Krsnaa Diagnostics - what is the diagnosis?

Stock Opportunities
434

Key highlights from Krsnaa Diagnostics Q1 concall -

Revenues up 13 pc
EBITDA up 16 pc
PAT up 14 pc ( due lower other income )

Retail business ( RPL ) now contributes to 6 pc of company’s revenues. Rapidly scaling up retail B2C business across Punjab, Maharashtra and Orrisa

Have won Rajasthan state Govt’s contract - a key positive. Should start making a meaningful financial impact from next FY

Recievables @ 120 days ( vs 150 days @ end of FY 25 ). Have started receiving long overdue payments from Karnataka and HP. Have received official confirmation on receipt of pending dues from these and other states

The capex required to execute the Rajasthan contract shall be around 250 cr. Rajasthan business has the potential to clock 300 cr / yr kind of business for the company

Revenue growth for next 3 Qtrs should be > Q1’s revenue growth

RPL ( their retail venture ) should contribute to 18 -20 pc of company’s revenues by end of FY 27 ( vs 6 pc currently ). RPL should start breaking even on PAT level by end of FY 26

Company’s Rajasthan contract is only for pathology ( and not Radiology ). Hence investment required is lesser vs annual revenue potential

Rajasthan contract is initially for 5 yrs ( starting from date of commercialisation )

Apulki hospital in Pune should go live by Q3. Krsnaa being their diagnostics parter - should see revenues flowing in wef Q3

Disc: holding, biased, not a buy/sell recommendation, posted for educational purposes, not SEBI registered

12 Likes
435

Some pickings from FY25 Annual Report

The core business risk is the ballooning of Trade Receivables, which grew over 3.6x faster than revenue, and which the statutory auditor explicitly flagged as the primary Key Audit Matter (KAM). Trade Receivables (Consolidated) ballooned by 57.5% (from ₹1,762.92 million to ₹2,777.45 million ) while revenue grew by only 16% . This surge has stretched the Days Sales Outstanding (DSO) from ~104 days (FY24) to approximately ~141 days (FY25).

The provision made for expected credit loss is only ₹63.30 million against a gross trade receivable balance of ₹2,840.75 million . This is a provision rate of just 2.2%.

The statutory auditor flagged Capitalisation of property, plant and equipment (PPE) as a Key Audit Matter (KAM). They also identified “employee costs incurred for the set-up of new centers” where management applied judgment to capitalize these costs

image
image481×765 75.9 KB

ROCE inflated due to off-book machine financing as vendor financing obligations are in contractual liabilities, not borrowings.

Disc: Holding, 5% of portfolio.

6 Likes
436

I perceive lack of management bandwidth in scaling up the business.
Price not yet reached listing days high.
Disclosure : Exited long back.

437

Retail business is growing rapidly, management it to contribute 20% in coming 2 years. This segment will have very low opex cost as they are using the existing infrastructure for retail segments also, as this segment grows it will improve the margins.

image
image1159×625 134 KB

Other than MH Radiology & RJ pathology tender there are no other unexecuted tenders available with the company.

FY26 Rev could be close to 850 Cr and FY27 would be 1150-1200 Cr (excluding the retail segment growth) as RJ contribution is available completely.

Risk of receivables from Govt bodies will continue.

3 Likes
438

Trade receiables have gone up from 283 crores to 365 crores. Sales of H1 is 359 crores. Source: Screener. Disclosure: Not invested.

439

The implementation of RBI link account for payment as per central government payment guideline and the resulting alignment of state processes caused a temporary timing impact that significantly affected the company’s working capital position. This impact largely contributed to the receivables standing at around 150 days at the end of the quarter. The company aims to bring these receivable days down to approximately 100 days by the year-end. Although the system transition across different governments caused some seating problems impacting the collection of receivables, the management views the situation as a positive sign and expects improvement in the coming quarters.

