Krishna Institute of Medical Sciences Limited (KIMS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Kim's Hospital Q1 FY27 Earnings Conference Call, hosted by IIFL Capital Services Limited. As a reminder, all participant lines will remain 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 the operator by pressing star, then zero on your touchtone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Rahul Jivani from IIFL Capital Services Ltd. for opening remarks. Thank you, and over to you, Rahul.

Yeah, thanks, Ryan. Hi, good morning, everyone. This is Rahul from IAPL Capital. I welcome you all to the first quarter on his conference call of Kim's Hospitals being hosted by IAPL. From Kim's, we have with us today Dr. Bhaskar Rao Bolineni, Founder and Managing Director, Dr. Abhinay Bolineni, Executive Director and CEO, Mr. Sachin Salvi, CFO, Dr. Nitesh Sethi, CEO for Kim's Bangalore Cluster, and Mr. Srinath Reddy, Director of Business Strategy. Over to you, sir, for your opening comments.

Good morning and a hearty welcome to all of you from Kim's. The breeze of Independence Day is already blowing as the nation is getting ready to celebrate its 80th Independence Day. Let me convey the Independence Day greetings to all of you in advance. Without keeping you waiting, I will straight come to Financial and Operation Results, Quarter 1, 2026-2027. I am happy that the growth trajectory continued, unabated, and we deliver strong financial and operational results for the quarter. We crossed the 1000 crore mark of revenue in Q3 2526, and the same tempo is continued with gust in the current year. Q1 FI 27 updates. Total revenue of INR 1196 crore, a growth of 36.1% year-on-year and 10.3% on quarter-on-quarter basis. EBITDA of INR 240 crore, a growth of 20.1% on year-on-year and 10.9% on quarter-on-quarter basis. EBITDA margin at 20.1% versus 20.27% in quarter 1, 20, financially at 26, and 19.9% in quarter 4, financially at 26. RAT at INR 37 crores in quarter 1, 27, against INR 85 crore and INR 33 crores in Q1, FY26, and Q4, FY26, respectively. Consolidated EPS for FY26 of INR-104, a degrowth of 2.3% on quarter-on-quarter basis. Cash and cash equivalents includes cash, bank balance, deposits with maturity less than 12 months and investment in mutual funds at INR-505 crore as on 30th June 2026. Quarter 1, 27 financial islets consolidated. Consolidated revenue from operations of INR 1180 crore, a growth of 35.3% on year-on-year and a 9.8% on quarter-on-quarter basis. Consolidated EBITDA pre-India's of INR 222 crore, there is a growth of 14.6% in our year and a 12.9% on quarter-on-quarter basis. Consolidated EBITDA. Pre-India yields and excluding other income of INR 206 crores, a growth of 10.2% on year-on-year, and a growth of 10% on quarter-on-quarter basis. Operational highlights consolidated. Quarter 1, 20, financial year 27 updates. Average revenue per operating bed grew by 9.7% and a 0.1% on year-on-year and quarter-on-quarter basis respective. Average revenue per patient grew by 6.8% on year-on-year and a decline of 3.8% on quarter-on-quarter basis. IP volumes, 72,493 grew by 26.6% in our year and 14% on quarter-on-quarter basis. The annual growth is 15.4% that is over the financial year 2025. OPV volumes 6,58,617 grew by 28.5% year-on-year and 8% on quarter-on-quarter basis. The annual growth is 25.4%. That is what the financial year of 2025. Thus, both IP and OPV volumes resisted an impressive growth. We have other developments. I want to appraise you of the two significant financial initiatives we have undertaken. A qualified institutional placement and a preferential allotment to promoters. The QIP successfully raised 1,500 crores and has oversubscribed, demonstrating the deep trust and confidence of institutional investors in the vision of your company. In line with our commitment to financial prudence, 1,100 crores of these proceeds have already been utilized to reduce our debt. Furthermore, the preferential allotment of promoters stands at 600 crores. Under this arrangement, 25% of the amount is to be infused initially and the balance to be brought within 18 months. The significant allotment underscores promoters' strong commitment and a long-term faith in the company's stable future. Together. These two strategic initiatives will substantially strengthen our balance sheet and provide us with the necessary financial leverage to explore new growth opportunities. I am happy to state that we have recently opened two units in Kerala, one unit in Kerala at Polkad, taking our present strength to three units in the state. There is a good potential and we are confident of good results. I am happy that all the new units are doing well on expected lines. At Mahadevapura, Bangalore, operated a break-even less than 7 months, and we are a bit of positive. At Electronic City, Bangalore will expect break-even in next one or two quarters. It has been started a little bit later than the Mahadevapura. Both the units are doing very well. We are very, very happy that the entire Bangalore cluster is exponentially doing well. It is gladdening that very complex surgeries including lung transplants are taking place in the newly opened centers, which speaks about clinical expertise and infrastructure at these centers. I would like to brief about some exceptional professional accomplishments. Dr. Raghuram, our renowned breast care expert, has achieved his third Guinness World Records title in a short span of 15 months. The latest Guinness World Record title was awarded under newly created category, Recognizing Innovation in Artificial Intelligence Enabled Holographic Health Education. The initiative demonstrates the transformative potential of artificial intelligence and immersive communication and advancing public health awareness. Last month, Dr. Raghuram addressed three distinguished institutions in the UK. We inaugurated a fully dedicated sports ortho-clinic at our Sitamudara YZ unit, which is the first of its kind in the state of Andhra Pradesh. Dr. Medha, head of our vascular endovascular surgery department, was invited as a faculty at the prestigious SVS Vascular Annual Meeting 2026. Held in Boston, USA, the world's premier gathering of vascular surgery leaders. Dr. Mehta presented the world's first surgical technique, no shunt, no hypothermia, no bypass, a novel technique for open repair of type 3 and type 4, paracroabdominal aortic aneurysms. This technique is pioneered in the first time in the world, represents a landmark advancement in complex aortic surgery. We are proud to share what is believed to be the first robotic implantation of the new Persever plus suture-less aortic valve, not only in India, but Asia-Pacific region, by Kim Sanagapur. The procedure was successfully performed by Dr. Saurabh Varshini using the Davency robotic platform, marking another step forward in the evaluation of robotic cardiac surgery. Thus, I have apprised you about the latest developments. The overall picture is promising and optimistic, and I am sure we will be able to achieve the projections in the forthcoming quarters with a continued emphasis on quality care and growth of orientation. And you all know that last quarter we have been inaugurated the new facility of Kondapur. And we are now doing a 50% growth within a quarter. I would now conclude saying that we must pioneer the future of health today to secure the very health of our future tomorrow. Thank you.

