Shalby Ltd (SHALBY) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Shalby Limited Q2 FY '27 Earnings Conference Call, hosted by Elara Capital. As a reminder, all participant lines 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 "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kashish Thakur from Elara Capital. Thank you, and over to you, sir. Please proceed.
Kashish Thakur (Elara Securities): Thank you, Shailendra. Good afternoon, everyone. We welcome all the participants to Shalby Limited Q2 financial year '27 earnings call hosted by Elara Securities. Today, we have with us senior management representatives from Shalby. We will start with performance highlights from President of Shalby Limited, Mr. Shanay Shah, and Mr. Amit Kumar, Group CFO. After that, we will open the floor for question and answers for all the participants. I will now hand over the call to Mr. Jigar to read all important disclaimers regarding any forward-looking statements that may be made in today's call. Over to you, Jigar bhai.
Jigar (Shalby Ltd): Thanks, Kashish. Good afternoon, everyone. Our investor presentation is uploaded on the stock exchange website and our company website shalby.org. We do hope you have already had the opportunity to go through the presentation. Please note that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to slide number two of the investor presentation for a detailed disclaimer. Now, I would like to hand over the call to Mr. Shanay Shah for his opening remarks. Thank you, and over to you.
Shanay Shah (Shalby Ltd): Thank you, Jigar. Good afternoon, everyone, and thank you for joining us. I'll take you through the key operational developments for the quarter across our two businesses, Shalby Hospitals and Shalby MedTech before handing over to our CFO. The hospital business remains the core of the group and this quarter's growth was broad-based. Joint replacement continues to grow and remains our flagship specialty. Growth was faster in other specialties, particularly nephrology and urology, oncology, general surgery, and critical care. As a result, our specialty mix is becoming more balanced, which is in line with our strategy of building a multi-specialty network and reducing dependence on any single specialty. We are continuously adding specialist doctors across the network and this will be a key driver of future growth in the hospitals business. Operationally, occupancy improved, average length of stay came down, and the share of insured and government scheme patients has gone up. On clinical capabilities, a few developments this quarter. Orthopedics continues to establish Shalby as a global center of excellence. This quarter, we treated a member of the family of the Kenya's Chief of Defense Forces for a hip replacement. A former president of Nigeria returned to Shalby for his second knee replacement 2 years after his first one with us. The incumbent Vice President of Nigeria also visited our Ahmedabad Hospital to meet him. We performed Gujarat's first telerobotic surgery at our SG Highway Hospital in Ahmedabad with the surgeon operating remotely from Gurugram. We continued to expand robotic surgery in oncology and urology. Our transplant program is now active across five hospitals: Ahmedabad, Indore, Jaipur, Surat, and Delhi NCR. It covers kidney and kidney and liver transplants, including swap and blood group incompatible kidney transplants. We also handled several complex referral cases, including international patients in neurosurgery and in ENT. In diagnostics, we added an advanced infectious
Shanay Shah (Shalby Ltd): enopsis system the first of its kind in Gujarat, along with liquid-based cytology for cervical cancer screening and automated testing that has cut several report turnaround times from days to hours. We are standardizing clinical protocols across hospitals, strengthening quality assurance, and improving the patient journey from admission through post-discharge care. We are also integrating operations more closely across the network so that practices that work in our better performing hospitals can be replicated elsewhere. We are also driving operational efficiencies across the hospital business. In the first half of the year, these have already started to show in several areas of outsourced manpower and we expect this to continue. We have also taken initiatives on materials and consumables, which are a large share of our cost. We expect the benefit to start flowing into the P&L from Quarter 3 onwards. Some hospitals are still operating below their potential. Our focus there is on improving the utilization of existing infrastructure and tightening operational discipline rather than adding new capacity. Our Delhi NCR hospital, Shalby International, continued to improve significantly during the quarter. Within the hospital business, Shalby Academy has added several new, several hundred new students and trainees this year across nursing, physiotherapy, allied health, and hospital management. It gives us a steady pipeline of trained staff for our hospitals. On the Shalby MedTech front, to