Vijaya Diagnostic Centre Limited

Vijaya Diagnostic Centre Limited reported a consolidated revenue of INR 173 crores for Q4 FY25, reflecting a 12% year-on-year growth, with organic growth at 13% driven primarily by test volume. EBITDA for the quarter stood at INR 69 crores, up from INR 63 crores in the previous year, achieving a healthy margin of 39.8%. The profit after tax (PAT) was INR 35 crores, with a margin of 20%. For the full financial year FY25, consolidated revenue reached INR 681 crores, an impressive 24% year-on-year growth (19% organic), with EBITDA at INR 273 crores (24% growth) and a margin of 40.1%. PAT for FY25 was INR 143 crores, representing a 21% margin.

The company announced the successful launch of 6 new hubs in the last two months, with two each in Pune, Bengaluru, and West Bengal. Additionally, the execution of 3 more hubs in West Bengal is on track to commence operations within the next 3-4 months. Leases for 2 hubs in Tier 2 locations of AP and Telangana have been finalized, scheduled to become operational in H2 FY26. New hubs are expected to break even within one year of opening, with Ongole already having achieved this and Nizamabad being close.

Gross margins contracted in Q4 FY25, primarily due to the increasing contribution of wellness services, which accounted for 15% of the quarter's revenue. Wellness packages are generally offered at discounted prices. This, combined with an increase in input costs, is structurally contributing to the new normal for gross margins. Pathology gross margins were around 85-86%, and Radiology gross margins were 90-91%.

In Bengaluru, the company has launched two hub centers in different corners of the city to test its Hyderabad go-to-market strategy, which is showing positive results. Pricing in Bengaluru is aligned with Hyderabad, not Pune or West Bengal. In Pune, the company consciously reduced B2B tie-ups due to payment realization issues, aiming to create capacity for B2C clients. Kolkata is expected to see more spokes opening in FY27 after the stabilization of current hubs.

The planned capital expenditure for FY26 is estimated to be between INR 145 crores and INR 150 crores, primarily for commissioning approximately 10 new hub centers. The company has onboarded a Chief Technology Officer (CTO) to fast-track IT initiatives, including the implementation of a new Customer Relationship Management (CRM) system in the current financial year. Digital spends are expected to increase in FY26 and beyond, reflecting a commitment to technology-driven growth.

Vijaya Diagnostic Centre emphasizes a B2C-focused model, investing in infrastructure, advanced imaging, and comprehensive lab services to offer everything under one roof. This strategy, combined with quality service and direct customer engagement, has allowed the company to gain market share year-on-year, even in mature markets like Hyderabad. The company avoids aggregator or distributor models, preferring direct interaction with patients.

Management anticipates a 1-2% drag on EBITDA margins for the next 2-3 quarters in FY26. This temporary dip is attributed to the costs associated with stabilizing the newly launched hubs and the incremental costs of hiring new talent. However, the company expects to return to its regular margin levels by the end of FY26 as these new centers start contributing to revenue and achieve breakeven.

The diagnostic industry is estimated to be growing at 11-12%. Vijaya Diagnostic Centre believes it is outpacing this growth due to its built capacity, quality of service, and comprehensive diagnostic offerings. The company's strategy of launching centers that break even ahead of schedule and its ability to grow existing centers contribute to its faster growth trajectory compared to competitors, even in established markets.