Bye-bye.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Sukrit D. Patil from I-Size Twin Trade Private Limited. Please go ahead.

Good morning with the team. I have two questions. The first question to Dr. Abhine is,

beyond the regular outlook, you just want to understand what are the top two to three execution priorities you are focusing on in the next few quarters, and alongside that, what do you see as the biggest risk in patient demand shifts or competitive pressures, and how are you preparing to manage them while strengthening Kim's position in the hospitality and healthcare delivery space?

That's my first question. I'll ask my second question. Thank you. Yeah, I think this financial year, a lot of focus is on the new Kundapur Hospital, which just got commissioned last month. The first month has been very promising. It grew by almost 40% in less than a month. So, yeah, I think a lot of focus on Kundapur, Trishwur, which we are going to come into in the next three to four months, and obviously to neutralize the EBITDA and most of our hospitals have been commissioned. My second question to Mr. Sachin is, from a financial point of view, what key risks or challenges do you anticipate in the coming quarters, and what specific measures are being taken to manage margins, cash flow, and balance sheet strength, especially in areas like cost pressures, receivables, or regulatory compliance? Thank you.

So, as far as fiscal concerns, some of the measures we have already taken care of. We have already launched a PIPO, and using the PIPO process, we have repaid the secured loans. So, we have enough leverage to fund the expansion of funder growth. So, that risk factor we have taken care of. As far as the receivables are concerned, yes, the government receivables were the challenge, but we have seen a positive trend in that side. The government receivables are coming on time to a certain extent, so that risk to a certain extent is negative. Loss funding had got reduced a bit in last quarter. For the newer units, the ramp-up is very important. It all depends upon how quickly we ramp-up in the newer units to mitigate the risks which are associated with the financial strength of the company.

Thank you, and best wishes.

Thank you. We take the next question from the line of Sandhya from Unicorn Asset. Please go ahead.

Hi, Rainwood. A couple of questions. First, on the Kerala units, how would you attribute the cost in case we have seen in the Kerala units? Like, going forward, what could be the state that we expect from those? Second one would be on the overall clusters. So, we have seen quite a few clusters having a significant jump in the RPOB, but ARPP is. Decently grown, not like an abrupt jump. So that explains that LOS has reduced in those clusters, in particular, that has given us quite a good RPOP jump. So should we see this as steady state or is it a quarterly phenomenon due to a mix of certain search kind of search series of courses that we do in Q1 favorably and not in the seasonal kind of a thing.

Yeah, I think Kerala cluster is still in its growth rate. We just added one hospital last quarter. We have another hospital that we commissioned towards the end of this year. So I think right now we're looking at single-digit EBITDA margins. Maybe through the year, it will continue similarly. But next financial year, we should move to mid-teens kind of a number. And it should stabilize at around 20-22% EBITDA margin over the next 2-3 years. As far as Kedla is concerned. And as far as the ARPA, you know, we are not seeing significant change on a quarter-on-quarter basis. Whatever numbers reported in Q4, Q1 are very similar. I think that trend will continue to be similar as we ramp up over the next one year.

Yeah, so just to confirm that we are focusing particularly on decreasing dialysis and therefore ARPA is the right metric to track.

Yeah, I would suggest look at ARPP because that's a more stronger indicator. RPOB could be changing because of seasonal case mix and that particular quarter, one of these things could change. But the right indicator should be ARPP.

Sure, makes sense. And how are we seeing demand other than the seasonal factors for the newer units, say in Kerala or... Of course, you highlighted that Kondapuram had a quite good cruise. Other than that, how are we seeing the overall demand in the existing units, which are mature now?

Overall, the demand is quite strong. We are pretty confident about the ramp-up. In fact, things are still going very strong in our favor in the right direction, most of us. We've had some glitches in terms of insurance and panelments and stuff. But I don't see any challenge in the ramp-up of the hospital that we've already commissioned.

We are seeing good demand.

