Summary of earnings call for Vijaya Diagnostic Centre Ltd published on 02 Aug, 2025

Vijaya Diagnostic Centre Limited
Q1 FY26
Call date · July 28, 2025

1 · Management Commentary

Key Positives

• Consolidated revenue grew 20.4% YoY to Rs. 188 crores, driven by 17% test volume growth and 14% patient footfall growth.
• Hyderabad market returned to double-digit growth; core network delivered strong operating leverage.
• EBITDA margin remained robust at 39.1% despite multiple new hub launches; PAT margin at 20.4%.
• All new hubs in Pune, Bangalore, and West Bengal are operational with steady footfall; Nizamabad hub achieved breakeven within two quarters.
• Five hubs and one spoke commissioned in Q1; positive ramp-up in new geographies.

Key Negatives

• No explicit negatives highlighted; management noted only a minor drag (~1%-1.2%) from new hubs, lower than expected.
• Some capacity constraints in Pune centers, being addressed via new additions.

Forward Guidance

• Capex plans: FY26 capex for new centers guided at Rs. 150-155 crores; replacement capex at 2%-3% of topline.
• New products/segments: Continued focus on integrated B2C diagnostics; wellness segment contribution at 14%-15%.
• Expected client wins/losses: No specific guidance; focus remains on B2C, not participating in PPP/government tenders.
• Revenue/margin outlook: Maintain 15%+ revenue growth guidance (backed by ~13% volume growth); EBITDA margin guidance at 38%-38.5% for FY26, factoring in new hub additions.
• Other strategic initiatives: Plan to commission 10 hubs in FY26 (5 already done); further expansion in West Bengal, Bangalore, Pune; ongoing search for inorganic opportunities.

2 · Q&A Highlights

Q 1 (Composite): What drove the strong growth in a seasonally weak quarter, and is this sustainable?
A (Management): - Growth attributed to brand strength, market share gains from unorganized sector, and strong ramp-up in new centers. - No material one-offs; momentum expected to continue, but no specific forward number provided.

Q 2 (Composite): What is the margin impact from new hub additions, and will guidance be revised?
A (Management): - Margin drag from new hubs was lower than expected (~1%-1.2%); operating leverage offset impact. - EBITDA margin guidance for FY26 maintained at 38%-38.5% (1%-1.5% drag expected for full year as more hubs open).

Q 3 (Composite): Why avoid PPP/government business, and will this strategy continue?
A (Management): - Company consciously avoids PPP due to lower price realization and receivable risks; focus remains on B2C.

Q 4 (Composite): What is the growth/margin profile of old vs. new centers, and how does ramp-up look in new geographies?
A (Management): - Old centers (2+ years) grew revenue at ~15%+, test volume at 13%, footfall at 11%. - New centers in West Bengal and Bangalore ramping up well; target to surpass Rs. 100 crore revenue in East India in 2-3 years. - Breakeven for new hubs typically at ~33% capacity, often within 2-3 quarters.

Q 5 (Composite): What is the outlook for wellness and radiology segments, and what drives revenue per patient?
A (Management): - Radiology share at 39% (highest so far), driving higher revenue per patient. - Wellness contribution at 14%-15%; growth driven by increased awareness, digital marketing, and corporate coverage.

Q 6 (Composite): What are the capex plans for FY26/FY27 and inorganic expansion strategy?
A (Management): - FY26 capex for new centers at Rs. 150-155 crores; replacement capex at 2%-3% of topline. - FY27 plans under evaluation; open to inorganic opportunities if right assets/valuations arise.

Q 7 (Composite): What is the sourcing model for pathology equipment and related costs?
A (Management): - Routine lab testing uses reagent rental model (OEM bears maintenance); specialized tests may require equipment purchase.

Q 8 (Composite): How is management bandwidth being expanded for new geographies?
A (Management): - Regional heads appointed for Pune, Kolkata, Bangalore; lateral hires at mid/senior levels; all report to Hyderabad corporate.

3 · Other Key Numbers

• Consolidated revenue for Q1 FY26: Rs. 188 crores
• Revenue growth YoY: 20.4%
• Test volume growth YoY: 17%
• Patient footfall growth YoY: 14%
• EBITDA margin: 39.1%
• PAT margin: 20.4%
• Net cash as on June 30, 2025: Rs. 270 crores (net of capital creditors: Rs. 220 crores)
• Lease liabilities increase in Q1: ~Rs. 1 crore
• IndAS impact for Q1: Rs. 1.8 crores (interest: Rs. 0.92 crores, depreciation: Rs. 0.95 crores)
• Radiology revenue share: 39%; Pathology: 61%
• Wellness revenue share: 14.2% (Q1 FY26), up from 13.5% (Q1 FY25)
• Home collection revenue share: 3.2%-3.3%
• Number of hubs/spokes commissioned in Q1: 5 hubs, 1 spoke
• Old centers (2+ years) revenue CAGR: ~15%+; test volume growth: 13%; footfall growth: 11%
• Typical breakeven for new hubs: within 2-3 quarters at ~33% capacity
• Spoke revenue range: Rs. 2-2.5 crores (typical), up to Rs. 6-6.5 crores (high-performing)
• Capex guidance for FY26: Rs. 150-155 crores (new centers), 2%-3% of topline (replacement)
• EBITDA margin guidance for FY26: 38%-38.5%
• Revenue growth guidance: 15%+ (volume growth ~13%, price/mix ~1.5%-2%)
• Number of hubs planned for FY26: 10 (5 commissioned in Q1)
• No price hikes planned for remainder of FY26; selective hikes (1%-1.5%) taken in Q1 on specific tests/geographies

All figures as stated in the call; where not disclosed, marked as such.

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.