For the record during Q2FY25 their receivable days target was 90 Days

2 Likes
440

Krsnaa Diagnostics -

Q2 FY 26 results and concall highlights -

Revenues - 206 vs 186 cr, up 11 pc
EBITDA - 60 vs 50 cr, up 18 pc ( margins @ 29 vs 27 pc )
PAT - 24 vs 19 cr, up 22 pc

No of CT centers @ 146
No of MRI centers @ 40
Pathology Refernce labs @ 6
Pathology satellite labs @ 114

MRI + CT centers are slated to to upto 200 ( by Dec 25 / Jan 26 ). Their Rajasthan project execution should see their Path Ref labs going upto 7 and satellite labs going upto 249

Amravati, Buldhana ( Maharashtra ) MRI centers and Ranchi ( Jharkahnd ), Tuljapur ( Maharashtra ) CT scan centers are slated to go live in Q3

Performance of their retail arm ( RPL ) - Revenues - 17 vs 2 cr ( retail revenue contribution now @ 8 pc of company sales ). Retail revenues grew by 60 pc on a QoQ basis. No of retail touchpoints @ 2878 vs 608 ( up 4.7 X )

Rajasthan PPP project - slated to add 10 labs in Nov, 25 in Dec and balance in Q4

Expect meaningful revenue bump up in revenues wef Q4 as Rajasthan project starts to contribute meaningfully

Expecting revenues from RPL ( their retail arm ) to accelerate to 15 pc of company’s topline in FY 27 ( indicating strong growth for next FY as well )

Retail business has now expanded to 2800 touch points ( mainly in Maharashtra, Punjab, Assam, Odisha )

The capex required to execute the Rajasthan contract shall be around 250 cr. Rajasthan business has the potential to clock 300 cr / yr kind of business for the company

Receivables stand @ 150 days, aim to bring them down to 100 days by end of this FY

Yet to open 15 MRI / CT centers @ Maharashtra

Due competitive nature of tenders that company bids for, they r not in a position to disclose their details nor the states that the company is bidding in

Due competitive nature of tenders that company bids for, they r not in a position to disclose their details nor the states that the company is bidding in

By 2030, company aspires RPL revenues to be 40-50 pc of company’s sales

Expect the retail business to break even @ annual revenue of 100 cr

Have started venturing into preventive / wellness areas in their retail business. Should help them accelerate growth + improving margins

Company is hopeful of clocking 25 cr / Qtr kind of run rate from their B2C venture ( from 18 cr in Q2 )

Disc: holding, biased, not SEBI registered, not a buy / sell recommendation

6 Likes
442

CFO resigned…

Main promoter is Rajendra Mutha and I find him hardly speaking any thing in Concal.

Rajendra Mutha is having experience only in Pharmacy and Yash Mutha is an MBA and had worked as an investment banker.

Yash Mutha is managing the entire show and he is not having any stake in the Company. If for some reason Yash resigns then Mr Rajendra is not having any experience of running diagnostic chain.

Beyond a point the present management is finding it difficult to scale the business. From the listing time in 2021, the stock is still 30% down from listing day. Receivable days are increasing, debt is increasing, FII/DII are decreasing their stake. Company is not able to walk the talk and is changing business model.

Rajendra Mutha Mr. Rajendra Mutha, Chairman and Whole-Time Director of Krsnaa Diagnostics Limited, brings over three decades of experience in healthcare industry. A certified pharmacist accredited by the Maharashtra State Pharmacy Council, he has been instrumental in driving the Company’s strategic vision and operational excellence. Known for his visionary leadership, ethical business values and decisive approach, Mr. Mutha fosters a culture of integrity, innovation and service. His leadership continues to steer Krsnaa Diagnostics towards impactful, inclusive and accessible healthcare delivery across India.

