Shalby Limited

Shalby reported a consolidated revenue of INR289 crores for Q2 FY26, marking a 5.5% year-on-year growth. Consolidated EBITDA increased by 15.8% to INR46.1 crores, with the margin expanding to 15.9%. This growth was significantly bolstered by the MedTech segment, which saw its consolidated revenue jump 42.1% YoY to INR33.7 crores and its EBITDA turn positive at INR3.66 crores from a negative INR21.6 lakhs in the prior year. The company also reported a substantial 204.16% YoY increase in consolidated PAT to INR7.3 crores.

The newly rebranded Shalby International Hospital (formerly Sanar International Hospital) faced significant headwinds, with its revenue declining by 21.87% YoY to INR20 crores. The hospital's occupancy rate remained low at 21%, and it continued to incur an EBITDA loss. Overall hospital occupancy for the group stood at 48% in Q2 FY26. Management attributed a decline in IP/OP volumes to heavy rainfalls, the absence of a malaria/dengue season, and ongoing TPA negotiations that put 5-6 TPAs on hold, leading to surgical drops.

On a standalone basis, Shalby's revenue grew 5.7% YoY to INR230 crores, and EBITDA increased by 10.29% to INR45 crores, with the margin improving to 19.5%. However, standalone PBT saw a significant decline of 51.94% YoY to INR13.6 crores. Despite this, standalone PAT increased by 14.45% to INR19.8 crores. Operational metrics showed ARPOB growing 5.2% YoY to INR40,794, while the number of occupied beds decreased by 2.46% to 673.

To address the challenges, management has rebranded Sanar International to Shalby International Hospital, restructured leadership, and is onboarding new clinical talent, expecting positive EBITDA within the next year. For overall hospital volumes, strategies include increasing the number of doctors (from 370 to 454), renegotiating TPA rates, and enhancing digital and international promotions. The company anticipates an increase of 400-500 basis points in occupancy in coming quarters for its other hospitals.

Shalby MedTech's strategy focuses on surgeon-friendly implant systems, R&D, and cost reduction. The segment achieved a 9% YoY and 3% QoQ reduction in COGS. Capacity improvement is slated for the end of Q3 and start of Q4, with the current plant having sufficient capacity for the next five years through additional shifts. The company is also investing in new product development and establishing R&D offices in India and the USA to drive sustainable growth for 2025-2026.

Shalby is making significant capital investments, with INR70 crores spent in Q2 and H1 FY26, of which INR50 crores was allocated to robotic and onco machines. The company currently operates 5 orthopedic robots and plans to acquire robots for general surgery, onco surgery, and neurosurgery, starting with SSI Mantra. Additionally, two new linac bunkers in Surat and Ahmedabad are expected to contribute to the top line from Q4 onwards, and an additional PET/CT scan machine will be installed in Naroda in the next quarter or fiscal year.

The company has successfully diversified its revenue mix, with the contribution from orthopedic-related services decreasing to 34% from 60-70% a decade ago, and other specialties like cardiology, neurology, and oncology now contributing around 10% each. While the overall strategy is to reduce government business, specific units like Mohali and Jabalpur will continue to serve government patients (ECHS/CGHS) due to operational necessities. Management also expects a positive impact on margins and revenues from CGHS rate revisions and GST.