Suraksha Diagnostic Q1 FY27 earnings call

Suraksha Diagnostic Limited reported a robust start to FY27, with total income reaching INR 887 million, marking a 21% year-on-year growth. EBITDA stood at INR 315 million, up 28% YoY, with the EBITDA margin expanding to 36% from 34% in the prior year. Profit After Tax (PAT) demonstrated a remarkable 40% growth, reaching INR 128 million, resulting in a PAT margin of 14.7% for the quarter. This performance is attributed to the strength of the underlying business and effective execution of the long-term strategy.

The genomics segment continued its strong traction, recording a revenue of INR 13.7 million, a significant 136% year-on-year growth. The company has invested approximately INR 220 million over the past three years in genomics. Suraksha has introduced a blood test for Alzheimer's and initiated a project for early detection of Alzheimer's disease using AI with CSIR's help. Management expects the genomics segment to grow around 20% quarterly for FY27 and anticipates B2B to form a larger share of this business going forward^⏳.

In Q1 FY27, Suraksha commissioned one hub and three spoke centers, expanding its network to 72 centers. The company has extended its footprint beyond West Bengal, with a new hub center in Jharkhand and a planned hub in Tripura. For FY27, the plan is to add a total of 3 hubs and 6 spokes. The long-term target is to open 100 centers by FY28, with a strategic focus on a 50-50 split between new territories and existing geographies for future center additions.

The company's focus on operational efficiency led to improved profitability across its network. Mature centers delivered a strong 40.9% EBITDA margin in Q1 FY27. Notably, centers less than two years old turned profitable for the first time, achieving a 6.5% EBITDA margin, a significant improvement from a negative 5.5% last quarter. This turnaround is driven by volume expansion, operating leverage, and disciplined execution of the expansion plan, with continued efforts to improve throughput and capacity utilization.

Suraksha plans a capital expenditure of approximately INR 70-80 million for FY27, primarily for network expansion. A hub center typically requires INR 100-105 million, while a spoke center requires INR 15-20 million. The company aims to achieve 100 centers by FY28. Management maintains an overall EBITDA margin guidance of not below 34% for FY27 and expects further margin improvement by FY28-29, driven by continued scale and operating leverage.

Suraksha aims to strengthen its position as an integrated diagnostic service provider in Eastern India, focusing on clinical capabilities and technology. The company believes the Indian genomics market could reach around 450 million by 2030. In the Kolkata market, Suraksha currently operates five hub centers and six spoke centers, with plans to add three more hubs and six spokes. Management believes they are the largest organized player in Eastern India, which is still an underpenetrated market dominated by smaller players.