begin with a commercial site, we've started targeted surgeon engagement through fellowships, clinical education, and product demonstrations, along with in-clinic branding. We entered the West Bengal and Odisha markets and made our first significant appearance in Eastern India at AOTS in Kolkata. We are reactivating Central India, including Nagpur, and Assam, Uttar Pradesh, and Uttarakhand are next. Internationally, we are present in North America, Japan, Indonesia and have received approvals from Malaysia, Argentina, and Nepal and have further approvals in progress. On the manufacturing and quality side, we have increased processing volumes in our clean, pack and sterile operations, which improved product availability. We reinstated the passivation line in-house and recommissioned a secondary clean line to add capacity. We improved inspection processes to reduce turnaround times. Quality control non-conformances came down significantly, first-pass acceptance improved, and defects and scrap from contract manufacturers reduced. These steps improved yield and reduce rework, and they put the business in a better position to handle higher volumes. Alongside this, we are putting in place a new supply chain for the MedTech business, which we expect to significantly reduce our cost of goods sold. We expect the benefit to start accruing in the P&L from Quarter 4 of this year, with a full quarter impact coming from Quarter 1 of FY '28. So, if I have to summarize the priorities for the next half of this fiscal year for us, they would be: number one, keep adding specialist doctors in the hospitals business and building our capability in the orthopedic and non-orthopedic specialties to drive growth and utilization across the network; the second would be, improve performance at hospitals that are below their potential with a focus on asset productivity and operational discipline. At MedTech, the third point would be to complete the transition to the new supply chain, sustain the quality and capacity improvements, and convert surgeon engagement in new geographies into volumes. And the fourth one would be, continue to invest in people, the clinical capability, technology, and the academy. Our focus is on the quality of growth, op- operating efficiency, asset productivity, and sustainable profitability. With our key investments largely in place, we expect CapEx requirements to be lower going forward. Combined with the efficiency initiatives that I have outlined, this should further strengthen cash flows and support debt reduction over time. With that, I'll hand it over to our CFO, who will take you through the financial performance for the quarter.
Amit Kumar (Shalby Ltd): Yeah. Thanks, Shanay, and good evening, everyone. Now, I'll walk you through the company's consolidated financial performance for the Quarter 2 of FY '27. I'll compare the number on a year-on-year basis, meaning the current quarter, Q2, versus the Q2 of the last year.
Amit Kumar (Shalby Ltd): The consolidated revenue has grown to 318 crore versus the 290 crore in the last year, with registering a growth of approx 9.8%. EBITDA stood at about 46.4 crore, as against 46.1 crore in the last year, reflecting a growth of 0.8% on year-on-year basis. EBITDA margin has held form about 14.6% compared to 15.9% in the corresponding quarter last year. Consolidated PBT stood at 16.5 crore, as against 19.1 crore in the quarter two of the last year, with the PBT margin of 2 and 1/2 with a PBT margin of 5.2%. The consolidated PAT has grown to 7.9 crore, with the PAT margin of 2.5% in the quarter two of the FY27, as against 7.9 crore in the PAT margin with a 2.5% margin in the last year in the quarter two. Our balance sheet remains strong with a gearing ratio of 0.45x, and net debt of 458 crore approx. Importantly to note, the net debt has decreased in this year, and we are very confident of seeing a further reduction in the coming quarters. Now, on the standalone basis, I will walk you through the same KPIs at a hospital level. The standalone revenue in the quarter two has stood 24 250 crore, as against 229 crore in the last year, registering a strong growth of 9.1% on year-on-year basis. Our EBITDA has stood at 45.7 crore, as compared to 44.8 crore in the last year. The margin has stand by, stood by 18.2%, as against 19.5% in the corresponding quarter last year. The PBT has grown to 31.6 crore, as against 30.6 crore in the last year, with a PBT margin of 12.6%. The PAT has further also grown to 23.5 crore, as compared to 19.8 crore in the quarter two of the last year. This has a margin of 9.4%, as against 8.6% in the quarter two of last year. At the standalone level, the debt has also declined at net standalone level to 47.5 crore, as against 54.5 CR in the last year. The annualized ROCE now stands at 9.4%. Our ARPOB has significantly jumped to 42,581, which is up by 4 and 1/2, 4.3%, as against 40,794 in the last year. ALOS has also improved to 3.58 days, as against 3.74 days in the last year. Further, our our occupancy has jumped to 52%, up by 400 basis points, meaning 48% in the