Asarfi Hospital — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Asarfi Hospital reported strong financial performance for the second half of FY25, with revenue growing 43% to Rs. 120.6 crores and net profit surging 154% to Rs. 10.6 crores, driven by improved margins. The newly operational cancer hospital, now with 65 beds, and DNB course affiliation are key growth drivers. However, increased debtors and relatively low occupancy rates in the cancer hospital remain areas of focus for management. A significant discrepancy was noted in the reported Profit Before Tax figures and growth rate.

Highlights

  • Revenue from operations grew 43% on year-on-year basis to Rs.120.6 crores from Rs.84.4 crores in financial year 2024.

  • EBITDA grew by 47% on year-on-year to Rs.223.5 crores with EBITDA margin improving to 20% up from 19% last year.

  • Net profit surged to 154% to Rs.10.6 crores, last year it was Rs.4.2 crores with PAT margin expanding from 5% to 9%.

  • Our cancer hospital located in a 9.55 acres land parcel in Ranguni, Dhanbad, became operational in Quarter 1, 2025, currently operating with 65 beds, up from initial 50 beds.

  • We have been affiliated by National Board of Examination for running DNB Courses.

Concerns

  • Debtors increased by Rs. 15 crore this year, primarily from government schemes, impacting cash flow.

  • Gross debt is around Rs. 40 crore, requiring active management.

  • Cancer hospital occupancy is currently at 30%, necessitating efforts to increase utilization.

Key financials

  1. Revenue from Operations ₹120.6 Cr +42.9%YoY
  2. IPD Revenue ₹99.1 Cr +10.1%YoY
  3. OPD Revenue ₹19.7 Cr +42%YoY
  4. EBITDA ₹223.5 Cr +47%YoY
  5. EBITDA Margin 20%
  6. Profit Before Tax ₹214.3 Cr +3,356.5%YoY
  7. Net Profit ₹10.6 Cr +152.4%YoY
  8. PAT Margin 9%
  9. Bed Occupancy Rate (Super Speciality) 61%
  10. ARPOB (Super Speciality) ₹17,505 +1.9%YoY
  11. ARPOB (Cancer Hospital) ₹30,500

What they filed

Q1 FY27: revenue up 32.8%, net profit up 33.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue31 33 35 36 45 +45%46 +40%45 +28%47 +33%
EBITDA7 7 6 7 9 +31%10 +45%8 +22%9 +34%
Net profit3 3 4 3 4 +48%5 +101%4 +7%4 +33%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Debt Gross ₹40 Cr
    So, sir right now the debt is around Rs. 50 crore. Right? It is a bit low. 40, debt is around Rs. 40 crore.
  • M&A 100-bed hospital Acquisition · Announced

    To expand total bed capacity to 500 by FY27 and contribute to revenue targets.

    Expected to contribute Rs. 20 crores to the FY27 revenue target of Rs. 200 crores.

    We are looking for a acquisition of 100-beds in this running financial year. ... We have already gone through the due diligence process. We are just analyzing the mode of acquisition, and we are just analyzing how to materialize the MoU and preliminary agreement. So hopefully it should be materialized in the running financial year.
  • Liquidity Cash ₹1.3 Cr 20% of working capital limits are unused.
    in March'24 you have a closing cash balance of Rs. 1.30 crores ... unused portion of your pension working capital limits? 20%.

Guidance & targets

Beds

  • Total bed capacity Beds · by FY27 · High confidence 500 beds
    we had suggested that we will be having 500-beds by 2026, we are on track on that vision. As going forward, one year has passed, so we have revised our vision for '27 also.

    — Harendra Singh, CFO

Revenue

  • Total revenue Revenue · FY27 · High confidence Rs. 200 crores
    Your vision for '27 of Rs.200 crores revenue and if you are in the process of let us say looking at 100-bed hospitals to acquire that, whether that revenue of that 100-beds hospital is already factored in this Rs.200 crores or that will be over and above this -? That is factored by approximately Rs.20 crores in that Rs.200 crores.

    — Harendra Singh, CFO

  • Revenue capacity with current setup Revenue · over the next three to five years · Medium confidence Rs. 300+ crores
    I saw this vision for FY27 of course. Now I was wondering at full capacity over the next three to five years both the cancer hospital and this one, what could be the peak revenue capacity with the current setup that is there without any further CAPEX, etc.,? Sir, we should be able to achieve Rs.300-plus crores without any further addition.

    — Harendra Singh, CFO

Margin

  • EBITDA margin Margin · going forward · High confidence 23% to 25%
    EBITDA margin we are looking for 23% to 25%. With the improvement in the cancer unit, our EBITDA will improve drastically and in the existing hospital also we are trying to bring down the cost control very significantly. So, we hope that the EBITDA margin we will be able to demonstrate not less than 21% to 25%.

