Vijaya Diagnostic Centre Ltd — summary of earnings call

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Vijaya Diagnostic Centre Limited
Q4 FY25
Call date · May 12, 2025

1 · Management Commentary

Key Positives

  • Successful launch of 6 new hubs in the last 2 months (2 each in Pune, Bengaluru, and West Bengal).
  • 3 more hubs in West Bengal to commence operations in next 3–4 months; leases finalized for 2 hubs in Tier 2 AP and Telangana for H2 FY26.
  • Entry into Bengaluru and Pune markets with state-of-the-art centers; strong initial traction and brand visibility.
  • Onboarding of a CTO with 25+ years’ experience and other senior hires to support expansion.
  • Consolidated Q4 revenue at INR173 crores (+12% YoY), EBITDA at INR69 crores (39.8% margin), PAT at INR35 crores (20% margin).
  • FY25 revenue at INR681 crores (+24% YoY), EBITDA at INR273 crores (40.1% margin), PAT at INR143 crores (21% margin).
  • Existing centers, especially in Hyderabad, continue to gain market share.

Key Negatives

  • Gross margin contraction due to higher wellness revenue (discounted pricing) and increased input costs.
  • Q4 saw softer growth, particularly in February, attributed to seasonality and festivals.
  • Initial drag on margins and EBITDA expected from simultaneous launch of multiple new hubs.
  • Pune revenue saw a ~5% YoY dip in Q4 due to conscious exit from certain B2B contracts.

Forward Guidance

  • Capex plans: INR145–150 crores for FY26, mainly for 10 new hub centers.
  • New products/segments: No plans to enter dialysis; focus remains on diagnostics.
  • Expected client wins/losses: Continued focus on B2C; selective approach to B2B/corporate contracts.
  • Revenue/margin outlook: 15%+ CAGR targeted for next 2–3 years; 1–2% EBITDA margin drag expected in FY26 due to new hubs, with normalization by FY27.
  • Other strategic initiatives: Increased digital investments (new CRM, digital marketing), further expansion of spokes post-hub stabilization, ongoing evaluation of inorganic opportunities in existing geographies.

2 · Q&A Highlights

Q 1 (Composite): What caused the contraction in gross margins, and is this the new normal?
A (Management):
• Gross margin contraction is primarily due to higher wellness revenue (at discounted prices) and increased input costs; this is expected to be the new normal unless wellness mix reduces.

Q 2 (Composite): What is the breakeven timeline for new hubs in Pune, Bengaluru, and other regions?
A (Management):
• All new hubs are targeted to break even within one year of opening; outside Telangana/AP, a buffer of 2–3 months is considered.

Q 3 (Composite): Will the addition of multiple hubs impact margins and depreciation/amortization?
A (Management):
• Expect 1–2% EBITDA margin drag for 2–3 quarters; D&A expenses will outpace network growth in the near term, but margins should normalize by FY27.

Q 4 (Composite): What are the capex plans and expansion strategy for FY26–27?
A (Management):
• Capex of INR145–150 crores planned for FY26; focus on hubs in new and existing geographies, with spokes to follow after hub stabilization.

Q 5 (Composite): What is the revenue mix (pathology/radiology, routine/specialized), and what is the industry growth outlook?
A (Management):
• Pathology: 62–65%, Radiology: 35–38%; within radiology, 20% advanced, 15% basic; within pathology, 15–20% specialized, rest routine.
• Industry growth estimated at 11–12%; Vijaya targets 15–16% CAGR, mainly volume-driven.

Q 6 (Composite): What is the B2C/B2B revenue split and approach to B2B contracts?
A (Management):
• B2C is 93–94% of revenue; B2B/corporate is 7%. Focus remains on B2C, with selective B2B engagement based on payment reliability and strategic fit.

Q 7 (Composite): What are the digital and branding investment plans?
A (Management):
• Increased digital spend planned, including new CRM implementation; branding spend will vary by geography and target segment.

Q 8 (Composite): Any plans for inorganic expansion?
A (Management):
• Open to inorganic opportunities in existing geographies if valuation and strategic fit are appropriate.

3 · Other Key Numbers

  • Q4 FY25 consolidated revenue: INR173 crores
  • Q4 FY25 EBITDA: INR69 crores (39.8% margin)
  • Q4 FY25 PAT: INR35 crores (20% margin)
  • FY25 consolidated revenue: INR681 crores (+24% YoY)
  • FY25 EBITDA: INR273 crores (40.1% margin)
  • FY25 PAT: INR143 crores (21% margin)
  • Wellness revenue share in Q4: 15%
  • PH (Pune) Q4 margin: 29% (one-off expense; normalized ~35%)
  • Gross margin: Radiology 90–91%, Pathology 85–86%
  • Home collection revenue: 2.6% of total, ~4% of pathology revenue
  • Number of centers (as of March 31, 2025): 151 (Hyderabad: 95, Pune: 18, AP & Telangana: 127, Kolkata: 2, Karnataka: 1, Gurgaon: 1)
  • Phlebotomist team: 600+ in-house, 35–40 home collection
  • Net cash (after capital creditors): ~INR200+ crores
  • Capex guidance FY26: INR145–150 crores
  • Volume growth from new centers expected in FY26: 2–3% of total volume
  • Price increase planned: 1–2% of total revenue
  • B2C revenue: 93–94%; B2B/corporate: 7%
  • No entry into dialysis or non-diagnostic segments
  • Exceptional expense in Q4: On account of Medinova merger
  • Guidance: Revenue CAGR 15%+ for next 2–3 years; EBITDA margin drag of 1–2% in FY26; capex INR140–150 crores; no significant debt disclosed.

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