quarter two of the last year. And if we exclude our Gurgaon unit, the Shalby International, our occupancy has jumped to 55%, as against 50% in the last year. The payer mix in the current quarter remains at about 33% self pay, 38% insurance, and approx 29% in the government payers. Now, importantly to our Gurgaon unit, the Shalby International, as long awaited, it has delivered a very strong growth of about 50% on year-on-year basis to its revenue. The revenue has jumped to approx 30 CR, as against 20 CR in the quarter two of the last year. This has demonstrated a strong growth, and we are very confident to see a similar level of the growth trajectory to continue in the coming quarters and and the year after. This has been supported with a significant jump in in in our ARPOB, which now stands at about 96,388, which is 18% higher than the last year, which was at about 81,185. The ALOS stands at about 300 The ALOS stands at 3.3 days. Also to mention, this is for Gurgaon unit a consecutive EBITDA positive. In both the quarters and at H1 level the unit is positive. And now, we are looking at a cash break-even of this unit at very soon, probably near the exit of the quarter four. This is supported with a higher occupancy, higher ARPOB, and also growing business on domestic and international sides both. Just to mention you the the comparison of our international and domestic growth. The business has grown on both sides.
Amit Kumar (Shalby Ltd): Moving to our medtech business, the in- medical implants. Our medical implants business in the Q2, this is quarter of our efficiency program started to show the num- show the numbers we have been targeting for a long while. We expect these benefits to build through the rest of the FY '27 also with new products, new geography and a stronger supply chain model already being initiated in the H2 of this year. Our consolidated revenue now stand at about 316 million. The SMTL, the parent entity at India, has grown by about 40% to 224 million, which reflects a growing traction of our products and sharper ex- execution across India. The US entity, SAT Inc., is also stable at about 286 million, which grew up by 4% on year-on-year basis. This is after a full year EBITDA positive last year. The medtech business has again delivered a positive EBITDA number, which is a fifth consecutive quarter for the medtech to deliver a EBITDA positive number. Consolidated EBITDA now stands at about 3.6 million, which is double than the last quarter of having 1.6 million of the EBITDA. Our operational efficiencies, as has been mentioned, has started reflecting in Q2, and we expect full-year benefit to come in the FY '27. As Shanay already briefly touched upon our next level of the growth, which is the gross margin. We are very confident to see our profitability to further increase from here, with a new supply chain model, audit, the steps being already initiated, and it would take its full benefit in the Q4 of this year. Further, we are also expecting a further NPPA price revision, which will support our EBITDA and revenue numbers in the India business. On the other side of our inventory, our inventory days has fallen 20% year-on-year in the last 2 years. And importantly to mention, now in the H1, just in the 6 months, it has already fallen by 16% and now stands to 784 days, which was about 1,200 days a year before. With this, we are maintaining a same momentum in our growth with a better gross margin and operational efficiency. We believe H2 will be more exciting from here, and we'll look for a stronger year than the previous year. With this, thank you to our employees, customers, business partners, and shareholders.
Amit Kumar (Shalby Ltd): We can take Q&A.
Moderator: Sure, sir. Thank you very much. Thank you. We will now begin the quest- 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Moksh Morbia from Prospero Tree. Please go ahead.
Moksh Morbia (Prospero Tree): Thanks for the opportunity. And my question to Mr. Shanay. The Shanay has mentioned in the opening remark that hospital business is a core business activity and most profit generating activity, which is clearly reflected at the standalone level. Sir, while the business operated at the subsidiary level, fun- particularly the implant business which was acquired in the 2021 where the you are mentioning that the EBITDA is positive, but if we compare the PBT level PBT of standalone and the difference between the standalone PBT and consol PBT, the last 3 year, there was a negative loss from the subsidiary is around 165 crore rupees. Can we focus on the hospital business, growing the hospital business at the domestic level, because many international players are entering into the India. We are very strong at the for the hospital business. We are running the all hospital at profitable. Why not we are concentrating only on the hospital business rather than diversifying into the implant business, which is not contributing positively at the PBI- PBT level? Can you throw some light on that activity, please?
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