There has been good growth in Salangana and Andhra, which is our mature cluster. If you look at a year-on-year growth, the revenue growth and a bit of growth in Salangana and Andhra have been quite strong.

That would, like, there's no number to track, like, for what would be the growth in the existing versus the new, therefore, I was asking this question in particular, because Telangana would have included, the numbers overall would have been due to the newer unit transfer as well, right?

Telangana does not include the newer unit. Telangana, Kundapur commissioned in July. So, it does not reflect.

Okay. Cool. That makes a lot of sense. Thank you. Have a good one.

Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Damian C. Kelly from HSBC. Please go ahead.

Hi, good morning, and thank you for the opportunity. My first question is on your CapEx strategy. So, after expanding significantly in the last three, three and a half years, should we assume you are broadly done with your expansion plan and focus from here on will be on improving the profitability metrics, or do you think there are still some markets or some pockets within the existing market where you can increase your presence further? We just want to understand management's thoughts here.

Well, like we mentioned earlier, our priority today is to ensure that all hospitals that we commissioned turn EBITDA positive and reach a single digit, high single digit or low double digit kind of an EBITDA margin. And once we are confident that the trajectory is sorted, the growth will continue to happen over the next two, three years, then we have enough opportunities in the core markets, which is Telangana, Andhra, Maharashtra, Karnataka, Kerala, which we will continue to pursue after that. So, I think our priority is very clear. Next eight months or next three quarters, we will first focus on stabilizing the current hospitals that we commissioned, and maybe next year we will come up with more greenfield opportunities. But in the core geography, we are seeing enough opportunity in the core geography. We are not looking at opening up any new geography.

So, more room for green fields within the existing market itself. That's how you're looking. Okay. My second question is on your Telangana cluster, which is your biggest and most mature cluster. So, if we leave apart this new addition of Kondapu unit, and when we look at the occupancy, the range has been broadly stated, say, 50-52% range. So, can you explain, like, why, like, occupancy are hovering in that range, and should we assume you can really move it to much higher level?

Yeah, I think, so there is one mistake in this, is the number of beds in Sikandabite, we have demolished the old facility, which used to have 250 beds. Right now, the bed capacity shows those beds also. But, right now we are not operational in full phase, but when the new facility gets ready by end of next year and will be operationalized, then the ramp up will continue to happen. So, as far as Telangana is concerned, we do not see any reason why we cannot ramp up to 70 percent in spite of the new Kondakpur hospital and the new sick and repair hospital over the next 3 to 4 years. Next time, in the next semester presentation, we keep a note on which are the beds that are not functional at this point in time, because of the renovation and rehabilitation.

Okay, so the actual occupancy would have been higher than what is shown in the presentation, right? And then you plan to take it to, say, 70% or so in the next few years.

Correct. 70% is growable in spite of the new Kondapur Hospital Act Commission. Next three to four years, we will get there.

Okay, and my next question, after paying off this $1,100 cover-up debt, should they assume a considerable reduction in the interest expense on your books from second quarter onwards?

Surely. So, we have completed the QIPO process only at the end of the quarter. At around 24 June, we have received the process into our current account. And using that process to such an extent, we have reduced our debt on 27th or 28th June. So, the interest cost reduction has not come in the last quarter. You will see that reduction in this quarter and henceforth.

Okay, and the last question is, Sachin, if you can update us on the empanelment status for all the new units in terms of which are remaining and where you have completed the empanelment with the key interest.

I think we've made good progress from the last call that we had. We've had traction on some of the insurance companies, some of the key insurance companies. There are now a few impediments left for both, for the four assets, which is Laki, Tani, Nasik, and two of the Bangor assets. I would say we've now impeded with 50% of. Let's see mousealtet 3 in Qv. N. A. This is normalized BEC 54 in Qv. The insurance company. The remaining 50 is what we're pursuing, which we're now seeing a positive direction. Earlier we were up to which direction things were going and we didn't have definitive timing. But now I think we have more definite timelines on when this will be completed. Most of these milli, these are big ones, the te Southwest, will be done by end of August mid September.

Thank you. While I say this fiscal year end, majority of things should be in place from an empowerment perspective. Thank you. Thank you for your response. All the best. I'll get back in the queue.

Thank you. We take the next question from the line of Karan Bora from Goldman Sachs. Please go ahead.

Thank you for taking my question. The first one is with respect to Telangana cluster. So, just trying to get a sense on what were the losses of new Kondapur unit and how did we maintain kind of such strong margins, which is kind of almost flattish via via, despite adding like 450 operational beds, if I'm looking at it correctly. And the old facility of Kondapur, have we also shut that or that is yet to be shut?

So, there are very marginal losses in the numbers that are reported in Q1. There are some preoperative costs that we started incurring to the tune of 2 crores a month for Kondapur, 1.5-2 crores a month. But July, which was the first full month of Kondapur being operational, the ramp up has been quite strong. So, we are not anticipating much losses. We were usually doing around 32-33 crores in Kondapur. July alone, we did 45 crores and more doctors are yet to join. So, the traction has been quite strong. We don't anticipate losses like we had indicated earlier. But and the old hospital is still operational. It will take us another six months before we shut down. So, that could be the drag. Only the rental cost and some operating costs for the old hospital will be some drag.

