Vaidya Sane Ayurved Laboratories Ltd (Madhav baug)

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Indian Ayurvedic industry was valued at ~ 8 bn USD in 2022. It is gaining momentum on the back of government focus on building a healthy a fit India. Ayurveda is an alternative medicine system with historical roots in India and is gaining global prominence for its preventive healthcare properties and treatment of many chronic lifestyle orders.

While Ayurveda has been in existence since ages, it has not gained as much awareness as it deserves due to lack of clinical trials , investment and high fragmentation of the market with plethora of standalone clinics and wellness centres. That said, there have been early signs of uptick in the sector especially after the government set up Ministry of Ayush in November 2014 to promote Ayurvedic services and products.

Vaidya Sane (Madhav Baug) offers a lucrative opportunity to engage in the growth of this sector across the value chain, spanning from services to products. The company, led by Dr. Rohit Sane, aims to organize the industry by establishing a network of clinics and hospitals, while enhancing clinical outcomes through a distinctive blend of diagnostic testing and Ayurvedic services, along with its proprietary products.

About the company

Started in 2006 with its 1st cardiac hospital in Khopoli and 1 clinic in Dombivali, Madhav Baug has expanded to more than 300 clinics and 2 hospitals with 60 beds as of FY 23. The company serves its outpatients through an extensive network of clinics across 8 states, and it caters to IPD + OPD through 2 hospitals located in Khopoli and Kondhali. The company achieved a revenue of 100 cr in FY 23 vs 75 cr in FY 22 with EBITDA margin of ~ 8%.

Out of the total revenue of 100 cr, hospitals accounted for 30% of the revenue, while clinics accounted for the remaining amount. The company focuses on innovative reversal therapies for conditions such as heart disease, diabetes, blood pressure, and obesity management. I won’t elaborate on India being recognized as the diabetes or chronic heart disease capital of the world, as this is well known. Needless to say, this translates into a large opportunity for the company.

Through years of intensive research, Vaidya Sane launched standardized diet kits for each disease in 2016. This unique delivery approach was a game-changer for the company, as it ensured easier medical compliance by providing patients with pre-packaged daily food kits required to adhere to the treatment.

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The company asserts the high efficacy of its treatments, supported by the publication of numerous trials and studies in highly reputable global journals, which serves as a testament to their quality. In 2017, they released a randomized controlled trial in the Indian Heart Journal, the official publication of the Cardiological Society of India. Subsequently, they have published additional reports in esteemed journals such as The Lancet, World Health Foundation, European Journal of Biomedical and Pharmaceutical Sciences, Asian Journal of Cardiology Research, and the International Journal of Diabetes and Endocrinology.

This approach stands as a solid foundation to enhance credibility surrounding their treatments and to raise awareness through clinical trials. For those who are interested, the provided link can be accessed to learn more

Clinics

The company operates under two distinct models: company-owned and franchise-owned. As of FY 23, it had a total of 302 clinics, with 196 of them being operated as franchises. The company initiates the process by establishing clinics on its own and subsequently, based on the doctors’ performance, these clinics are offered to potential franchisees for a fee. While the company generates revenue primarily through the sale of products, the service-related revenue is attributed to the franchise owners. This dynamic results in the reported revenue from clinics being 70 crore rupees, whereas the actual cumulative collection at the enterprise level amounts to 153 crore rupees.

The economics are strong: – Cost of setting up a clinic is 20-25 lakh, The monthly operating cost is 2 lakh. A clinic reaches maturity over 2 years on average where it reports ~6-8 lakhs a month. GM is 70%.

The company has opened a lot of clinics over the past couple of years which are yet to reach maturity and hence, one can expect operating leverage as the clinics scale. This is reflected in the average revenue per clinic which is still below 50 lakhs per annum.

Hospitals

The company has 45 beds in khopoli and 20 in Kondhall. It uses advanced diagnostics and stringent plan for patients here for treatment along with Panchakarma therapy. The Khopoli hospital is NABH accredited and the company has tied up with 30 insurance companies through TPA.

