This is great thread, so thanks to all the amazing contributors !
I am new to the company and had a question. Please help if anyone knows
As I understand the company has certain moats when it comes to winning the tender. This is also substantiated by a bid to win ratio of 75%+. If this is the case why does Krsnaa not bid for far more tenders ? As I understand their market share is less than 7% (assuming the size of industry is INR 10-15K Cr)
Maybe they don’t want any aggressive expansion like Big Bazar but a calculated growth like D-mart.
First let the current centres become break-even and maybe profitable and then expand.
Just Personal Opinion.
Invested and Biased.
dr.vikas
As I understand, in the latest transcripts they are a net debt free company. Hence wondering if there is an issue in the addressable opportunity size ?
Valid point. But Bhai, Promoter is Marwadi, and they are one of the best with business acumen.
They have 27% stake in this business. Their major business is with Government where due to bureaucracy, the things move very slowly.
So give some time for the business to evolve.
My personal opinion
Invested and Biased.
dr.vikas
Found this note from today’s Arihant Capital Bharat Meet on X -
https://x.com/AlphaWealth000/status/1904905705846640830?t=Z9EeTm-t7-rTkB5di-rcZw&s=19
I might be wrong to judge this but the 2 states with payment problem are both Congress ruled states! Could be a coincidence or a political issue. But given that this is a primarily B2G business, the risk of political nuisance remains. Any thoughts?
– Resignation of Senior Management Personnel of the Company.
Key monitorable for the Company in Q4 will be revenue growth and receivable management.
Rajendra Mutha who is the major shareholder and director of the Company never responds in Concal.
Disclosure : Not invested.
Krsnaa Diagnostics -
Q4 and FY 25 results and concall highlights -
FY 25 outcomes -
Revenues - 717 vs 619 cr, up 16 pc
EBITDA - 195 vs 146 cr, up 34 pc (margins @ 27 vs 24 pc)
PAT - 77 vs 57 cr, up 37 pc ( PAT margins @ 11 vs 9 pc )
No of patients served @ 1.92 vs 1.56 cr
No of tests performed @ 6.1 vs 4.4 cr
Q4 outcomes -
Revenues - 186 vs 166 cr, up 12 pc
EBITDA - 54 vs 45 cr, up 21 pc (margins @ 29 vs 26.7 pc)
PAT - 21 vs 19 cr, up 11 pc ( due higher tax outgo vs LY )
Company’s infra -
CT centers - 143
MRI centers - 37
Path Labs - 117
Path collection centers - 3748
Company is performing these radiological + Pathology tests at prices far far below their competitors ( as low as 70-80 pc below the competitors prices )
Geographical mix of revenues -
West - 36 pc
South - 19 pc
North - 31 pc
East - 14 pc
Over and above the Govt business, company has started its private B2C diagnostics business in Maha, Punjab, Assam and Odisha under the brand RPL. Initial response has been encouraging
B2C retail segment is expected to start contributing meaningfully wef FY 26
Company intends to establish itself as the most affordable, accurate + 24 X 7 service provider via its retail venture RPL. Company is leveraging its existing infrastructure to manage its B2C foray. Integrated Radiology + Pathology solutions at one place is unique to the company
Company’s B2C foray should not warrant heavy capex as the company is going to leverage its existing B2G infra for the same
To begin with, company is expected to keep its focus razor sharp in states like - Maharashtra, Assam, Odisha, Punjab - wrt its B2C foray
India is a severely under penetrated mkt wrt diagnostics. Additionally, the organised sector’s mkt share in diagnostics continues to be low @ 15 pc - representing a huge growth runway ahead
Company has started exercising caution wrt not going after business where the profitability is low / receivables cycle is long. This has led to moderation in company’s topline growth in FY 25. However the quality of revenue has improved
Have recommended a dividend of Rs 2.7 / share
Receivables stand @ 150 days from two states - HP and Karnataka ( a key concern ). Receivables from other states continue to be below 90 days
At company level, receivables stand @ 140 days
Company is confident ( based on the discussions they have had with key govt agencies ) that their receivable days should come down in not so distant future
EBITDA margins are likely to be higher in FY 26 vs 25
Company’s revenue / test has seen an improving trend in last few Qtrs. This has happened because of 2 reasons - ramp up of revenues from retail segment ( now @ 4 pc, they aim to take it upto 7-8 pc by end of FY 26 ) + greater share of advanced tests in the normal B2G business
Company has sacrificed growth to the tune of 4-5 pc ( in Q4 ) as it has turned cautious wrt doing business in states where the receivables r on the higher side
Cash to Credit ratio of their business is about 20 : 80
Guiding for topline growth of > 15 pc with margin expansion for next FY
The amounts outstanding with Karnataka + HP Govts stand at 145 cr
Company expects the receivables at company level should come down to 100 days by end of FY 26 - this is key area to watch out for
Expect the bulk of collections to come in Q1 ( which should also free up their working capital )
Company’s B2C prices are also 30-35 pc below competition. In long term, company expects to ramp up their B2C revenues to 70 pc of their business from current levels of < 5 pc
Company current mix of revenues from radiology : pathology in FY 25 @ 50:50 vs 60:40 in FY 24
Disc: holding, biased, not SEBI registered, not a buy / sell recommendation, will only add once the receivables start to fall meaningfully
So the problem with the same 2 states continue in Q4 as well… is it due to too much of freebie culture that is destroying state financials or political issues or additional corruption / speed money kind of problems, is anyone’s guess. But one thing is sure that this business will be subjected to political uncertainties and problems associated with the same.
