Krsnaa Diagnostics Q4 FY26 earnings call

Krsnaa Diagnostics reported robust financial results for FY26, with revenues reaching approximately INR 7,728 million. The company's EBITDA stood at INR 2,149 million, reflecting a margin of around 28%. Notably, PAT crossed the INR 1,000 million mark for the first time, achieving INR 1,014 million. In Q4 FY26, revenue from operations was INR 1,926 million, a 4% year-on-year and 7% quarter-on-quarter growth, with PAT growing over 101% year-on-year to INR 417 million.

The company is executing one of the largest diagnostic infrastructure expansions in India, with a planned capital investment of INR 5,000 million in FY27. This includes projects in Rajasthan (approx. INR 300 crores) and MRI expansions (approx. INR 150 crores). The retail diagnostics business emerged as a strong growth engine, scaling sixfold from INR 10 crores in FY25 to INR 60 crores in FY26, now contributing 8% to overall revenue. Management aims to scale retail contribution to double digits in FY27 and 25-30% of group revenue within 3-5 years.

Krsnaa Diagnostics demonstrated focused efforts on improving collections and working capital efficiency. The Days Sales Outstanding (DSO) successfully reduced from 155 days in Q3 to 139 days at the end of Q4 FY26. The company recorded its highest quarterly collection of INR 1,580 million in Q4 FY26. Management has set a target to further reduce DSO to sub 120 days in FY27, emphasizing its commitment to a healthier balance sheet.

The company's PPP-led model continues to be a core strength, enabling access to affordable diagnostics across underserved geographies. While acknowledging that some projects completed their tenure and others faced implementation delays (e.g., Maharashtra project, government site delays), Krsnaa has maintained consistent growth. Management highlighted that PPP tenders include contractual rate escalations (2-5% annually or biennially) and that delays are typically operational rather than structural, with collections for older projects like HP and Karnataka now progressing.

Upon completion of its existing order book, Krsnaa expects to cross 200-plus CT and MRI centers, becoming one of Asia's largest radiology platforms. By FY27 exit, the company targets 260 radiology centers. The pathology lab network, including satellite and reference labs, is expected to reach 297 by Q2 FY27 with the integration of Rajasthan. Management is highly optimistic about opportunities in FY27, expecting all investments to converge and drive growth, while aiming to maintain EBITDA margins at current levels despite initial Q1 FY27 pressures from manpower deployment.

The strategic investment in Apulki Healthcare yielded a value gain of approximately INR 222 million during the year. This partnership is crucial as it positions Krsnaa within the oncology and cardiac care ecosystem, offering exclusive diagnostic rights for 30-plus years across Apulki's hospitals. The first hospital under this partnership was recently launched, and management expects this to be a significant long-term growth driver, with Apulki targeting positive EBITDA in FY27.