Krsnaa Diagnostics Q3 FY26 earnings call

Krsnaa Diagnostics reported revenue from operations of ₹181.2 crores in Q3 FY26, marking an approximate 4% year-on-year growth. The quarter was characterized as seasonally softer for the diagnostic industry, with lower seasonal volumes and temporary operational pauses undertaken to accelerate the recovery of long-pending government receivables. Despite these headwinds, the company maintained an EBITDA of ₹47.4 crores (26% margin) and a PAT of ₹16.8 crores (9% margin), demonstrating resilience.

A key highlight of Q3 FY26 was the recovery of over ₹130 crores in government receivables, which was ₹100 crores more than the collection in Q3 of the previous year. This significant recovery materially strengthened the company's cash position and reinforced the effectiveness of its execution and working capital discipline. Management noted that collections from Himachal Pradesh and Karnataka have started flowing in, with confirmations received from Karnataka authorities.

The retail diagnostic segment continued its robust growth trajectory, with revenue growing nearly 8x year-on-year and contributing approximately 8% to the overall group's revenue in 9MFY26. The retail network has expanded to over 3,000 touch points, with plans for steady expansion across Maharashtra, Punjab, Assam, and Odisha. Management expects 15-25% growth in retail touch points in the coming quarters^⏳, emphasizing a focus on building the B2C segment.

Krsnaa Diagnostics is actively implementing large-scale PPP projects. The Rajasthan project is under implementation, with around 20 labs and 300 collection centers installed, aiming for completion by Q4 FY26, with an annualized revenue potential of ₹200 crores by end of FY27. The Maharashtra MRI project, involving 10 sites, is nearing readiness but faced delays in clearances and inauguration. The company also launched the first Apulki Healthcare Hospital, a PPP-based cancer and cardiac care facility, expected to reach ₹20 crores in mature revenue within 2-3 years.

Margins in Q3 were impacted by cost absorption related to expansion initiatives, particularly the Rajasthan pathology rollout, where costs were incurred without corresponding revenue in the quarter. Management clarified this is a timing issue, not structural, and expressed confidence in maintaining current margin levels, with aspirations for improvement as investments mature and operating leverage strengthens. They also noted a positive impact from GST rationalization on consumable costs.

The company announced the departure of Mr. Pawan Daga, the Chief Financial Officer. Management reassured stakeholders of a strong, experienced financial leadership team and a structured transition process to ensure continuity across financial operations, governance standards, and internal controls. The process for appointing a suitable successor has been initiated, underscoring commitment to high standards of financial discipline.