Disc: I am a retail investor, not SEBI registered, Invested and added during the fall post Q4 results.
According to the latest conference call, the company aims to achieve seventy percent B2C business in the long term. For the next year, the B2C target is eight percent. B2C is a high margin, high return on capital employed segment, and the company plans to scale up volumes using its existing facilities without the need for additional capital expenditure. If they can execute this strategy successfully, it could be a game changer
A Word of Caution:
Management has been talking up the B2C segment since 2022, yet we’ve seen almost no tangible execution in the last three years. This persistent narrative feels more like a story to excite investors rather than a credible strategy.
Why do I say that?
Disagree to some extent.
They are building this strategy in T3, T4 and currently there is no online business and entities that take care of this service, so the competition is not a threat here. But, on the contrary side the execution is too slow from management, and no material revenues that we see in the projections.
They are building th brand outside of hospital via collections center’s, this, the can do branding via different ways and most of the center’s built in for pathology alone & very less projections on the radiology for collection center’s
The prices of the tests offered by Krsnaa have come down substantially from FY2024-Q3 to FY2025-Q4 whereas that of competitors has seen no change. Can these numbers be trusted?
Krsnaa has changed the format of the investor presentation in Q4 FY2025. It no longer shows the Assets to be deployed slide.
Moreover, the number of disclosures to exchange on projects updates is almost absent. In FY23, they did 19 updates, in FY24, 12 updates and in FY25 only 6 updates.
I do not have a very good feeling.
Please note this is NOT a buy or sell advice. I am NOT a SEBI registered adviser.
The working Capital borrowing which was at Rs 5.5 Cr in Mar 23 has increased to Rs 101 Cr in Mar 24 and to Rs 147 Cr in Mar 25 . Receivables have increased from Rs 74 Cr to Rs 178 Cr to Rs 283 Cr during the same period.
FY 21-22 Sales was Rs 455 Cr which has increased to Rs 682 Cr in FY 24-25, Sales increase during this 3 years is almost equal to increase in receivables.
If this is the level of working capital they are going to utilise for their average growth , how will the Company generate free cash flows. From where will they do their CAPEX.
Further, to achieve this growth Company has done a CAPEX of Rs 465 Cr.
As per rating agency:
“The ratings also consider the capital intensive nature of KDL’s operations with capex plans of over Rs.300 crore in FY2025FY2026 towards setting up new centres.”
Company is not generating cash flows to fund this CAPEX and hence it will have to take leverage. Leverage growth with cash generation is a perfect recipe for disaster.
What kind of management thought process is on this kind of poor capital allocation.
After bragging for long time since listing for B2G now they are guiding for B2C. It seems that management has failed miserably in scaling up B2G business even after allocating so much of capital.
Management certainly lacks bandwidth in scaling the business and all these things are red flag for me. If growth requires huge capital allocation both in the form of working capital as well as CAPEX, then the Company will never generate returns for the shareholders.
The management does not has bandwidth to sustain competition from existing B2C player and hence I do not forsee any area from where future growth will come.
DII have been selling their stake continiuosly.
27.36% 20.43% 19.41% 18.49% 19.77% 18.73% 16.59% 15.37% 15.26% 15.86% 14.46% 14.26%.
Disclosure: Not invested an exited long back. Tracking for checking whether my exit call was right or not.
Just a follow up question on that, if they are able to bid and win B2G contracts at such low prices and earn stable margins even after that. what will stop them from doing the same in B2C diagnostics space.
Invert always Invert: If B2G would have been a simple ,high margin and high ROCE business , why other large players are still not entering this segment. I really doubt the management bandwidth of Krsnaa Diagnostic to scale up the business in both B2G and B2B business.
Lack of management band width and intense competition in B2C business will be a hindrance to expand this segment. I dont think they have done any good in B2G segment either.
Stock still way below its listing price even after 4 years and DII and FII are continuously reducing their position.
Quite impressed that the company is able to fight and get what it deserves from the local govts. More convincing wrt the moat. Could be one of the under-appreciated opportunities because of B2G overhang.
Disc: Invested and biased