Investment Thesis

  • One of the few companies trying to organize a growing industry. Acceptance requires credibility and the company is working towards it through research papers , word of mouth and significant investment in marketing – digital and on ground through exhibitions , trade shows etc. The company spent 16% of reported revenue on marketing in FY 23. Despite such investment and clinics yet to hit maturity, the company reported ~ 25% ROCE in FY 23

  • Investment in technology, marketing, unique and innovative delivery through diet kits and amalgamating diagnostic tech with ayurveda despite its small size reflects the DNA of the management. The company has a doctor facing app to monitor the progress of the patients and consumer facing app for medical assistance, health and exercise monitoring, medicine support etc. The app has more than 100k downloads. It even has a clinic management app for inventory management at the clinic level.

  • The company has ambitions to increase number of clinics to ~500 by FY 25. They would open about 80 clinics in FY 24 in focus states like Kolkata, Punjab, Delhi and Rajasthan. The company is also expanding its number of hospital beds to 120 which would entail 7-8 cr of capex. The company has ~16 cr of cash on its books and has recently raised 40 cr through warrants from marquee investors like Mukul Aggarwal, Sundar Iyer – more than sufficient cash available for expansion over the next many years.

  • The company is launching new products like Madhavprash, gummies, herbal teas and juices, atta etc. Vaidya Sane has acquired 2 companies last year to enter manufacturing of these products (Dynamic remedies and UV Ayurgen Pharma). It sells these products online and is exploring opportunities to expedite offline distribution channels through acquisition. One can see and buy the list of products on Buy Health & beauty Products Online | Online Shopping | Live Life Well | Madhavbaug Wellness. They have recently started selling their products on Amazon , 1mg etc.

  • The company is exploring NABH accreditation for its clinics too which could be a big game changer. Apart from this the company is partnering with corporates like JSW Ispat, Central Warehousing corporation etc to provide services to members/employees of such organizations at discounted pricing. They are also trying to convince corporate insurers for coverage of these services in their insurance policies.

  • Margin drivers – Operating leverage – scale (16% marketing , 20% expensed on salary in FY 23) and maturity of clinics and in house manufacturing of products through 2 acquisitions made in FY 23 (Dynamic Remedies and UV Ayurgen). Expect the EBITDA to increase to double digits over the next three years with 25% growth in topline.

Risks

  • Whatever said and done, most people still have more faith in allopathy vs ayurveda. Increasing awareness will take time and requires substantial investments. Govt support and promotion will help immensely in this aspect
  • The company has more than 220 clinics in Maharashtra with thin presence in other states. It needs to be seen if the company can replicate this success in other states as well. Even marketing seems to be more focused and regional (Maharashtra) for now and this needs to change. Quality of marketing (atleast on YouTube) needs improvement
  • Building offline distribution will be critical for its retail products to do well. The company could look at an acquisition here
  • While a lot of things can play out, execution remains key and requires strong talent at the top. Needs to be seen how the company fares on this.

DISCLAIMER - INVESTED AND BIASED

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Sources

Conference call – https://madhavbaug.org/analyst-call-investor-presentation/

Investor ppt - https://archives.nseindia.com/corporate/MADHAVBAUG_29052023131141_Intimation_InvestorPresentation_Submission_Signed.pdf

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Interview with the management -

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App : mibPULSE (patients are connecting with the doctors to stay connected with the patient vitals)

PowerMAP - Gadkari ji inaugurated this. AI approach

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Thank you @mantis1 for such an amazing write up about the company. It saved me time in making my own notes about it. To add to your write up, I have done my own analysis about the company as I’ve recently taken an exposure in it. The below highlights my rationale behind investing in the company,

Growth:

  • Company owned clinics are going to expand from ~400 in FY24 to ~1000 in the next 3-5 years.

  • Current hospitals in Khopoli and Nagpur are going to see their beds double in the next 12 months. Eventually, 8 more hospitals/health resorts are going to be launched in the next 3-5 years.