    — Harendra Singh, CFO

Occupancy

  • Cancer hospital occupancy rate Occupancy · going forward · High confidence 50%
    No, it will not be 30%. Ideally this should be around 50% and we are working on it.

    — Harendra Singh, CFO

  • Multispeciality hospital occupancy rate Occupancy · going forward · High confidence 70%
    and in the multispeciality hospital we are looking for a capacity utilization of 70% because that 70% will give us a good boost to the revenue.

    — Harendra Singh, CFO

ARPOB

  • Cancer hospital ARPOB ARPOB · going forward · High confidence 45,000
    Sir, for cancer hospital, we are targeting to match with the HCG. HCG is having around 45,000 ARPOB and we would like to match that number because to achieve that target we need to create a similar kind of comprehensive cancer care spectrum of services to provide, and we need to attract patients of similar strata. So we are looking at ARPOB of 45,000 around which will be matching with the HCG.

    — Harendra Singh, CFO

  • Multifacility segment ARPOB ARPOB · going forward · Medium confidence 20,000
    Sir, if ARPOB it is 20,000, that will be nice, but it is not achievable immediately because when you are operating in an area like Dhanbad, you have to take care of the factors involved in that area plus immediately you cannot increase the ARPOB because there is some limitation because it is a D-type city and these days lots of government schemes, Ayushman Bharat, these all are against ARPOB.

    — Harendra Singh, CFO

Radiation

  • Radiations per day Radiation · going forward · High confidence 80
    At present, we are delivering approximately 20 radiations per day. And this number has to go from 20 to we are targeting that we should be at least 80 radiations per day.

    — Harendra Singh, CFO

Employee Cost

  • Employee cost growth Employee Cost · coming days · Medium confidence not more than 20%
    It will not jump like that. So, as it is said it jumped to around 30%. We believe that it should be not more than 20% in the coming days.

    — Harendra Singh, CFO

Market Position

  • #1 hospital in Jharkhand Market Position · by Jan 1, 2027 · High confidence #1
    So, we have taken an oath that by 1st January 2027 we will be #1 hospital in Jharkhand in terms of the parameters we have decided.

    — Harendra Singh, CFO

What to watch in Q1 FY26

Debtors Reduction & Impact on Interest Cost/EBITDA

Next quarter
Current Debtors increased by Rs. 15 crore, total debt around Rs. 40 crore.
Target Significant reduction in debtors, positive impact on interest cost and EBITDA.

Why it matters

Effective debtor management is crucial for improving cash flow and overall profitability, especially given the reliance on government schemes.

Debtors position is already, we have internally red flagged it that anyhow we need to bring down the debtors. But because you are working with government organization a lot of things are not under our control. We have reduced the debtors of existing hospital this year. Further, we are having talks with our main debtors, and they have promised to make some payment in the first quarter. But, in coming days things will get better and debtors will be managed, we are working on that.

Risks & concerns

  • Increased Debtors/Receivables

    medium

    Receivables increased by Rs. 15 crore, primarily from government schemes, leading to cash flow challenges and potential impact on interest costs. Management is actively working on debtor management and process improvements.

    Both acknowledged

  • Low Capacity Utilization in Cancer Hospital

    medium

    The newly operational cancer hospital is currently at 30% occupancy, which is below the target of 50%. Management is implementing strategies like health talks and service expansion to improve utilization.

    Both acknowledged

  • Land Dispute

    low

    A historical land dispute is ongoing in the high court, but management states that Asarfi Hospital is no longer a party to the case and any judgment will not impact its operations.

    Both downplayed

Q&A highlights

6 direct, 2 evasive
Discrepancy in Other Income (P&L vs Cash Flow) and Long-term Liabilities in Cash Flow Evasive
Mayank, because it requires a detailed... I will have to look at the numbers and then I will have to answer, kindly post this on our e-mail so that we can give you detailed reply of this.

Highlights potential accounting/reporting complexities or a lack of immediate clarity on financial statement reconciliation, requiring further follow-up.

Asked by Mayank Kapoor

Rationale for Other Income Increase (from Rs. 2 crores to Rs. 8 crores) Direct
This year we had sale of our eye unit because there was difficulty in managing our eye unit. So we sold some of the assets of eye unit to SharpSight which is a hospital eye chain. There is a component of rent income, then it has component of some fixed deposit and there is some component of scrap sale also.

Clarifies the significant increase in non-operating income, attributing it to specific asset sales and other non-core activities, which helps in assessing core operational performance.

Asked by Ridhi Agarwal

Cancer Hospital Expansion Plans despite 30% Occupancy Direct
Yes, Cancer Hospital has capacity to expand because it is a new cancer hospital and cancer treatment requires lots of trust building. We are organizing lots of health talks to the neighboring districts aggressively; yesterday itself.

Addresses concerns about expanding capacity when current utilization is low, providing strategic rationale for future growth through trust-building and service expansion.