Okay, got it. The second question is with respect to Bangalore RPOPs. So, I think if I'm not mistaken, we had kind of originally guided for like 70-75,000 RPOPs, but like we have seen like 90,000 plus RPOPs for two quarters. So, is that the correct base we should be looking at and what has changed versus our expectations before we originally started the hospitals versus what is happening on ground?

Yeah, yeah, yeah. So, the RPOP would go down slightly lower. So, because the empanelments and other things are here to happen. So, therefore, it may not remain at these levels, but it will not go down to the initial levels of 25,000. So, it could be anywhere between, somewhere we are expecting it to be anywhere around 85,000, around that number, 80 to 85,000. Once all the empanelments are done and more and more corporates are empaneled, then it should go down to those levels. Your second, what was the second question? Yeah, your second question was, what was the different compared to what we had anticipated initially? So, there's nothing much different, even though initially we expected around 75,000, but the thing is that as we placed as a strategy, we placed ourselves as more of a quality care hospital, doing very complex kind of procedures, very niche kind of procedures. So, these are giving us better numbers, both in terms of the ARPP as well as the ARPOP. And that is the only reason as to why the R-POPs are higher at Bangalore, but will get stabilized as more and more all kinds of cases, case mix, all kinds of case mixes happen, it will get more stabilized to around that 85,000 number.

Also, if you look at the ARPP, it is very similar to Telangana, it's just that because the ALOS is lower, the RCOB looks inflicted. But like Srinath said, 85,000, 80,000 is what you should, you know, model as RCOB for that case. Got it. Helpful. Thank you.

Thank you. Participants who wish to ask a question, please press star and 1. We take the next question from the line of Rahul Jivani from IIFL Capital Services Limited. Please go ahead.

Yeah, sir, if we look at, let's say, the ramp-up trajectory at your four new hospitals, which is Nasik, Thane, and the two Bangalore ones, Nasik achieved EBITDA break-even this quarter. Mahadevapura and Bangalore have also seen, let's say, substantial decline in losses. But somehow, the Thane trajectory seems to have flattened out. So, Thane's EBITDA losses essentially have been flat for past three quarters now. So, can you talk about in terms of where the ramp-up at Phane has been slightly below versus some of the other newer hospitals?

So, there is nothing significantly alarming, Rahul, as well as Sane is concerned. So, traditionally for Maharashtra, at least for our experience in Nasi, Nagpur and Sanghi, first quarter is usually a week quarter, number one. And because of the impairment delay for the last four or five months, we have not been able to see much work. But in the month of May, we got our Jypsa impairment and tumor impairment happened in June. So, if you actually look at July, Tanei did 21 crore in revenue and 10 percent EBITDA margin. And the August trajectory also is similar as far as the revenue. So, I think that Q1 sub-optimum Q1 we have seen that traditionally in Maharashtra, but July has been a promising month. The same trajectory is continuing in August also.

Okay, sure, Dr. Abinett. So, then for this quarter, which is the second quarter, you would expect Thane as well to achieve break-even on a quarterly basis?

As far as June is concerned, it's 10% margin. If the August-September trajectory continues similarly, then it should be a healthy EBITDA margin.

Sure, Dr. Minesh. And you said for July, Thane did around 21 crore of monthly revenue.

Correct. Versus Q1, if you look at the average, it is around 16 crore, against which it did 21 crore in July.

Sure, Dr. Binah. And then in terms of, let's say, the two Bangalore hospitals as well, given the traction seen at Mahadevapura, so Mahadevapura should likely achieve break-even in 2Q, and Electronic City in third quarter, would that be a fair assumption?

Mahadevapura has already achieved break-even now. Even in July, for example, it has done 20 crore revenue. So, Mahadevapura is now stabilized. It's almost zero or slightly positive EBITDA margin. Electronic city is where the drag is, which, like we had indicated earlier, towards the end of the year, that also should become zero. Overall, as a cluster, we are aiming for a Bangor cluster to be zero EBITDA for the full year. With no losses. Yeah, we need to cope the losses also.

Sure, Dr. Minaya. And can you talk about the way you indicated margins for Kerala as in mid-single digit for this year, ramping up to 20-22% over the next 3-4 years, about the Bangalore and the Maharashtra cluster as well, in terms of how do you see the margin trajectory in 27 and then over the next 2-3 years? Bangalore, you talked about the neutral margins for the year.

I think both clusters we should look at a healthy, you know, 20% growth on a year-on-year basis. Our key is to first stabilize and make sure that there is no drag in any of these assets. After that, it should, you know, as long as it is growing at a good 15-20%, I think we are happy on the growth of the house.

Okay, sure. And Sachin, can you call out the net number post this 1100 crore repayment which we have done?

So, at the 31st of March 26, at the start of the financial year, the debt position was 3,250 crore, which has reduced to 2,570 crore as on 30th June. In fact, it had reduced further by about 100 crore in the first week of July because, as I have said, we have received the proceeds in the last week of June, and we couldn't pay off some of the loans which we have promised to pay as per the objective in the first week. We could be able to retire those debts only the first week of July. So, the debt position as of now would be somewhere around 2,400 crore.

Well, sure. I rejoined that. Thank you.

Thank you. We take the next question from the line of Kunal from Access Capital. Please go ahead.