  • A lot of the infrastructure, personnel and marketing costs are being incurred upfront. As sales kick in and these margins stabilize and become efficient over time, the business will see a good margin kicker coming in. Furthermore, the company’s plan on backward integration for its food kits will improve the margins further. All of this will flow to the bottom line. Thus, there is a nice operating leverage play waiting to happen here.

  • Growth in the patients visiting these clinics and hospitals as the brand and the treatment it offers becomes more visible. This will happen through word of mouth (more patients = more gospel being spread), marketing spends, tailwinds in the sector with the government pushing ayurveda through the ministry of Ayush (just like it pushed Yoga).

  • Launch of its B2C products in offline stores and setting up offline distribution for the same.

Company/industry potential:

  • Unorganised to organised theme at play here for ayurveda treatment.

  • The company is adding value by offering a chance for disease reversal using ayurveda viz a viz allopathy and doing so at a lower costs. This is the value migration at play here.

Risks:

  • EXECUTION. The single BIGGEST risk. The company and its promoter have set really high goals for themselves. They may not be able to achieve this in the timeframe they’ve set or the quality of services and products may suffer as they scale. They may not be able to scale margins beyond excel projections. People may remain skeptical of ayurveda and the patients will not increase as projected.

  • Key man risk. Second BIGGEST risk. Everything rests on Dr. Rohit Sane and his vision and dream. The company over time will need to add more professionals to the business. Though, they do have some professionals like the CEO, CFO, Marketing head etc. in place.

  • The failure to building Madhavbaug as a brand.

  • Its B2C product venture fails to have the desired impact. Worse still it takes away time and limited company resources from its main mission of building more clinics and hospitals. It has happened in H1 FY24 where the management was busy in marketing its Madhvprash product and this impacted the sales, margins and profits.

  • General management missteps and highly ambitious goals that fail to materialize beyond presentations and excel sheets.

In summary,

Parameter Rationale/Thoughts
Sales growth starting FY25 Sales are expected to grow ~20-25% for 3-5 years
Margin expansion EBITDA margins are expected to increased from ~9% EBITDA (in FY23) to ~15-20% EBITDA over the next 3-5 years
Profit growth Profits should grow at ~20-25% over 3-5 years with steady state margins. But the fun part is, the margins are going to expand, hence the profits will grow at a faster rate than the expected sales growth
Valuations Here is how I’m looking at it,
  • PE ratio: 70 at CMP of 215. With ~20% growth on the exit EPS of FY23 (4.59) works out to an EPS of 5.50, thus resulting in a PE of 39 for FY24. One-year forward EPS of 6.6, results in a PE of 32.57. Is this cheap? Well not really, but for a company poised to grow for a decent period of 3-5 years with an expected expansion in margins, it is not overly expensive either. I think it is fairly valued
  • PEG ratio: At a PE of 39 (FY24) and PE of 32.57 (FY25), there is a chance that the company will grow its profits at these speeds or higher over the next 3-5 years. Thus, it should have a PEG of 1 or under, again making me believe it is fairly valued
  • Price to sales ratio: The company is available at P/S ratio of ~1.87 on FY24 exit sales (Mkt cap 224 crs /120 crs revenue) and ~1.55 on FY25 exit sales (Mkt cap 224 crs / 144 cr FY25 sales). The question I ask myself, will I buy a business under 2 times sales? At this juncture, I’m getting a fast growing business with - cash on books, land and buildings, tech and systems in place to grow and scale, a somewhat proven business model, trained staff and processes and a hardworking promoter/owner. The answer is, hell yes!
  • Stock is down ~42% from its 52-week high, it is already beaten down and some of the early hype about the business seems to have faded away. Can it fall further? Sure, in case of market corrections and poor results, it may go down further, but to me the downside from here looks limited. For e.g. if it goes down another ~30% (under normal market conditions), I would suspect there is something wrong with the business/promoter. A company with a clean balance sheet like this shouldn’t get hammered further (at least in my experience).
  • In the last fund raise in July 2023, a set of marquee investors were issued warrants at 261, currently it is trading below that. I ask myself, if they saw value at 261, why can’t I at this stage?

