Vijaya Diagnostic Centre Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Strong quarter, broad-based volume: Revenue grew 20.4% YoY on 17% test volume growth and 14% patient footfall growth, with Hyderabad returning to double-digit expansion.
• New hubs are outperforming expectations: Five hubs commissioned in Q1, Nizamabad broke even in two quarters, and the EBITDA drag was much lower than feared because centers are doing well.
• Margins held firm despite expansion: EBITDA margin came in at 39.1%, absorbing the ~1.2% drag from new hubs through operating leverage in the core network.
• Revenue per patient hit a record in a seasonally weak quarter, lifted by a higher radiology mix (39%) as advanced radiology share increased with new hub additions.
• What to watch next quarter: Whether the delayed monsoon-driven fever season lifts Q2 volumes, the pace of breakeven at the remaining new hubs, and any update on FY27 hub locations.

Volume & Revenue Drivers

• Volume-led growth model intact: The 20.4% YoY revenue rise was built on 17% test volume growth and a shift in test mix, with patient footfall up 14%. Price contributed only ~1.5%, the rest came from mix.
• Hyderabad engine re-accelerated: The core market, contributing ~70% of revenue, returned to double-digit growth. Management sees market share gains as competitors are not growing at the same pace.
• Old centers still compounding: Centers opened two years back grew revenue at ~11% CAGR, contributing 15%+ to revenue, with volume growth of ~11% and test volume growth of ~13%.
• Revenue per center stayed strong despite adding centers not yet fully operational, because older centers kept growing at a consolidated level.
• Seasonal momentum was genuine: Average daily revenue increased month-on-month through the quarter (May over April, June over May), with only ~1%-1.5% impact from early-April monsoon effects. No one-off reason explained the strength.
• Wellness growth is real but small: Faster wellness growth reflects company focus, market awareness, and expanded corporate coverage, but in absolute terms the quarterly add is only ₹1-2 crores. Management cautioned against over-reading percentage changes.

Reddy: "In percentage terms, you will see a significant number, but don't go too much by the percentage terms. Look at the absolute numbers."

New Hub Economics

• Five hubs commissioned in Q1 out of the 10 planned for FY26, spanning Pune, Bangalore, and West Bengal. All are up and running with steady footfall.
• Breakeven is arriving faster than expected: Nizamabad hub in Telangana achieved breakeven within two quarters, and one Bangalore hub is on track to beat the estimated 12-month timeline.
• The drag was much lower than feared: Management noted that analysts had expected a meaningful hit to EBITDA from new hubs, but strong performance across Bangalore, Nizamabad, and Kolkata kept the impact to ~1.2%.
• Pune is the exception, and it is being fixed: The acquired PH brand was running at near-full capacity, constraining growth. One hub opened in Q4 took 1-2 months longer to ramp, a second opened in May, and traction has picked up in the last 1.5 months. An AVP Sales & Operations was added and the sales team strengthened.
• Three more hubs coming in Q2 across core geography and West Bengal, with two additional West Bengal hubs on track for H2 FY26. Total FY26 CAPEX for new centers is ~₹150-155 crores, plus replacement CAPEX of 2%-3% of topline.

Reddy: "I mean, people like you have expected that this would be a drag on business and EBITDA, but that has not happened. Bangalore is doing well, Nizamabad is doing well. Whatever we have opened in Kolkata is doing well. So, by god's grace everything is doing well."

Margin Composition

• Gross margin expanded despite no broad-based price increases. Three drivers: radiology at 39% share (material consumption is much lower than pathology), advanced radiology component increased with new hubs, and wellness proportion reduced compared to Q4.
• EBITDA margin landed at 39.1%, absorbing the ~1.2% drag from new hubs through operating leverage in the core network. Management maintained full-year guidance of 38%-38.5%, implying a 1%-1.5% impact from the five hubs still to open over the next two quarters.
• Radiology-pathology mix is stable at scale: Quarterly shifts of 1%-2% may occur with hub additions, but no major structural change is expected. Radiology remains predominantly advanced radiology.
• Wellness margins are lower at the gross level, but management does not track or disclose them separately, arguing that at the EBITDA level the difference is immaterial given the fixed cost structure.
• No further price increases this financial year: Price adjustments are done in Q1 annually, and there are no plans for additional increases.

Geography & Market Structure

• Hyderabad is the fortress: The market is still growing at double digits, and Vijaya is the strongest player with patient trust. The B2C integrated dense-network model allows the company to get stronger year-on-year in operating geographies.
• New geographies are share-gain stories: In Pune, Kolkata, and Bangalore, the company expects to gain market share every year for the initial years. All three have regional heads reporting into Hyderabad corporate.
• West Bengal ambition is material: The target is to ramp to ₹50-₹100 crore in revenue over the next 2-3 years through more hubs followed by spokes.
• PPP model explicitly rejected: The company prefers to open centers opposite government hospitals for B2C business rather than operate inside government hospitals under the PPP model.
• Acquisition radar is on: Management is continuously looking for acquisitions subject to valuation, asset quality, and integration fit, though no specific deal was signaled.

Vegesna: "The advantage of becoming B2C player with dense network is that you get stronger year-on-year in the geographies that you operate, right? So, that which will allow you to inch the market share."

Vegesna: "I would much rather open a center opposite the government hospital and do B2C business rather than doing PPP inside the government hospital."

Capacity & Operating Model

• No capacity constraints exist except to some extent in Pune, which is being addressed with new centers. Management declined to quantify capacity per center, stating it depends on center size and is difficult to generalize.
• Reagent rental model dominates routine testing: For routine lab work, equipment comes from OEMs under reagent rental arrangements with repair and maintenance included. The company purchases equipment only for more specialized lab testing.
• Revenue per patient hit a record in a slack quarter, driven by the higher radiology mix. Radiology test costs are higher, so when radiology share increases, average revenue per patient automatically moves up.
• Wellness contribution expected to stabilize in the 13%-14% range on a blended basis.

Guidance & Commitments

Key Metrics