Sector scan:
| Company | Q3FY22 Topline | Q3FY21 Topline | EBITDA Margins Q3FY22 | Margins Q3FY21 | Covid Revenues Q3FY22 | Covid Revenues Q3FY21 |
|---|---|---|---|---|---|---|
| Dr. Lal Pathlabs | 497 | 452 | 22% (28% excluding one off) | 31% | 11.87% | 24.33% |
| Metropolis | 293 | 275 | 26% | 32% | 17% | 19% |
| Krsnaa | 106 | 98 | 29% | 19% | 1.1% | 19.5% |
| Vijaya | 111 | 100 | 43% | 46% | 7.8% | 14.4% |
| Thyrocare | 117 | 138 | 31% | 36% | 5.6% | 19.68% |
KPI:
| Company | Q3FY22 Tests Conducted | Q3FY21 Tests Conducted | Q3FY22 Number of Patients | Q3FY21 Number of Patients |
|---|---|---|---|---|
| Dr. Lal Pathlabs | 16.9 million | 13.5 million | 6.6 million | 5.5 million |
| Metropolis | 6.3 million | 5.1 million | 3.3 million | 2.7 million |
| Krsnaa | 4.68 million | 3.07 million | 1.97 million | 1.42 million |
| Vijaya | 2.32 million | 1.91 million | 0.85 million | 0.68 million |
| Thyrocare | 4.06 million | 4.7 million | 3 million | - |
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Currently, Vijaya and Thyrocare are market leaders on margins.
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All players have suffered from covid test revenues dropping off a cliff. Krsnaa has the least exposure presently with 1% of their revenues coming from covid. Metropolis has the most to lose, followed by Dr. Lal.
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FY23 could see Krsnaa overtake/close in on Metropolis’ tests taken / footfall.
My takeaways from the concall:
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Krsnaa’s management plans to double all existing capacity, which is already at comically low capactiy utilisation. This means we won’t see their true asset turns/RoCE numbers until they stop expanding. I didn’t get a chance to ask which their best performing center is - I wanted to know if they’ve been successful in hitting 70%+ utilisation, this is needed to know if they can replicate this in rural centers.
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Crucial - while they’re present in PPP tenders, they are agnostic to clients that walk in. If walk ins are referred by governments, they get free treatment. However in metros, 50% of the footfall are private, even HNI patients. Governments don’t discriminate between private/public walk ins. Therefore, the PPP centers can be thought of being akin to standalone diagnostic centers with free rent, and disruptive prices.
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There have been instances in the past where other players outbid them in tenders, but very quickly realised they could not compete, and the bid came up for re-tender, and Krsnaa picked these tenders up.
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Despite going from 2 centers → 1800, tip of the iceberg for PPP model. There are 750 districts, they’re only in 76. 26,000 public hospitals and Krsnaa’s present only in a handful.
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Scope for leveraging their network gained through PPP - B2C product offerings and more partnerships with private hospitals. Goals are for revenues to be a 50/50 split between PPP and private. More details in Q1FY23.
@Dev_S this repurchase by Phi Capital is bizarre, I don’t think I’ve seen many instances of this. Phi Capital offloaded 1.6 million shares through an OFS during the IPO, and have now bought back nearly 10% of what they sold (purchases in Jan + Feb).
PS: I had earlier flagged that CFO pay was strangely low - 3.7 lakhs in FY21. I deleted that post as I found the answer, and realised I had posted incorrectly - CFO was appointed late in FY21, and worked for only 1-2 months with the company. Therefore 3.7 lakhs looks low for FY21, but annualising the rate makes it much more reasonable.
Disclosure - Invested, biased
Edit: added in Thyrocare for comparison