Thus, my general consensus is that the stock seems fairly valued at this juncture and should do well with as the business grows and scales

Parameters Rationale
Promoter Holding Dr. Rohit Sane, the founder of the business has a lot more skin in the game than I do, he holds 66.29% of the company. He has more to lose than I do. He also comes across as a very passionate promoter. Very driven to solve the problem of diseases by going to the root of it and reversing them. I want to back a promoter like this.
Dividends Short history to ascertain the same. Though the company did give one in FY23
Balance Sheet No debt on the books and the business growth has been funded mainly from internal accruals in the past. The current fund raise will ensure the balance sheet will not get stretched going forward either. So, there is less risk of the company becoming insolvent
Ratios Good cash conversion cycles, less working capital days, 20% type of ROCEs, with the business growing and getting more efficient, these should get better over time
Moats 1. First company (in my knowledge) to attempt organizing the unorganized ayurveda treatment market to an organised one 2. Their food kits (including its backward integration), treatment processes, research papers, tech enabled platforms and systems, trained ayurveda doctors, well established and organised clinics and business model 3. Over time, it’ll be their brand ‘Madhvbaug’ which they are building from scratch 4. In time their scale and ambition of setting this up pan India and making it a truly national chain of clinics and hospitals
Triggers for stock price growth 1. Expected growth in number of clinics and hospitals 2. Expected sales growth 3. Expected margin expansion 4. Expected profit growth 5. Foray in B2C products and setting up of physical distribution for the same 6. Better discovery of the company and its business model in the markets
Odds in my favour? Yes, I think investing in this company at this juncture renders the odds in my favour

Sources:

  1. All projections and details are based off numbers shared by management in their publicly available concall and interview
  2. Numbers have been taken from Screener
  3. Comparative PE ratios of companies in the similar business of hospitals, clinics and diagnostics

Vaidya Sane Peer Comparison_Valuations
Vaidya Sane Peer Comparison_Valuations1672×629 87.3 KB

Disc: Invested as a tactical 2-4 year bet. May hold longer depending on how management executes its plans. Position size is 2.3% of my entire pf.

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Ayurveda research study done by Vaidya Sane published in Asian Journal of Cardiology
Research. Link to the release here.

Link to the study: Impact of Ayurveda-based Panchkarma Therapy in Change of the VO2peak in Congestive Heart Failure Patients - An Observational Study

The company keeps on pushing its research backed treatment in Ayurveda.

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Company’s growth plans seem seems great and it’s available at good value as well after the recent correction. Dr Sane also seems incredibly driven especially as the entire company came to existence because of his father passing away due to heart failure. So a lot of good things going for the company especially if they manage to organize the sector.

My biggest concerns are 3 fold:

  1. Execution at scale - Both in terms of being able to execute their plan and in maintaining the quality of doctors when they expand so quickly. Heard the interview about their foctor approval process which seems very thorough so that’s good but still, doing is different to saying.

  2. Human behavior - Heart diseases especially are always handled when shit hits the fan and once that happens, people have no option but to go for emergency care. Whether people will get into year long treatment plans to manage the early signs or even go for it after surgery needs some change in how we behave. Lot of awareness and customer education will be needed for that.

  3. Ayurveda’s acceptance as a valid treatment science - Especially for people with money, the traditional route always tends to get preferred. The current govt does seem to push ayurveda but it’ll take a lot more effort. Comapny is doing the right thing by publishing aggressively about their test results but my sense is that it will take a lot of marketing efforts to get buy in from people.

As an aside, any idea why Mukul Agarwal doesn’t pop up as a stakeholder when he holds a big chunk from the issue last July?

