Vijaya Diagnostic Centre Q1 FY27 earnings call

Vijaya Diagnostic Centre reported a robust Q1 FY27, with consolidated revenue reaching approximately ₹231 crores, marking a 22.8% year-on-year growth. This was primarily driven by a strong 16.5% increase in test volumes, complemented by changes in test mix and realization. The company's EBITDA grew 34% year-on-year to ₹98 crores, with the EBITDA margin improving by 360 basis points to a healthy 42.7%. Profit after tax (PAT) also saw significant growth of 37.6%, reaching ₹53 crores, translating to a PAT margin of 23%.

The company continued its aggressive network expansion, commissioning one hub centre in Gachibowli, Hyderabad, and a flagship hub in Bengaluru during the quarter, along with four spokes across Hyderabad, AP, and Pune. The Bengaluru hub, a state-of-the-art facility, involved a capex of approximately ₹30 crores and includes advanced imaging technologies like digital PET-CT and 3T Omega MR, alongside an automated central lab. The Gachibowli hub incurred a capex of ₹9 crores. For the full FY27, the company plans a total capex of ₹190-195 crores, which includes commissioning 9 new hub centres, 10-12 spoke centres, a Panjagutta reference laboratory, and acquiring land for a new hub in Andhra Pradesh for ₹8-10 crores.

Hyderabad, the core market, continued its strong performance with 17% year-on-year revenue growth, contributing 67% of the total revenue. Pune also delivered an 18% growth. The company's strategy for new markets like Bangalore involves establishing a fully automated central lab first, as seen with the ₹30 crore JP Nagar facility, before expanding with more hubs and spokes. Management expressed confidence in replicating its dense cluster model across other southern Indian states and Karnataka, aiming for deep penetration similar to Hyderabad.

The wellness segment maintained its share at 14.8% of revenue, driven by increased awareness, migration, and education in tier-2 geographies. Management highlighted a differentiated approach through digital initiatives and advanced cardiac CTs in newer hubs, allowing for comprehensive packages from basic investigations to whole-body imaging. These premium wellness packages, priced between ₹8,000-₹10,000 for an Angio, are contributing to higher realization per patient and are seeing strong demand from both retail and corporate customers.

The company is leveraging AI to generate smart reports for its lifestyle wellness packages, which are customized based on patient history, details, and age. In radiology, AI is being used for organ-based analysis in KUB, chest, and breast cases. Management emphasized that AI implementation requires rigorous testing, validation, and certification before clinical use, with their team of over 400 radiologists evaluating its efficacy. The goal is to integrate these AI-driven insights into their PAC systems for enhanced reporting.

Management stated that Vijaya Diagnostic Centre continues to outperform industry growth, driven by its B2C-focused integrated business model, high-quality reporting, and advanced imaging equipment. They believe this strategy helps them gain market share consistently across geographies. In Hyderabad, competitive intensity from organized players is not significant, as major competitors are deploying capital outside the region. The company's network expansion pace is also noted as being faster than that of competitors in its key markets.

The company maintains a strong balance sheet with a surplus cash position of approximately ₹330 crores. It consistently generates cash PAT of 26-27%, providing a resilient financial foundation for its expansion strategy. The planned capex of ₹190-195 crores for FY27 is intended to be funded without significant financial strain, allowing the company to pursue growth with confidence and a disciplined approach to capital allocation.