Yash Mutha Mr. Yash Mutha is a seasoned leader with over 20 years of extensive experience in strategy, operations and overall business management, playing a pivotal role in driving the growth and transformation of our Company. He holds a Bachelor’s degree in Commerce from the University of Pune and is a respected associate member of the Institute of Chartered Accountants of India. Additionally, Mr. Mutha has passed Certified Fraud Examiner exam, accredited by the Association of Certified Fraud Examiners, USA and Certified Information Systems Auditor (CISA) exams held by the CISA Certification Committee, USA. Since joining the Company in 2017, Mr. Mutha has been a driving force behind our strategic initiatives, overseeing key operational functions and reinforcing our commitment to innovation and excellence. His leadership as Managing Director has been instrumental in navigating the complexities of the healthcare diagnostics industry, enhancing corporate governance and fostering sustainable business growth.

Disclosure : Exited in 2024 with loss. Following company to validate my exit thesis.

5 Likes
443

Hi All, I just started analysing this company and want to know if all the equipment / machines are owned by Krsnaa or the govt?

If Krsnaa owns it (I think this is the case) then does it make it a bit less risky if Krsnaa is able to continue with PPP models for next 5-6 years? Is it wrong to consider it as a stepping stone for them to penetrate deep in market, get trained staff, full understanding of mechanics. In the meantime they seem to be pressing the right buttons to start B2c, Apulki investments etc?
Is my understanding correct that if they are able to continue with this PPP model, they have right to win and venture into private labs as they already have Brand name, machinery, staff, skills etc?

I understand there are risks in short term.

Please enlighten with your assessment on this company and their nature of operations / risks.

444

Issue with B2G business is always these receivables and political interferences

3 Likes
445

Krsnaa Diagnostics

Q3 FY 26 results and concall highlights -

Revenues - 181 vs 174 cr

EBITDA - 46 vs 45 cr ( margins stable @ 26 pc )

PAT - 15 vs 19.5 cr ( due sharp decline in other income @ 3.8 vs 9.2 cr on a YoY basis )

Q3 performance of retail business -

Revenues @ 17.7 vs 2.2 cr, up 8X. Retail now contributes to 10 pc of company’s revenues vs 1 pc in Q3 LY

No of retail touchpoints @ 3101 vs 875

Company’s Infra -

No of MRI centers @ 41

No of CT Scan centers @ 149

No of pathology Ref labs @ 26

No of satellite labs @ 114

No of collection centers @ 4000 +

Company’s presence spans 18 states + UTs

Notes from previous concalls -

The capex required to execute the Rajasthan contract shall be around 250 cr. Rajasthan business has the potential to clock 300 cr / yr kind of revenues for the company

Expect the retail business to break even @ annual revenue of 100 cr

Have started venturing into preventive / wellness areas in their retail business. Should help them accelerate growth + improving margins

Notes from Q3 concall -

Once the Rajasthan project goes on stream, no of Ref Labs shall increase to 49, satellite labs should increase to 249, collection centers should increase beyond 5000 touch points

Large upfront investments in required in Radiology labs is a natural entry barrier wrt the company’s business

In Q3, company recovered 130 cr stuck with various state govts - materially strengthening their balance sheet ( bloated receivables was a big overhang on their stock price )

Aim to ramp up retail revenues to 15 pc of company’s revenues by FY 27

GoI allocated 1.06 lakh cr for Healthcare in the latest union budget ( crossing 1 lakh cr for the first time )

Q3 is a seasonally weak Qtr. Plus the company deliberately did not press for revenue growth and focussed on collection of monies stuck with state Govts

EBITDA margins were under pressure in Q3 as company was spending aggressively towards execution of Rajasthan project while the revenue recognition is slated to begin in Q4

Company expects their RPL ( retail arm ) business to break even on a Qtly basis in Q4

Going forward, company is going to be selective wrt the PPP tenders that they bid for - so as to keep their receivables under check