Disc - Not invested but researching

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@Varun_K my thoughts to your pointers,

  1. Fully agree with you. To me this remains the biggest monitorable. The execution will make or break this investment. Hoping Dr. Sane delivers and lives up to his promise.

  2. Hmmm, well all this is anecdotal. For me the proof of the pudding will be in the numbers the company posts. India is a vast country with a lot of people needing treatment for various ailments. As long as they post close to the projected numbers, I don’t think we need to worry about this. At least not at this stage where the company itself is so small.

  3. Yes, awareness is key to their growth and the acceptance of Ayurveda. It’ll be good to see how the company progresses on this front.

Not sure about your query about Mukul Agarwal’s stake. Maybe he is yet to exercise the warrants or maybe there is some issue with screener. Let’s see if the March 2024 update shows his stake in the company. If it doesn’t we can check with the company.

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@amangoklani

Appreciate the response. I’ve invested in the company since my last post.

Couldn’t do any direct scuttlebutt but I decided to check what kind of reviews their hospitals and especially the clinics were getting online. Was pleasantly surprised by the excellent reviews for their clinics which was great to see especially when I checked for the ones in NCR.

Was already on the fence but the great reviews pushed me to invest.

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On the basis of discussion in this forum, I have taken a position at the smallest numbers possible. Hoping that the Company and Dr Sane delivers.

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In last 2 months, CFO and Company Secretary have resigned. For such a small company, it could mean something is wrong. It may be these guys don’t see any growth for themselves hence they are leaving company for greener pastures. As an investor, should we be concerned? @amangoklani. @mantis1 your comments please.

Resignation of CFO on 27th March 24

https://nsearchives.nseindia.com/corporate/MADHAVBAUG_27032024124600_Initmation_Resignation_CFO_Signed.pdf

Resignation of CS on 17 May 24

https://nsearchives.nseindia.com/corporate/MADHAVBAUG_17052024132229_Intimation_Resgination_CS_Signed.pdf

Disclosure : invested for last 3 months, transactions in last 2 weeks.

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Resignation of CFO/ Company secy is a non-issue. Any one going through Exchange filings will see related posting almost everyday, may be multiples. It has become a standard for Company Secys to change companies at the drop of a hat for few rupees of extra benefits. It is just like attrition rates in IT cos. I know many green horns, working as Company secretary, changing jobs for extra 5000 pm. And SME companies recruit them for doing some routine jobs, like statutory filing, exchange disclosures, MCA filings etc. Generally they don’t much contribute to business or finance. Except some quality and senior professionals who are Key persons, resignation of CFO/ Company Secy should be taken as a negative in my opinion.
I am not a qualified professionals and you must not allow my opinion to affect your investment decision. It will be fair to presume that I may have vested interest here. I may be interested to buy this stock on any weakness.

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Generally, the resignation of a CFO is definitely concerning. However, I’ve looked at it from a different perspective (whether it is for better or worse/ am I right or wrong, I don’t know).

Look, the company does a topline of only ~100 crores and has a market cap of ~200 crores. If as a working professional I get a chance to move to a bigger, better company with a more challenging role and better monetary benefits, I’ll take it. Then what stops someone else from doing the same? They may do it either for their personal ambition or for the welfare of their family or maybe both. When I worked at a company doing a topline of INR 30-40 crs, my goal was to move a bigger company, I did eventually end up working with a company doing a topline of INR 80,000 crores. For me the reason was two-fold, making better money and cutting my teeth with the best, maybe it is the same situation here or maybe it isn’t, we will never know. The management isn’t going to tell us for sure.

If it is of any solace, I have met a bunch of seasoned micro-cap investors and they rate Dr. Sane highly and don’t find anything amiss. Furthermore, the company has some seasoned and successful investors as Mukul Agarwal invested in it. Dr. Sane and the seasoned investors have far more to lose than I do, so I’m comfortable holding my position here (for now!). Also, overall the stock has been butchered and has fallen 51% from its 52-w high. It only needs a flicker of some positive news to take it up.