Asked by Ridhi Agarwal

QoQ EBITDA Margin Dip (21% to 15%) and Sustainability of 17-19% Target Direct
We are working on cost control very aggressively, we are on to it and we believe that the EBITDA target will be achieved.

Addresses a short-term margin contraction and reaffirms long-term margin targets, indicating management's focus on operational efficiency and cost control.

Asked by Tanvi Jain

Increase in Debtors (Rs. 15 crore) and its Source Direct
Sir, it is all primarily from government. Because of being a cancer hospital, our catchment area has increased. Earlier, only patients from two or three districts used to come but now patients from more than 10 districts come to us. As you know the government supported cancer hospital runs more.

Explains the rise in receivables, linking it to the payor mix (government schemes) and expanded patient base, which impacts working capital and cash flow.

Asked by Ankur Gulati

Funding Mismatch due to Debtors and Need for More Borrowings Direct
No, look for growth investments have already been made. We do not need any funding from outside for growth. The capacity that we have built, we have to use that capacity in a better way.

Clarifies the company's funding strategy and how it plans to manage working capital challenges without additional external debt, relying on existing capacity and debtor management.

Asked by Ankur Gulati

Discrepancy in Cancer Hospital ARPOB (65,481 this quarter vs 30,429 annual) Evasive
I have noted it, I will just recheck, and I request you to e-mail me on that. I will definitely give you clarification as to how it is showing as 60,000.

Highlights a significant inconsistency in a key operational metric for the new cancer hospital, requiring further clarification for investors to accurately assess performance.

Asked by Ram Prasad

Land Issue Resolution for Hospital Operations Direct
Yes, land issue is resolved to the extent that they submitted to people who are fighting with us, they submitted affidavit that we do not want to fight with Asarfi Hospital right now. So this issue gets resolved. And high court threw us out from the list of parties.

Addresses a potential legal and operational risk, providing assurance that the hospital's operations are secure and not directly impacted by ongoing legal proceedings.

Asked by Paras Chheda

2 min read 6 chapters

Detailed narrative

Strong Financial Performance in FY25

Asarfi Hospital reported robust financial results for the second half of FY25, with revenue from operations growing 43% year-on-year to Rs. 120.6 crores from Rs. 84.4 crores in FY24. This growth was accompanied by a 47% increase in EBITDA to Rs. 223.5 crores, improving the EBITDA margin to 20% from 19% in the previous year. Net profit surged 154% to Rs. 10.6 crores from Rs. 4.2 crores, with the PAT margin expanding from 5% to 9%. A significant discrepancy was noted in the reported Profit Before Tax figures and growth rate, which management has been asked to clarify.

Cancer Hospital Operationalization and Growth Strategy

The company's dedicated cancer hospital, located in Dhanbad, became operational in Q1 2025, currently operating with 65 beds, up from an initial 50. Management highlighted its deep commitment to providing specialized healthcare, including Jharkhand's first advanced linear accelerator. Despite a current occupancy rate of 30%, the hospital is actively engaging in health awareness programs and expanding services to build trust and increase utilization, targeting 50% occupancy and an ARPOB of 45,000, aligning with HCG's standards.

Operational Metrics and Capacity Utilization

For FY25, the Super Speciality hospital achieved a bed occupancy rate of approximately 61%, serving over 10,576 inpatients and 1.05 lakh outpatients. The Average Revenue Per Occupied Bed (ARPOB) for the Super Speciality hospital increased to 17,505 from 17,177 last year, while the cancer hospital's ARPOB stood at approximately 30,500. The company aims for 70% occupancy in its multispeciality hospital and 50% in the cancer hospital, alongside increasing daily radiation treatments from 20 to 80.

Debtors Management and Working Capital Focus

A key concern raised was the increase in debtors by Rs. 15 crore, primarily due to government-supported cashless schemes like Ayushman Bharat. Management acknowledged this challenge, stating that they are actively working on debtor management through internal red-flagging, weekly monitoring, and IT infrastructure improvements. They expressed confidence in balancing debtors and creditors to manage working capital without requiring additional external funding, as growth investments have already been made.

Future Expansion and Strategic Vision

Asarfi Hospital has a strategic vision to reach 500 beds by FY27, which includes the acquisition of a 100-bed hospital in the current financial year and adding 50 beds to existing facilities. This expansion is expected to contribute Rs. 20 crores to the FY27 revenue target of Rs. 200 crores. The company also aims to become the #1 hospital in Jharkhand by January 1, 2027, by focusing on comprehensive services and attracting top clinicians.

Capital Allocation and Shareholder Returns

The company stated that significant CAPEX investments for growth have already been made, and no further external funding is required for its expansion plans. Gross debt was noted to be around Rs. 40 crores. While no dividend was declared this quarter, management confirmed they are actively considering it and will proceed once the financial situation improves. The focus remains on utilizing existing infrastructure and managing costs aggressively to achieve targeted EBITDA margins of 23-25%.

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