Chandan Healthca

Chandan Healthcare Limited reported a strong Q3 FY26, with revenue growing 20% year-on-year to ₹65.77 crores. EBITDA saw a significant increase of 39% year-on-year, reaching ₹12.61 crores, and EBITDA margin expanded by 263 basis points to 19.17%. Profit After Tax (PAT) grew 7.97% year-on-year to ₹4.54 crores. However, PAT margin slightly decreased by 7 basis points to 6.9% due to a one-time^📎 exceptional provision of ₹2.2 crores for gratuity, mandated by a new labor code.

The company is aggressively expanding its network, having started six comprehensive diagnostic centers and 18 labs in the current financial year. Nine more labs and a comprehensive center in Raipur are scheduled to open next month. Looking ahead, Chandan plans to launch three more comprehensive centers and 13 laboratories across three states next year, aiming for a total of 100 labs and 1,000 franchisee centers within three years. Additionally, two new wellness centers are set to open in Delhi and Raipur next month.

Chandan Healthcare differentiates itself by focusing on comprehensive centers offering both pathological and radiological services under one roof, attracting direct patient footfall. While it also operates a franchisee model for sample collection, its primary business model emphasizes direct patient engagement and a broader service offering. The company aims for a balanced revenue mix across B2C, B2B, and B2G segments, targeting 33% from each, though B2C is currently prioritized due to better margins and faster receivables.

The company has secured a significant government contract in Punjab and Guwahati for radiology services in eight district hospitals and one railway hospital. This project is estimated to generate ₹52 crores annually for 10 years, totaling ₹550 crores. Under this Public-Private Partnership (PPP) model, Chandan will install MRI and CT scans and collect payments directly from patients, with operations expected to commence within the next six months. This initiative is seen as a major growth driver for the upcoming year.

Recognizing the future importance of specialized diagnostics, Chandan is planning to launch a Genome lab in Lucknow and a PET scan facility in Gorakhpur in H1 FY27. These advanced services are crucial for areas like cancer, IVF, and genetic testing, and the company is investing approximately ₹1 crore per lab to ensure high-quality, closed-system operations. This strategic move aims to cater to growing demand and enhance the company's specialized service portfolio.

Management expects EBITDA margins to improve consistently, targeting an overall range of 30-35% in the future, and specifically 30-32% by Q4 FY27. While current employee costs are elevated (18% of revenue) due to advance hiring for expansion, these are expected to normalize^📎 as new centers mature and business volumes increase. The company also aims to achieve a 10% EBITDA margin for its pharmacy business within the next year.

Chandan Healthcare plans to invest approximately ₹100 crores in new labs over the next three years, with each lab costing around ₹1 crore. The company has already raised ₹104 crores through preferential shares, with ₹26 crores received in the current month, ensuring sufficient liquidity for its expansion plans. Management confirmed that working capital is improving quarter-to-quarter, and the company expects to generate positive net cash inflow from operating activities this year, indicating a healthy financial position for future growth.