Krsnaa Diagnostics Ltd (KRSNAA) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to Q2 and H1 FY '27 earnings conference call of Krsnaa Diagnostics. As a reminder, all participants will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shruti from Stellar Investor Relations. Thank you and over to you, Ms. Shruti.
Shruti (Stellar Investor Relations): Thank you. Good afternoon, everyone and thank you for joining us today for the Q2 and H1 FY '27 earnings call. We have with us the senior management team of Krsnaa Diagnostics Limited represented by Mr. Rajendra Mutha, Chairman and Whole-Time Director, Mr. Yash Mutha, Managing Director, Mr. Mitesh Dave, Group Chief Executive Officer, Mr. Chandra Prakash, Interim Chief Financial Officer and Mr. Sujay Bose, Head Secretarial, Legal and Compliance. The management will be sharing the key operating and financial highlights for the quarter and half year ended September 30, 2026, followed by a question-and-answer session. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risk and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect developments that occur after a statement is made. Documents relating to the company's financial performance including the investor presentation have been uploaded on the stock exchanges and the company's website. Trust you all have been able to go through
Shruti (Stellar Investor Relations): With this, I now hand over the call to Mr. Yash. Thank you and over to you, sir.
Yash Mutha (Krsnaa Diagnostics Ltd): Thank you, Shruthi. Good afternoon everyone and thank you for joining us today. I would like to begin with an important milestone in Krsnaa's journey. For the first time, Krsnaa Diagnostics has crossed 500 crores in revenue in the last 6 months, achieving ₹507 crores in H1 FY27. Despite the natural completion of certain contracts, Krsnaa has delivered an impressive 27% year-on-year growth. Had some of these contracts continued, our real growth would have been around 37%. This demonstrates the strength of our execution and more importantly, our ability to consistently create new growth opportunities that more than compensate for contracts completing the tenure. For me, this milestone is not simply about crossing a financial number. It reflects the journey we have undertaken, the business we have built, and the conviction with which we continue to move forward. Since our listing in 2021, in the last 5 years, Krsnaa has grown continuously, expanded its presence and strengthened its position in India's diagnostic sector. And we have achieved this despite the natural life cycle of our business, wherein certain government contracts complete their tenure, projects transition, and new opportunities emerge. We have always believed that individual tenders do not define Krsnaa's growth. What defines us is our ability to continue grow beyond the life cycle beyond the life cycle of any single contract. Contracts will commence, mature and eventually conclude, and new opportunities will emerge. That is the nature of a PPP business. But the infrastructure that we have built, the experience we have gained, the technology we have developed and the trust we have earned do not disappear with the completion of a particular contract. They became the foundation for our next opportunity, and I believe our performance over the years is a reflection of precisely that. We have been among the pioneers in successfully scaling diagnostic services through the Public-Private Partnership model in India. We have established statewide diagnostic networks within government hospitals, including in some of the remotest parts of the country, where operating healthcare infrastructure is challenging and access to specialized diagnostics has traditionally been limited. And we have done this while offering services at substantially affordable prices, which are significantly lower than the prevailing market rates. Think about this, what it means. We are making advanced diagnostic services available to the patients who might otherwise had to travel long distances, incur significantly lower than prevailing market rates. Sorry, incur significantly out-of-pocket expenses or delay essential investigations. We are bringing together three things that are often difficult to achieve simultaneously: accessibility, affordability, and internationally benchmarked quality. I believe very few companies in India have built such an integrated platform at our scale. That is our differentiation, and that is what gives me confidence in Krsnaa's long-term prospects. Moving on, as I mentioned in our previous earnings call, the implementation of large projects, particularly Rajasthan, could lead to some moderation in our EBITDA margins. However, I am pleased to mention that whilst we have seen this moderation, encouraged by the operating efficiencies that our teams have achieved, we have helped contain the impact even as our revenue base has expanded significantly. During the first half alone, we have generated livelihood opportunities for approximately 5,000 local people to support our expanding operations, particularly in Rajasthan. This naturally had an impact on our operating cost and