have in the beginning, is very less for us now. We can go all out and do the expenses from day 1, unlike a few years back. So that's why the government business is even very less in the new hospitals that we have started or will be starting.

Got it. And if you can give any kind of guidance for FY '26 because you're going to be operationalizing almost 50% more capacity in FY '26 going from almost 1,600 beds to 2,300 beds. What kind of revenue numbers you are going to target for FY '26?

See, I mean, we -- as you said that we have delivered, in the past few quarters, industry-leading growth as far as Y-o-Y is concerned. I think we should be on track for that. And the company is on track and has always delivered upwards of 30% Y-o-Y growth for last few quarters, and we are quite hopeful for sustaining it and increasing it also in the future.

Okay. Do you expect any change in seasonality in your business given you're adding a lot of capacity in newer areas. So any change in seasonality is expected?

No. As we said in the Northern India, particularly, you see the Q1 and Q3 is the weakest quarter. Q2 and Q4 is a bit better, particularly Q4 is the strongest quarter. So this was a seasonality impact. That's all I believe.

That's a good thing, right, because Q3 sequentially has been higher for us, like Q2 was lower and Q3 has actually been higher for us.

Yes, having the weakest quarter, Q3, still we had maintained our numbers, which is quite significant for us. And definitely, we are quite hopeful for the last quarter.

The next question is from the line of [indiscernible] from Edelweiss Public Alternatives.

So a few questions, right? On this census bed, so when you calculate the denominator for utilization, is it fair to assume that census bed is the denominator number that you take? And is there any regulation, which you have to follow as to how much day care and non-day care bed you have to keep?

So yes, it is -- the denominator is always on the census beds as far as occupancy is concerned across the hospital industry. And...

Rather than -- there's no such norms, as such legal norms. But when you start a hospital, you do understand you plan your beds accordingly. You understand these many beds you needed for a day care and these are for IPD and these many beds for your critical care. So this all goes with the business sense. You do the excels and mathematics and depends on which area you are, what type of population you would be catering. So there, that's a bit of percentage change here and there. But generally, these are the norms in the hospital industry, everyone practices it.

And occupancy is always calculated on the census bed.

And now coming to your -- the acquisitions that you made in Delhi and Faridabad, you mentioned that 300 and 400 bed in Delhi and Faridabad will become operational from Q1 FY '26. So in this, how would be the mix between census, non-census? And also, how will the ramp-up happen, right? Would it be similar to how it happened in Greater Faridabad? And what could be the average ARPOB that one can expect in Delhi and Faridabad...

So for those -- both those 2 hospitals, the 400 bed and the 300 beds, census bed would be close to 90% of both those 2 hospital beds are concerned. And as far as the ramp-up is concerned, we are quite hopeful that what we have replicated in Greater Faridabad, we can also replicate in Faridabad because we understand that market better now. We are able to attract more star doctors. With this being a bigger hospital now, there are a lot of star doctors who want to join us and become heads for both the Greater Faridabad and the Faridabad Hospital because they would be somewhere around 15 kilometers away from each other. So very different markets of Faridabad region, catering to drainage of the nearby villages and cities connecting the Faridabad highway from both the sites as well as Delhi. So the ramp-up that we have seen in the Greater Faridabad, we expect it to be even better in both these 2 hospitals because these 2 are bigger hospitals having radiation oncology. The Delhi hospital will also have liver transplant, something the Greater Faridabad Hospital was not having. So we do expect even a better ramp-up in these 2 hospitals than the Greater Faridabad Hospital.

And the ARPOB...

For both these 2 hospitals is also expected to even be better than the Greater Faridabad hospital because the Delhi area pricing as well as the focus on much more on super specialties and low government business. So ARPOB will also be even quite good for both these 2 hospitals.

Okay. So then it will be upwards of at least INR 31,000, INR 32,000 that you are reporting for Greater Faridabad side for both these hospitals?

For both these hospitals, it could be even upwards of INR 35,000...

Okay. Okay. And when we look at the 9 months margin, right, you mentioned that, had there not been the ramp-up of Greater Faridabad, the margins could have been between 26% to 27%, which means that there is a 120 bps drag due to Greater Faridabad ramping up. Now when we enter next year, while this drag will not be there, but there would be a ramp-up drag of the acquisitions that we have made, right? So should the margins from, let's say, where you end this year, FY '25 be higher in FY '26 or this drag will probably pull the margin lower? How should one think about margin?

So it will not be lower because what also happens then the Noida Extension Hospital and the Greater Noida Hospital will also be contributing next year to a larger margins because occupancy will also ramp up here much more given the increase in the oncology volume, given the increase in the international patients in Greater Noida as well as transplant program. So the drag will not be lower, and the EBITDA margins will be sustainable next year from where we end this financial year.

Okay. Okay. And one last clarity, Yatharth...

I'm sorry to interrupt. Can you please fall back in the question queue for further questions? The next question is from the line of Abhishek Maheshwari from SkyRidge.

Almost all questions are answered. Just one thing. What's January -- what has January been like considering that we are coming out of a lean season?

Yes. So January has been very promising. In fact, December is one of the most leanest months as far as North India and Delhi NCR is concerned. There was a lot of fog visibility. OPD volumes were quite less than December. And as soon as January starts, school reopens here, patients come back from out stations, and we do have seen an increase in the OPD volumes. And this is why in the past also, we have seen Q4 has been the strongest quarter in company's history, and we think we have every reason to believe that same will be the scenario this financial year.

The next question is from the line of Devang Patel from Sameeksha Capital.

Firstly, what is the target for receivable days, although it's been inching down. The absolute amount keeps rising quarter-on-quarter. And what are we doing to reduce receivable days other than reduce government share?

So I think somewhere at the end of this financial year, if we close it close to 110 days, that's what I think would be a good reduction from the start of the year, even though we are quarter-on-quarter increasing the revenue. So government business is also increasing. So on a larger scale, the receivable days being reduced is what we are expecting. So close to 110 days. And it's just not that government business reduction is the only way we are able to do it. Quarter-on-quarter, we have done it this year. There are other aspects also. So last year was anyways an exception. So this year, we were anyways expecting a larger receivable from the government, and we have been receiving that. There have been certain recovery teams that have been established headed by the group CEO himself, who's constantly being engaged in recovery of these amounts as well as we have outsourced certain of the recovery channels to certain specialized agencies to deal with recovery from not just even the government, but even the private insurances. So that's what the company has been deployed, and we are hopeful of closing this year close to 110 days.

Just a quick follow-up. What is the receivable days we are targeting on a steady-state basis? And for Jhansi, what is the share of government business?

The share in government business is Jhansi because of Ayushman card having there is higher than the group average. So it is upwards of -- or I would say, upwards of 6% there. But as far as your first question was concerned, as far as the steady state, I think see, in 2.5 years' time, we expect our receivable days to be is somewhere close to 75 to 80 days in 2.5 years' time. And this is what we are working on. And quarter-on-quarter, we are seeing a decline in our receivable days, and we are quite hopeful with the reduction of government business, this is where we should be in 2.5 years' time.

Ladies and gentlemen, due to time constraint, this was the last question. I now hand the conference over to the management for their closing comments.

Thank you, everyone, for taking out your time and joining our earnings call. As discussed, we hope that our team is able to answer and clarify all your queries. And thank you, Nuvama, for hosting this call.

On behalf of Nuvama Wealth Management Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.