Hi, good morning, sir, and thanks for the opportunity. The first question is on the Kondapur unit. So I just want to understand the revenue potential from this. This has been a fairly lucrative unit for you, 350 crores plus revenue, 100 crores plus EBEDDA. And just wondering, if you are making such a big, you know, hospital over here, just want to kind of understand how do you see this unit in the next three to four years?

Yeah, it seems the full potential of the hospital will

be around 100 crore revenue per month,

which is around 1,200 crore revenue. And we should be able to get to that number over the next four, five years.

And what drives this number? Because, I mean, if I were to just have a casual look, I mean, there are a lot of other hospitals also in the area. So, I mean, 100 crores, I mean, this might even become the biggest unit or the second biggest unit. So, just wondering, what's driving this conference?

You're asking why is that happening? Yes, sir. I think there are a lot of clinical programs that we've not been able to add in Kondakpur over the last few years because of space constraints. We're solving for that. A lot of new clinical leaders who wanted to join us, but we didn't have space, they're joining. So, for example, we had no oncology at all in Kondapur. We've not started transplant even now, even in spite of the new hospital. So, there's a lot of opportunity to add a lot of new clinical programs and doctors, and we're pretty confident that we can scale up to that number, in spite of Kim having research in that job.

All right. And so, just comparing, let's say, Madhepura's trajectory to Thane. Madhepura, I believe, started after Thane. It was doing higher revenue rate versus Thane, and has, I think, broken even faster. So, what would you attribute the main difference to? Is it because of delay in encampment of Thane, or it's just that there are more bets over there, or it's just, you know, a bigger sector story? Why would this happen?

One key difference between Maharashtra and South is, I think the South ideology of full-time practice is a lot more easier to get aligned with doctors. As far as Maharashtra, not just Kane, Nasik or Nagpur in the past, doctors are not fully aligned to having a full-time practice. So it takes time for us to convince them. So they first join us as a part-time model, then they slowly continue to, you know, contribute more time in the hospital and then over a period of time come to full-time. So if you look at Nagpur, when we first acquired, it took us 18 months, 24 months before we could stabilize that unit, because initially those doctors are not fully aligned in terms of having a full-time practice model. But once they get comfort, they see the hospital going in the right direction, all promises are kept, then the traction is quite good. If you look at Nagpur in the month of July, we've done the highest, we've done 30 crore revenue just from the Nagpur facility. So, likewise, Tanev has a lot of potential. Maharashtra in general has a lot of potential. But we are aware that it will be a little slow when compared to any other hospital in South. Because in South, it's easier to get clinical talent. Talent is available. Number one, talent is available. Number two, ability to attract talent also becomes easier because they are already practicing in other corporate hospitals. And, you know, it's easier for them to shift to another hospital versus in Maharashtra, they have to shut their own hospital or their nursing home or their clinic. So that decision to shut their own setup and move to a corporate hospital for long-term growth takes a little time for alignment. But otherwise, potential, I think, is quite strong in market structure. But it will always be a slow growth till the market matures.

Sure, sure. That's helpful. Just one more clarification on one of the points you made on Telangana beds. So, operational beds have gone up around 450 on a quarter-on-quarter basis. But occupied beds are like, you know, flattish quarter-on-quarter. So, what explains this discrepancy?

So, that Kondapur beds, in the last 10 days of Q1 is when we have added them. So, those are the 450 incremental beds, right?

Okay. So, okay. So, that is the reason there is no increase in occupied beds. Correct. And all the rest.

Thank you. We take the next question from the line of Sorum Kumar from Scientific Investing. Please go ahead.

Hello, am I audible, sir? Yes, sir. Hello.

Yes. My question is on the capacity utilization. Currently, we are around 50%. And earlier, when we were at 60% plus utilization, we were clocking 28% plus EBITDA margin. If you can give some guideline, when do you see us hitting 55%, 60% kind of utilization again? And historically, sir, whenever we have crossed 60%, we have come up with a lot of new beds. And somehow, we have never crossed, correct me if my memory is wrong, we have never been able to cross 65. So, is that the peak kind of capacity utilization in the hospital business? Because I see some of the smaller hospitals doing 65 to 70% utilization also. So, if you can give a color with a three to five-year framework, how we will be hitting the higher capacity utilization?

Actually, in the bed capacity, in the 1870, or sorry, the 2669 beds, if you remove the 450 beds of Kondapur, 500 beds of Kondapur that just got added, and if you remove 200 beds in Sikinabad which are under renovation, and look at the occupied beds as a percentage of the remaining beds, it is already at 65% kind of an occupancy. It's coming back. We'll share that working after the call with you, Saru.

Okay, sir. Okay, okay. And, sir, the other question is, I think you have guided for 4 to 5% ARPOP growth rate, but historically, we have done much better number like 15-16%. Of course, that has to be with also the, you know, the geographical mix of how hospital has evolved. But even this quarter, we have done a better ARPOP number. So, and usually the inflationary ARPOP growth rate is around 6-7%. So should we expect 6-7% kind of inflationary ARPOP growth rate going forward, or this is too aggressive?

I think it's very aggressive. Four to five is a good number. Oh, we just did the math on the bed capacity. So, if you remove the 200 beds in Sekenabad and Akhanda renovation and new construction and the Kundapur beds, the current cluster is at a 61% office.