Though, in all honesty I’m more concerned about the management missing their guidance for FY24. In their last con-call Dr. Sane had suggested they’ll “very easily” grow their topline by 20% and also show margin improvement. However, in the last call with Arihant Capital it turns out the topline promised for FY24 has now conveniently moved to FY25. This to me is rather concerning for a company this size. I will try to attend the con-call and check with the management the difficulties they’ve faced in meeting their guidance this year.

Apart from the above, the stock continues to be a hold for me and I’ll continue to monitor their execution over FY25.

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When are the FY24 results expected? Couldnt find any date online.

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Results are out. Revenue dropped by 10% whereas PAT dropped by 70% ! Looks like negative operating leverage is playing out…

https://nsearchives.nseindia.com/corporate/MADHAVBAUG_26052024153645_Outcome_Submission_Signed.pdf

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I had the chance to attend the Vaidya Sane call today. Here is the quick gist of what I’ve picked up so far (will re-listen and add more if I missed out on anything):

  1. Flat revenue growth this year was an outcome of their marketing spends largely being directed to their products. This lead to the walk-in patient type changing from the year long treatment that they come to seek (disease reversal) to being patients seeking short term remedy for their ailments. The management has already addressed this by hiring a new marketing agency and changing their campaign which is now directed towards bringing in the desired type of footfall to their clinics and hospitals.

  2. In FY25, the focus is on increasing footfalls in the existing clinics and hospitals viz a viz looking at aggressively adding more clinics. So that there is better capacity utilization.

  3. Higher marketing spends and campaigns focused on getting more footfalls to the clinics and hospitals in FY25. The higher marketing spends will be offset by reduction in other expenses/spends. These cost cutting measures along with in-house manufacturing of products will lead to margin expansion.

  4. Guidance for FY25 is topline growth of 20% and EBITDA margin expansion to 10%, margins may go higher than this as well.

  5. The mission 2025 stated in their own deck is inaccurate and the plan for 1000 clinics, 10 hospitals is their plan for the next 4-5 years. The bed expansion in their existing hospitals will take place in 12-18 months. All of this sounds more realistic now.

  6. To me Dr. Sane sounded a bit subdued but confident on the call today (compared to his usual bullish and confident tone). This is for the better I believe as what he is planning to achieve in FY25 came across as more realistic (this point is entirely my opinion, you may choose to differ)

Disc: Invested as a tactical 2-3 year bet. Will continue to monitor their execution over FY25. Personally for me it has been underwhelming in FY24.

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I recently had the chance to meet the management of Vaidya Sane in person, here are my notes from the meeting. I’d like to thank @Marathondreams for helping me with some of the questions for the meeting.

Meeting pointers:

  1. The most important metric to track for new sales growth is the ‘new patient footfall’ metric (which grew by 24.43% in FY24). The overall footfall metric is mainly used to track the overall health of the business (grew by 2.85% in FY24). New footfall metric indicates arrival of new patients for disease reversal and for their 1-year disease reversal program. Total footfall includes all patients - new, old and existing.

  2. The main KPIs the company tracks to monitor the health of the business includes, (i) Customer Retention (ii) New Footfalls (iii) Total Footfalls (iv) Care plans sold to diseased patients for disease reversal (v) Medicine sale (vi) Expense management

  3. The main reason for flat sales in FY24 was attributed to product marketing viz a viz their usual marketing of care plans for disease reversal of diabetes, artery blockages etc. The new marketing plan with Medulla Communications is to start in the first week of July 2024 and will be run on a pilot basis for 4-5 weeks to see its impact. If it works, the management will launch a full blown campaign. In the meantime, they have their basic marketing plan running.

