Krsnaa Diagnost.

Krsnaa Diagnostics reported a 10% year-on-year revenue increase to INR174.5 crores for Q3 FY25, with EBITDA at INR46.6 crores, reflecting a 27% margin. Net profit for the quarter grew 50% year-on-year to INR19.4 crores. For the first nine months of FY25, revenue grew 17% year-on-year to INR531.1 crores, and EBITDA increased 39% year-on-year to INR141.6 crores, maintaining a 27% margin. The net profit for the nine months reached INR56.9 crores, equalling the full-year profit of the previous fiscal year, demonstrating strong operational efficiency.

The Union Budget 2025-26 reinforced healthcare as a national priority, with a 13% rise in allocation for the Ministry of Health. The Ministry of Health and Family Welfare received INR90,958 crores for FY25, a 12.96% increase from the previous year. The National Health Mission budget increased to INR36,000 crores. Initiatives like the expansion of Pradhan Mantri Jan Arogya Yojana to INR7,300 crores and plans for 200 new cancer daycare centers in FY26 are expected to boost demand for diagnostic services, benefiting Krsnaa Diagnostics.

Q3 revenue was impacted by seasonal variations, the earlier conclusion of the Mumbai BMC project, and delayed ramp-up of Maharashtra CT and Madhya Pradesh MRI installations due to site handover delays. Operational challenges in Karnataka and Assam also contributed to volume moderations. The company reported higher receivables for 9 months FY25 due to delayed payments from Himachal Pradesh and Karnataka, with some projects extending to 120 days. Management expects HP Karnataka receivables to reduce to 90 days by year-end and overall receivables to 65-70 days by next year, with INR30 crores already collected from HP in January.

Krsnaa Diagnostics commissioned 40 CT scan machines in Maharashtra, with the remaining 15 CT scans and 17 MRI machines expected to be operational soon, contributing revenue from Q1 FY26. The company expanded its nationwide collection centers by 284 in the last three months. Under its 'RPL' brand, retail operations have been launched in 4 states (Maharashtra, Punjab, Assam, Orissa) leveraging existing PPP infrastructure. The company aims for 500 retail touchpoints next year, focusing on an asset-light model and digital solutions to enhance accessibility and affordability.

For Q3 FY25, radiology contributed 49% to revenue, while pathology contributed 51%. Radiology typically yields a higher EBITDA margin of around 40% at the center level, compared to pathology's 25-30%. Management noted that pathology projects generally mature faster (1-2 years) than radiology projects (1.5-3 years). The company aims for a healthy 50-50 mix between radiology and pathology, though the actual mix can vary based on tender outcomes.

Management acknowledged that ROCE has been subdued due to significant past investments not yet commensurate with revenue. However, with new initiatives like the asset-light B2C model, ROCE is expected to improve in the coming years, showing quarter-on-quarter improvement. The company is aspirational for a higher contribution from the B2C segment to its overall revenue, expecting it to grow significantly in subsequent years, though specific quantification of investment and future contribution is still underway.