Wrt revenues from offering diagnostic services @ Apulki Hospitals - company expects to clock 20 cr / yr / hospital kind of revenues from this business. First Apulki Hospital has gone live. It should take about 2 yrs for the company to ramp up to 20 cr kind of revenues from this hospital. Other hospitals are in pipeline

Should be able to give an updated guidance wrt Rajasthan Project in the Q4 concall ( ie once the revenues start to kick in )

Company’s business split between Pathology : Radiology wrt their Govt business is roughly @ 50 : 50

In process of expanding their radiology centers ( 10 of them ) in Maharashtra. Should start to go live in Q4 and Q1

Finance costs in Q3 stood @ aprox 8 cr. As company’s collections ramp up, these costs should start to moderate going forward

Q4 is generally a good Qtr wrt receivables as most govt departments have to clear their dues by end of FY

Should be able to achieve 200 cr kind of revenues from Rajasthan project in FY 27

Company’s Rajasthan tender is Pathology heavy ( vs Radiology ). Hence the overall company’s revenues should skew towards pathology in FY 27 vs a near equal split at present

Disc: hold a small position, not SEBI registered, biased, will add / reduce depending on company’s performance going forward

4 Likes
446

IMHO non receipt of outstandings from Karnataka Government is a major red flag. In B2G model, getting order and execution are relatively easier than getting paid for the services rendered. In Q3 they have collected about Rs.100 crores but still karnataka ia concern. Disclosure: Not invested. Not SEBI reigstered and not a BUY Sell Hold recommendation.

447

Following CFO resignation , Head Investor relation has also resigned.

448

IMHO the major risk is the fact that Company is driven by a professional CEO who does not have any skin in the game. The chairman is the majority stakeholder but with pharmacy background. So there is risk if the CEO decides to leave. Thyrocare is also driven by a professional CEO but he owns about 6 percent stake in the company. In Krsnaa Receivable s from Karnataka government is another major issue that raises doubts about the business model -B2G. Disclosure: Not invested . Not a Buy sell or hold recommendation.

449

Agreed. Krsnaa Diagnostics CEO is still relatively new to the job, I don’t foresee him leaving, atleast from what I’ve heard of him do far.

Fun facts:

Public records list Yash Mutha’s full name as Yash Prithviraj Mutha, indicating his father’s name is Prithviraj. Rajendra Mutha’s full name is Rajendra Khivraj Mutha.

450

Does anyone have any updates on Karnataka’s project? Last update was that Krsnaa has suspended cash free services in 13 govt. hospital + 140+ crs. is stuck and it also included 5% increase clause. If this is already counted revenue and it settle at lower amount than does company has to write off amount?

Karnataka’s regulatory mechanism reduces CT, MRI scans billed under PPP - Medical Buyer.

451

The Karnataka receivable issue seems to be bigger than anticipated. The outstanding receivables are to the tune of 143 crore and although the management indicated in the Q3 concall that they had received certain communication in the way of confirmations from the Karnataka authorities on the payments, it does not seem to have materialised. The bigger issue in my view is that if indeed the outstanding was this high, why is it not mentioned in the debtors ageing schedule in the Annual report given that the issue is ongoing from 2019. 143 crore on a total debtors outstanding figure of 277 crore is extremely high and will cause a serious dent to the finances of the company, should this not be received. Also, the Karnataka Health minister’s claim of the company billing multiple scans , when only one was required is a red flag on the company’s business practices. Would like to know other participants’ views on these issues.

D: Not invested.

Screenshot 2026-04-09 at 2.36.52 PM
Screenshot 2026-04-09 at 2.36.52 PM1688×590 74.2 KB

1 Like
452

Krsnaa Diagnostics halts MRI, CT services in 13 Karnataka hospitals over dues - Medical Buyer .

https://medicalbuyer.co.in/krsnaa-diagnostics-cfo-pawan-daga-steps-down/#:~:text=According%20to%20the%20filing%2C%20Daga’s,hours%20on%20January%2019%2C%202026

This may be the reason for resignation by CFO