  4. Q1FY25 (Apr - Jun) has gotten off to a slow start due to (i) Summer and elections (ii) Panchkarma treatment is not preferred by patients during summers (iii) People are away on summer vacations (iv) generally the business picks up July onwards for the co (historically H2 has always been better) (v) the new marketing campaign is yet to start

  5. Though in a big positive for Q1FY25 (Apr - Jun) the cost saving initiatives have already started and this would lead to margin expansion in FY25. As per the management, even if there is zero sales growth in FY25 vs FY24, the EBITDA margins will still expand to ~11-12%. With the ~20% sales growth stated for FY25, the EBITDA margins will get even better as operating leverage would kick in.

  6. The marketing expense of ~INR 18 crores in FY25 will be managed by scaling the spends up or down depending on the impact of the new campaign with Medulla. If the plan is working and bringing in more relevant footfalls (of disease reversal), the spends will be higher, if it isn’t working as expected the spends will be curtailed. Overall, the EBITDA margins will see an expansion this year with all the cost saving initiatives.

  7. Another thing that will aid with the cost saving initiatives this year is the in-house production of medicines and food kits. By the end of FY25, all their medicines and food kits will be manufactured in-house. This will lead to much better quality control and also bring down manufacturing costs thereby leading to cost savings and EBITDA margin expansion.

  8. The management is also very confident of growing the topline by at least 10-15% this year (on the very conservative side). 20% growth is their stretch target but they are confident of achieving it ,if all their initiatives fire, (i) like their new marketing campaign with Medulla (ii) if they are able to launch the source franchise model (where investors buy their franchise instead of an ayurveda doctor) (iii) where their newly launched clinics do well (iv) when they start enlisting more corporate companies for their disease reversal programs. They already working with the likes of Tata Steel, JSW, Steel Authority of India etc.

  9. The management also stated that they can grow their topline without adding a single new clinic as their existing clinic capacity is operating at ~35-40%. Each clinic operates ~2.5 work stations and with this they are able to offer 1 L panchakarmas a month (across all their clinics), at the moment they are doing only 35-40k panchakarmas a month. Furthermore, they can also increase the number of workstations in existing clinics (from ~2.5). So, apart from operating at higher capacity, there is always the additional lever of adding more workstations to existing clinics. Currently the company has 353 clinics: 300 clinics & 53 OPD clinics (where panchkarmas are not possible and the clinic is used only for disease diagnosis).

  10. Kondali hospital should be NABH certified by Q2FY25. Vizag hospital is already at breakeven.

  11. The company has INR 12-13 crores of cash on books. Warrants worth ~INR 30 crores haven’t been exercised yet. The cash, the warrants and internal accruals will be used for further expansion of hospitals and addition of hospital beds. Both, the new construction of hospitals and addition of beds will happen in phases and based on demand/capacity utilization. The company currently owns a land bank of 8 acres (3 acres in Khopoli + 5 acres in Nagpur).

  12. Company is buying the adjacent land in Khopoli to expand the beds from ~53 to ~153 in the next 12 months at a total cost of ~INR 20-23 crores. INR 12-15 crores will be for capex and INR 8 crores has been the land acquisition cost. It’ll take the company 24-28 months to fill up all these beds.

  13. The aspirational target for the company on the revenue front is ~INR 300 crores by FY28 and EBITDA margins being at ~20% in the next 2 - 2.5 years.

  14. The major public shareholders (as on March FY24) of the company apart from Dr. Sane are, Virtuous Capital (~4.98%), Dharmesh Patel (~3.97%), Vinayak Kudva (~1.24%) and Santosh Kudva (~1.23%). For some reason this information is not available on Screener. When warrants do get exercised, Dr. Sane’s stake will dilute from ~66% to ~61%.

Observation on management: Through out the meeting, I thought that Dr. Sane and his management team were very transparent and honest about the future growth plans of the company. They were also great hosts and extended an invitation to other investors like me to have a face to face meeting to discuss the future prospects of the company. The gesture to invite is highly appreciated.

In summary: The company continues to have good growth plans going forward (at least on paper). Execution remains key on both the cost saving initiatives and more importantly growing the topline. I continue to hold the stock and will keep monitoring the performance of the company in FY25

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