Okay, and how do you see, sir, this panning out in, let's say, by FY28 end and by FY30 end? FY28? Did you say FY28 or FY30? Yeah, FY28, like March 2028 and March 2030, two years and four years. How do you see this number panning out, sir?

By FI 30, if we don't add any more bed capacity to the current hospitals, then it should be around 65-70%, if we don't add any more bed capacity.

And then we should be hitting back 28-29% EBITDA margin, is that assumption correct? Yeah, sir. 30% we should be able to hit, yeah. Okay. Okay, sir, that's all I heard.

Wish you all the best.

Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Simran Thakkar from BS Capital. Please go ahead.

Thank you. Good morning, everyone. To build on to one of the prior participants, Boston, on Bengaluru, Mahadevan Breakeven, so what we see on slide number 25 is we could see, still see, caught up on FY27 loss of $15 million and won $76 million in terms of the bidda. So could you please clarify on that? So it should be what we should assume is breakeven has already been achieved in Q1 FY27. Is that so?

Thank you. See, it's one of the month, right? For the quarter, it will be a loss, EBITDA loss, but in the month of June is where we had the break in, and July also we are doing well in terms of revenues as well as the EBITDA. So therefore, this quarter, on a full quarter basis, that number will be posted.

Understood, sir. Okay, thanks for that clarification. My second question goes like this. The board approved draft O&M and call option agreements with Goldenland Solutions and Sabotam Healthcare this quarter. So, if you could just detail out on the assets, including the location, what's the background, what's the current occupancy, how are we seeing panel around this, please?

So, these are two hospitals in Telangara and Angra. The hospital that we are requiring, which is ARIT hospitals. I mean, not we are requiring, but we are having an OIN event with them. That is a pre-advented hospital very close to the new wonderful hospital.

Sir, this agreement would be signed from quarter to FI27, like the PAH, etc., would start getting hit by quarter to FI27?

It's an oil name agreement, so we will only get a percentage of the top line. The losses will not hit our... Imagine when we have a conflict that the hospital has...

Can you just mention an important page of traffic on sales in FY27, if you could just give that number, and how much would be this, let the team greenfield, the acquisition?

The investment which we did in the last financial quarter is about 60-75 crore. As we have already mentioned, most of the capex which we have promised to do, we have already completed. So, going forward, only some capex we may have to incur into Skinderabad, which is our existing unit, the flagship unit. We are building an hospital in Rajivandri. There, we will have to spend about some 60-75 crore in this financial year. And Kundapur Capex also is mostly it is done. So, there will not be any material Capex, but still you can assume about 100, 125 crore of Capex in the next nine odd months from these three assets. Oral, it will be more, but once we announce these assets, then we can give that number.

Understood. Thank you so much.

Thank you. We take the next question from the line of Sagar Jaitwani from Philip Capital, PMS. Please go ahead.

Yeah, thanks for the opportunity. The growth in the VP cluster were growing

at an LB rate in the past, and now the growth has moderated. So what is the reason for that, and how do you see it going ahead?

I think AP continues to be strong. Are you referring to Q4 to Q1? Q4 to Q1, and also I'm comparing it with the past growth

rates that I've been seeing it from, suppose, 19,000 to, you know, 24, 25,000 and then 27,000 in the last quarter, and the growth rate in this quarter particularly has come down. Just want to try to understand what is the reason for that.

It could be some seasonal small case mix changes, but we are confident that AP will continue to grow. In fact, Q4, the Q2 result will be quite better than Q1 result because some of these hospitals have ranked up significantly. But we don't see anything on ground which is alarming. This could be some quarter-quarter seasonal effect. It will continue to grow strong. Thank you. We also added cancer in most of our hospitals in AP in the last 2-3 months. So, there will be good arc of growth from those specialties as well. Understood.

And in the Bangalore units, have we completed the doctor hiring fully?

Doctor hiring as a, you know, is never completed fully. For that year, we are done. I think for this financial year, we are sorted. We will keep adding more and more doctors as the hospital matures.

Yeah, and can you give the overall margin trajectory for H2 this year and maybe how do we see FY28 in terms of the margins, EBITDA margins?

We will share a note on that separately after the call. We won't be having an endless.

Yeah, sure.

Thank you so much.

Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Nancy Yadav from Aliglo, Capital Advisors. Please go ahead.

Hi, sir. Thank you for the opportunity. Just want to touch up on Kondapur once again. I know somebody asked already. So, just wanted to understand if it has already contributed meaningfully to the revenue in Q1 or it started off well from July.

We started the hospital. We admitted the first patient on the 20th of June. So, Q1, we had 10 days. The first full month was the 1st of July to 31st of July, where we saw 40% growth in revenue.

Understood. And so, any preoperative expenses or any losses that we incurred for the same hospital in Q1?

No, because the EBITDA is already very high. It already delivers our last week with 110 crore EBITDA. So, there was only a 4-5 crore preoperative expenditure. So, there could be some drag, but given the revenue growth rate, I don't see that there will be significant drag in the EBITDA percentage compress, but absolute number will increase.

Okay, got it. Okay, thanks.

Thank you. We take the next question from the line of your Raj, Shailavat, from Chris Capital. Please go ahead.

Hi. Thank you for taking my question, and congratulations on our encouraging set of results. I had a question on the Bangalore units. So, I see the operational beds have increased from 280 to 340. Can you help me understand which of the units have these beds been added in?