our margins as the newly established networks continue to ramp up. What is encouraging is that despite the significant expansion in manpower and operations, we have been able to maintain healthy EBITDA margins through better resource utilization, cost discipline, and operational efficiencies across our existing business. As the patient volume increases and a newer project's mature, we expect to derive greater operating leverage from this expanded network. Our focus remains on improving utilization, controlling costs, and generating better returns for the infrastructure we have already established. Mitesh, our group CEO, will elaborate on our operating performance and detailed businesses, while Chandra Prakash, our interim CFO, will take you through the financial results in greater details. I would also like to address an important area that has been a subject
Yash Mutha (Krsnaa Diagnostics Ltd): expansion in our business as well as attributable to certain delays in fund allocation and payment disbursement from certain government authorities. We recognize that the collection cycle has extended and improving it remains one of our highest management priorities. However, I would also like to share an important development. Based on our ongoing discussions and communications with respective authorities with various state governments, we currently have visibility on potential collections of around 200 crores during Q3. Our senior management teams continue to engage directly with the relevant authorities, and we are closely monitoring collections across all major projects. There is also an important shift in the business mix that I would like the investors and the community to appreciate. Our strategic focus on increasing cash-based revenues is already delivering encouraging results, with a steadily rising cash contribution to our overall business. This reflects a deliberate management strategy driven by expansion of our retail operations as well as increasing focus on our cash-based PPP projects. By the end of FY '27, we expect our cash-based revenues to contribute to almost 40 to 45% of the overall revenue mix, aggregating to approximately 400 crores for a year, further strengthening cash flows and working capital efficiency. Continuing this strategy, we are actively pursuing additional cash PPP opportunities, with some tenders currently in pipeline. We look forward to sharing further developments as these tender processes conclude and awards are finalized. We are therefore not only growing our business, but progressively strengthening the cash generating characteristics of that growth. There is an additional development that I would like to highlight. As promoters, we have always approached Krsnaa with a long-term perspective. We understand the opportunities ahead, the investments required and the responsibilities that come with building a healthcare platform of this scale. And when we look at our existing business, the projects under implementation, our pipeline of opportunities, and the direction in which diagnostic industry is evolving, our conviction in Krsnaa's long-term potential remains strong. It is with this conviction that is reflected in the recent allotment of convertible warrants to our promoter group, representing a potential investment of approximately 92 crores. Of this, rupees 23 crores has already been contributed, with the balance payable upon conversion of the warrants. I consider this as an important expression of our confidence in the business we have built and the opportunities that we see ahead. As promoters, we continue to back our long-term vision with our own capital. Beyond diagnostics, we also see meaningful opportunities in the broader healthcare ecosystem through a strategic association with Apulki Healthcare. I'm pleased to share that Apulki has commenced operations in its hospital in Pune, marking an important milestone in its journey, as well as progressed its hospital PPP initiatives across Borivali, PCMC, KDMC, and the Chembur-Govandi region of Mumbai. Together, these projects represent an a hospital platform of approximately 2,000 beds. For Krsnaa, our core focus remains diagnostics, but at the same time, we believe our association with healthcare infrastructure platforms like Apulki can create opportunities for greater integration, patient access and long-term value creation. Looking ahead, as I look at Krsnaa today, I see a company entering an exciting new phase of growth. Our established network continues to grow, newer projects are gaining momentum, and opportunities in advanced diagnostics, specialized diagnostics, cash-based PPPs, retail, and an association with Apulki are opening new avenues for the future. What gives me confidence is that not any single project, but the strength of the platform we've built, and our ability to grow beyond individual contracts and it's changing market conditions. For our shareholders, our focus is clear, to translate a growing scale into stronger cash flows, improved returns on capital, and sustainable long-term value creation. With that, I now hand over to Mitesh to take you through the business developments. Over to you, Mitesh.
