Vijaya Diagnostic Centre Concall Summary: Key Highlights and Q3 FY26 Results

Guidance & Outlook

• Revenue Growth: Management expects FY26 growth to exceed 15%, with Q4 supported by seasonal improvement in wellness demand from mid-February through March.
• Margin Outlook: Despite stronger-than-expected hub ramp-up and operating leverage, management maintained its EBITDA margin guidance at around 40%, citing continued investments in talent, IT, cloud migration, and digital tools.
• Realization Outlook: Management expects realizations to remain broadly stable, with ARPP movement within ±3%–4%, supported by annual tariff increases of around 1%–1.5%.
• Hub Expansion Pace: Management is not accelerating hub additions aggressively despite healthy margins, as the key constraint is execution bandwidth and stabilization rather than capital availability.
• FY27 Expansion Plan: The company plans to add around 4–5 hubs and 10–12 spokes in FY27, continuing its cluster-led expansion model.
• Wellness Tailwind: Management expects wellness contribution to keep rising from the current ~15% of revenue, with potential to move north of 20% over time.
• Geography Focus: Near-term expansion remains focused on core clusters and current cities, especially West Bengal, Pune, Bangalore, and non-Hyderabad AP/Telangana, rather than entering new Tier 2/3 states immediately.

Capex & New Projects

• Q3 Hub Additions: The company commissioned four new hubs in Q3 — Phoolbagan and Diamond Harbour in West Bengal, and Khammam and Nandyal in core markets.
• West Bengal Build-out: With the new additions, the company’s West Bengal network has expanded to 7 hubs, and management highlighted strong early demand response.
• FY26 Capex: The company has spent INR 159 cr of capex in FY26 to date, including replacement capex.
• FY27 Capex: New-center capex for FY27 is guided at INR 100–120 cr.
• IT / Digital Investments: Management is stepping up investments in a high-end CRM, logistics app, internal applications, and cloud migration, which are a key reason for holding EBITDA guidance despite operating leverage.
• Spoke Rollout Model: New spokes are expected to break even within two quarters and start contributing positively at EBITDA level by the third or fourth quarter.
• M&A Posture: Management reiterated that acquisitions remain opportunistic, with preference for B2C-led targets, familiar geographies, and reasonable valuations, but provided no active deal update.

Financial Performance

• Q3 Revenue: Q3 FY26 revenue reached a record INR 205 cr, up 21.4% YoY.
• Q3 Growth Driver: Revenue growth was driven by 14.7% YoY test volume growth, with the balance coming from improved test mix.
• Q3 EBITDA: EBITDA rose to about INR 86 cr from INR 67 cr, up 28.2% YoY, with EBITDA margin at 41.9%, up 221 bps YoY.
• Q3 PAT: PAT increased to around INR 43 cr, up 22.3% YoY, with PAT margin at 21%.
• 9M Revenue / EBITDA: For 9M FY26, revenue stood at INR 595 cr (+17.1% YoY) and EBITDA at INR 241 cr (+18.1% YoY), with EBITDA margin at 40.6%.
• 9M PAT: 9M PAT was INR 125 cr, representing a margin of about 21%.
• Cash Position: Total cash stood at about INR 305 cr, with net surplus cash of ~INR 260 cr after excluding deferred capital creditor balances.

Operational Highlights

• Balanced Growth Engine: Management described Q3 growth as balanced across radiology and pathology, despite Q3 typically being seasonally softer.
• B2C Mix: Around 92% of revenue continues to come from B2C, reinforcing the company’s consumer-led, brand-driven model.
• Radiology Contribution: Radiology accounted for 37% of revenue in Q3.
• Realizations: Revenue per test was INR 487, while revenue per footfall stood at INR 1,756.
• SSSG: Q3 reported SSSG was 2%, but normalized SSSG adjusting for the Durga Puja shift was 12.8%; 9M SSSG stood at about 8.6%.
• Hub Breakeven: Management reiterated that new hubs typically break even in 12–14 months outside Hyderabad, though recent West Bengal hubs achieved breakeven in just 3 quarters.
• Geography Mix: Q3 revenue mix was Hyderabad 68%, Rest AP/Telangana 19%, Pune 6%, West Bengal 3%, and Others 4%.

Business & Strategy Updates

• Hyderabad Strength: Hyderabad grew around 15% YoY, with balanced contribution from pathology and radiology, and growth driven from existing capacity without recent hub additions.
• Pune / Bangalore Ramp: Pune grew around 8% YoY, while Bangalore centers are ramping well, with management focused on city-level depth before wider Karnataka expansion.
• Wellness Strategy: Preventive and wellness testing remains the key pathology growth driver, supported by both retail demand and rising corporate preventive check-up programs.
• Integrated Diagnostics Moat: Management emphasized that its advantage lies in the integration of pathology and radiology, supported by specialist reporting and tele-radiology, rather than just equipment ownership.
• Turnaround Advantage: The company highlighted faster reporting and integrated diagnosis as a differentiator, including materially shorter turnaround times in smaller cities through tele-radiology support.
• Store / Network Productivity: Even the smallest spoke is capable of delivering meaningful wellness revenue, supporting the economic logic of continued spoke-led penetration.
• Accounting / Cost Impact: Management said capex inflation from USD-INR depreciation has been largely offset by the reduction in GST on equipment from 12% to 5%, keeping net equipment cost impact minimal.