Yeah, it is here. We have added beds in the Madhapura unit. We have operationalized more beds. Earlier, we had around 170 beds. We have increased to 210. But we have not added any more beds at the electronic city. The additional beds have come from the Madhapura. Okay, okay.

And how are we foreseeing addition of future beds as in when the occupancy ramps up? Do we have any date or occupancy number in mind when we will start adding more beds there?

See, one is the present at present the Madhya Kura occupancy on the census bed I'm talking about because 210 beds what I mentioned is including non-census beds. It's a total operation bed. The non-census bed will be adding as the occupancy goes up. Right now, census bed occupancy is around 40%. When it reaches 55-60%, we will be adding more census bed into the accounts. Otherwise, the non-census bed will remain the same. Again, we are doing a lot of complex cases. Sometimes we need to commission the ICUs. Sometimes we commission the ward beds. Based on the ramp up, we will be planning the adding of the beds, operation beds.

Okay, understood.

Thank you.

Thank you. Participants who wish to ask a question, please press star and 1. We take the next question from the line of Saurav Kumar from Scientific Investing. Please go ahead.

Hello. So my question is on the minority interest going forward for next two, three years. How much of that should we factor for minority interest? That is the first question. And second question is through QIP, I think you said we'll be reducing 1,300 crore of debt. And in the next three to four years, I think, considerably, we should do 2,000 crore plus of, you know, total operating cash flow. So, how much of that will go for maintenance, capex, and then whatever is left? Do you see a further debt reduction happening through internal accruals, or we will see more capex being spent towards the growth if you can, you know, throw some light on these two things?

So, as far as minority interest is concerned, for the current quarter, it is 10.5%. For the longer period, it would be somewhere in the range of 10 to 15%. I do not think it will increase beyond that. As far as repayment of debts is concerned, out of the total proceeds, we have already repaid 1,125 crore of debt. The maintenance capex you want to take. So, maintenance capex would be around 100 crore per year for the next, say, 3 or 4 years. Each year, 100 crore.

Okay, sir. And, sir, given in next three to four years, we'll be doing 2,500 plus crore of operating cash flow, and maybe 400 to 500 crore will be maintenance capex. That leaves us with additional 2,000 crore of, you know, cash flows. So, do you see potential for further debt reduction in next two, three years, or you feel this money might get invested for, again, greenfield or brownfield growth?

Most likely, it will get invested for greenfield.

So, we intend to keep our debt equity in a range of 2.5 to 1. So, that is the intention. So, most of the internal accruals which gets generated, new cash which gets generated out of the business will be deployed for further expansion of the CAPEX opportunity which are there in our core clusters.

Okay. And, sir, usually the brownfields are, I mean, in terms of the timeliness of the reward, and our brownfields are usually quickly rewarding. So, do we have more plans towards any brownfield expansion?

Yeah, there are a couple of shortlets in Kerala, in Kalangana, Maharashtra. At the right time, when we think the opportunity is right, we should, we will look at consolidated.

Okay, sir. Okay, sir. Wish you all the best. Thank you.

Thank you. We take the next question from the line of Alankar Garur from Court of Institutional Liquities. Please go ahead.

Hi, good morning, everyone. Abhin, I'm trying to understand how should we look at sustainable margins in Telangana. You spoke about 30% earlier in the call, but in the past, you have even achieved as I have 35% margins in Telangana. So, can you help us understand why the difference 30 versus a peak of 35%?

So, even now we are confident of the same number, because the previous person who asked the question came saying 28-28, so we said 30-31. If you look at our 26-25 numbers, we have delivered 31 percent EBITDA margin, so 26 and 25. So, we are pretty confident. If you look at our mature, like, secondary part, it does 34-35%. Kundapur before the expansion is to do 34-35. Sunshine was at a much lower number because there were newer facilities and growing. But if you look at Q4, even that is up to 38-39%. So, I don't see any stress in Telangana. It will continue to deliver anywhere between 30-35% kind of an improvement. But now that we are adding a lot of bit capacity, it will take some time for us to get to that number. There is new Konda, Pools, Sikinabad, some greenfield opportunities, some acquisition opportunities. Before we get back to that 30 plus kind of an EBITDA margin, it will take some time.

Sure, that's helpful. And similarly, for Kerala, you spoke about settling at 20 to 23 percent. And generally, what we understand is the cost structure in Kerala is slightly higher, but still that gap seems a bit on the higher side. So, would you like to explain?

There is a rental cost of 4-5 percent in most of the assets at Kerala. And therefore, I had knocked off that 4-5 percent margin and said 20-22 percent.

Alright, so nothing very structural which improves margins in Kerala. Oh, okay. The second question was, you spoke about looking at new greenfield options now, possibly next fiscal only in FI28. Similarly, earlier you had spoken about looking at couple of acquisition opportunities. Would those two be more of FI28 announcements now, or we can expect something in FI27?

Difficult to say, Alanka, because These are not in our control as in when the transaction is announced in the closure dates are more dependent on what the seller wants to do. So, at this point in time, we do not have much clarity on what time values.

Okay, fair enough. And the final question is at the industry level, can you help us update on the progress of the Forman and panelment initiatives.