Mitesh Dave (Krsnaa Diagnostics Ltd): Thank you, Mr. Yash. A very warm, good afternoon to everyone. I would like to take you all through the key operational developments and our priorities for the coming quarters. Starting with our PPP and institutional business, Krsnaa has built an integrated diagnostic network across 19 states and union territories. As of quarter 2, FY '27, our network comprised 259 pathology laboratories, 196 CT and MRI centers, and over 8,400+ patient test points. Our network now spans over 334 districts across the country, with approximately 74% 75% of our centers covering rural areas of India. This reflects the important role we play in extending access to quality diagnostics beyond major urban centers, particularly in underserved and remote geographies. With a strong infras--
Mitesh Dave (Krsnaa Diagnostics Ltd): our base in place, our focus is now shifting towards improving utilization, increasing patient volumes, and strengthening operational efficiencies across the network. Over the coming quarters, we will focus on stabilizing newly operationalized projects, improving the productivity of existing centers, and ensuring consistent service quality as volume scales up. Moving to radiology. As of quarter two FY '27, our 196 CT and MRI centers were supported by a network of over 350 radiologists and NABH-accredited teleradiology capabilities for X-ray, CT, MRI. We will continue to focus on improving center utilization, reporting quality, and turnaround times. Quality remains central to our operations. As of quarter two FY '27, we had 57 NABL-accredited pathology labs and 75 NABH-accredited radiology centers. We remain committed to maintaining consistent quality standards across our network. Talking about retail, I am pleased to share that momentum of building network, revenue generation from network, and integrated diagnostic services through the unique initiatives has helped RPL to register quarter-on-quarter strong and robust growth momentum. The unique advantage and key operating leverage is that we can utilize our existing laboratories, pathologists, radiologists, logistics, and technology to expand our reach directly to the consumer without having to build the entire infrastructure from the scratch. During quarter two FY '27, our [inaudible] generated revenue of around 23.5 crores, registering year-on-year growth of approximately 35%. Patient volume has increased by 45%, while test volumes grew by 48%. Retail now approximately 9% of overall group revenue. During the quarter, we continued strengthening our consumer engagement through the wellness camps, digital marketing, and improved center branding activities, and further engaged 10,000-plus [inaudible] through conferences, webinars, meetings during quarter two FY '27 and which is helping us in stellar and consistent growth quarter-on-quarter. We are also expanding our preventive health care and specialized test offering across areas such as cardiac care, oncology, metabolic health, and obesity. Going forward, our focus will be on widening our partner network, improving patient experience, building stronger doctor relationships, and increasing awareness of our retail services while increasing retail's contribution to our overall business. Beyond our existing portfolio, our entry into specialized PET-CT diagnostics through the PPP route is an important milestone and step towards the expanding our capabilities in specialized diagnostics. We are also leveraging digital platforms, data analytics, and automation to improve operational coordination and enhance the overall patient experience. To summarize, our priorities for the coming quarters are to improve utilization across our PPP network, stabilize and scale new projects, strengthen our and expand our specialized diagnostic capabilities while maintaining high standards of quality and operational efficiency. With that, I would love now request our interim CFO, Mr. Chandra Prakash, to take you through the financial performance of quarter two and H1 FY '27. Over to you, Mr. Chandra Prakash.
Chandra Prakash (Krsnaa Diagnostics Ltd): Thank you, Mr. Mitesh, and good afternoon, everyone. I will now take you through the financial performance of the company for Q2 and H1 FY '27, respectively. Starting with our consolidated Q2 FY '27 performance. Revenue from operations stood at Rs. 271 crore compared with 206 crore in Q2 FY '26, registering a year-on-year growth of 32%. This is our highest-ever quarterly revenue, which reflects the contribution from newly operationalized projects, continued growth in our existing business, and expanding retail network. EBITDA before CSR and ESOP expenses stood at 72 crore compared with 60 crore last year, registering growth of approximately 20%. The EBITDA margin stood at 27% compared with 29% in Q2 FY '26. After CSR and ESOP expenses,
Chandra Prakash (Krsnaa Diagnostics Ltd): EBITDA stood at 71 crore with a margin of approximately 26%. Profit after tax stood at 25 crore compared with 24 crore in corresponding quarter, registering a growth of approximately 3%. The PAT margin stood at 9%. While revenue and EBITDA have grown, profitability is impacted temporarily due to upfront operating costs associated with recently implemented projects, along with higher depreciation and finance costs. As these projects mature and utilization improves, we expect to derive better operating leverage from the infrastructure created. Now coming to H1 FY '27, revenue from operation stood at 507 crore, compared with 399 crore in H1 FY '26, reflecting a growth of approximately 27%. Our growth is increasingly being driven by multiple business segments, reducing our dependence on any single project and providing a more diversified and sustainable growth base. EBITDA before CSR and ESOP expenses stood at 131 crore compared with 113 crore last year, registering a growth of approximately 16%. The EBITDA margin for H1 '26 '27 stood at 26%, compared with 28% of last year. PAT for the first half stood at 41 crore compared with 45 crore in corresponding period last year, with a PAT margin of approximately 8%. The moderation in profitability was primarily due to upfront operating costs, higher depreciation, and finance costs associated with our expanded network. To conclude, H1 FY '27 reflects healthy revenue growth and an expansion in our operating scale. Our focus going forward will be on improving asset utilization, maintaining financial discipline, managing working capital, and translating our infrastructure investment into stronger profitability and cash generation. We thank our investor and analyst for their continued confidence and support. With that, I will hand over to the moderator to open the floor for question and answers. Thank you.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants, please restrict yourself to two questions. So the first question comes from the line of Dhwanil Desai from Turtle Capital. Please go ahead.
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