I think lesser spoken about that, you know, common forum is better for the industry as such because a lot of these sanctions are being discussed and, you know, I think we should do it on a one-on-one basis than to discuss in a public forum on GIC.

Sure, sure. Okay, so just maybe is there any update at your end regarding common empanelment or nothing much?

So, I think some clarity is emerging as time passes. I think last year, unfortunately, was a bad year because it coincided exactly when GIC announced this Common Council and when we commissioned a lot of hospitals. I think now insurance companies are also getting clarity on the way forward from GIC, and GIC itself is taking some stands and making some changes. I think it will settle down now over the next few months.

Sure. Got it. That's it from my side. Thank you.

Thank you. We take the next question from the line of Rahul Jivani from IIFL Capital Services Limited. Please go ahead.

Yeah, Dr. Binay, you talked about the old Kundapur Hospital is still operating and there being the rental cost impact of that. So what kind of rentals are we currently incurring for the old hospital and how long will it continue then?

Yeah, I've got six months before we take a decision on how we want to do the existing. And around 90 lakhs per GST is the cost that we have per month. And some other operating costs like electricity and some manpower as well.

Okay, so annual cost of maybe around 12 crore rupees.

Towards the rental, and you can assume another 3-4 crore towards the operation as in that and sustaining that.

Sure. And given you talked about, let's say, potential of Kondapur being 1,200 crore kind of a revenue, so let's say if you hit those numbers, what kind of EBITDA margins do you think this hospital would operate at? So if you assume somewhere around 35-40% margins, then potentially the Kondapur EBITDA for us could become, let's say, 4 to 5x in, let's say, 4-5 years. Is that understanding correct?

It's a model around 30 percent, Rahul. No, the upside. No, the upside.

But Dr. Bini, Kondapur Hospital, I guess, currently does around, let's say, between 30-35% EBITDA margins. You talked about onco and transplant not being there in the existing hospital. So do you think that there is an upside in terms of the margin potential for the bigger Kondapur setup?

Last year it did 33 percent EBITDA margin, but for two years it will be a little suppressed because we are adding a lot of new clinical programs. They need to mature. And as you are, you know, scaling up to our 1200 crore kind of a revenue, your clinical programs and all, you know, it will take some time before they mature. So, to assume a good 30-32 percent margin is good at our 1200 crore kind of a revenue. 35-40. It needs, it will take more time for it to measure and reset.

Yeah, sure, Dr. Mune. And just last question, can you talk about some of these, let's say greenfield or M&A opportunities which you are, let's say, pursuing just in terms of which markets and how large could these assets be?

Whatever we are pursuing, we are pursuing in our home markets only. I mean, in the home markets that we have already operational. Like I said, Maharashtra, Kerala, Talangana, Andhra is where we are mostly focusing on acquisition. Karnataka will continue to do a more greenfield road. The size of these hospitals are typically around 300-350 meters with an opportunity to scale up by another 100-100 meters.

Okay, and just asking in terms of let us say across these greenfield and acquisition opportunities, if you had to put out a number in terms of overall bid addition, let us say in FY28, FY29, apart from the projects which we have already announced, what that number could be?

It is difficult to tell now because we do not know if we will be able to close these acquisitions. We have no certainty on these. These are just projects that are out there. Unless we have a different time sheet from them, it is difficult to put out in our way. Oh, sure, sure, Dr. Abhinath. Thank you. Thanks for answering the questions.

Thank you.

As well as no further questions from the participants,

I now hand the conference over to the management for their closing comments.

Very good discussions that have been happened in the last one hour. If you look into the holistically that healthcare is really a service-oriented rather than talking about in a common form like openly about the margins of 35%, 30% is not good, When we meet, We can be able to discuss in detail about that. As far as our clusters are concerned, Kerala is doing very well. The reason is we invested only 110 crores and the revenue were being around 77 and even though it is a single digit. Karnataka, as we expected, is doing very well. Even the ARPPs were very high. The reason is, initially, we did not expect that so much of complex cases, clinical talent is available. Thanks to Srinath and Nithish, they were able to bring. That is why, initially, we have shown these things. When we added multi-specialities, that we will be able to neutralize. As far as Hyderabad, Karangana cluster is concerned. As we planned, it is going absolutely, there is no deviations of that. In Maharashtra, as you have seen that in Nagpur onwards, the entire culture, the patient mindset and the doctor's mindset is entirely different. So only we are trying to change. Once they understood the concept and culture of Kims, and then that is started ramping up as Abhinav has pointed out in the... I mean Nagpur. And on the occasion, it is continuously keep growing as we expected. There is a lot more opportunities because undivided state, Telangana was doing the only one which is doing. Now we can able to develop a lot more in Vijayavada, Guntur and Vizak. So there is a great potential that we do. And as well as the debt is concerned, I think we are in the philosophy that we need to be able to maintain a proper debt equity, even though with respect of the new acquisitions or opportunity that is coming, we are very, very, very cautious about both the talent and the debt and as well as the opportunities that are there, the management and also that will be definitely keeping all these things in mind. And we are expecting year-on-year growth historically, what we have shown last 10-15 years. We are aiming to see, to achieve that year-on-year growth in the top line and bottom line. And that is our entire exercise with your planning and putting all those things. So, your company is in good shape and doing definitely much better than all of us are expected. Thank you.

Thank you. On behalf of IIFL Capital Services Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.