Health X Platform Limited (HEALTHX) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to HealthX Platform Limited Q1NF527 on your conference call, hosted by CoIndia Advisor. 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 star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand our conference over to Ms. Swamya from Go India Advisor. Thank you and over to you, Swamya.

Hi, everyone. I welcome you all to Health Tech's Flight Song Limited Q1F527 earnings call. Please note that discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks pertaining to the business. We have on call today Mr. B.L. Mittal, the Managing Director and CEO, and Mr. Lokeesh Shagarwal, the CFO. I now request the management to proceed with the opening remarks. For that, we will open the floor for Q&A. Thank you and over to you, sir.

Good afternoon, friends. I am B.L. Mistal. Welcome to the HealthEx Platform Limited Q1 FY27 Earning and Business Update Call. We sincerely appreciate your continued touch and support as we build HealthEx into a technology-lead, capital-efficient healthcare platform with a clear objective of making healthcare more affordable, accessible, and trustworthy across India. Given FY27 has been an increasing start to the year for us, the initiative that we have invested in during the previous year across the Taylor City, Sastra Sundar's geographical extension, Fulfillment Infrastructure Technology and JITO are now beginning to translate into stronger revenue momentum while we continue to work towards improving the underlying economics of the business, building a scale with a strong operating foundation. The strength of our platform today is reflected in the CLVR bit. We currently serve approximately 5,000 retail pharmacies with more than 50,000 SKU, sourced from over 1,000 vendors supported by more than 350 expertise and 3,500 employees. Importantly, more than 95% of our purchases are sourced directly from pharmaceutical companies without paying any purchase rights. While our purchase return remains below 1%. This gives us a strong sourcing and availability advantage as we continue to scale. Retailer Shakti and Shasta Sundar both are driving growth now. Our revenue momentum has achieved meaningfully, lead by our two core platform. Retailer Shakti grew 48% YUI, continuing to remain on principal growth engine, while Sentra Sundar grew 44% YUI, reflecting a strong B2C business. The quality of this growth is also increasing within Retailer Shakti. 69.4% of business come from orders above 2500 and 42.4% from orders above 5000, indicating that retailers are increasingly consolidating meaningful share of their procurement requirements on our platform. This also eliminates the focus on certain customers because their sales are widespread in thousands of customers. Similarly, 69.2% of customers' orders are above 1,000, highlighting a healthy consumer basket size, and it also reflects that 30% of orders are going below 1,000. They have chosen the capability to serve even the smallest orders. Together, these platforms provide us with a strong base to deepen customer engagement and build a larger healthcare ecosystem. We are expanding beyond our existing markets. A part of Kauke's strategy is to replicate this model across geographies. Building on our existing West Bengal infrastructure, we have expanded into Odisha, Bihar, and Jharkhand, while strengthening our northern operations through our Noida infrastructure. We have already deployed science team and established the logistic and fulfillment capabilities required to penetrate these markets. The early response reinforced our confidence in this strategy. Importantly, your business is not dependent only on large metropolitan markets. Approximately 67% of retail industry business and 78% of Shastra Sundar business comes from Tier 2 and Tier 3 markets. This reinforces our philosophy of inclusive healthcare infrastructure in India, which India needs and we provide across geographies, across income levels. This demonstrates the scalability of our model and the significant opportunity available in undercurrent markets where accessibility, affordability, and reliability remain important needs. Our new initiative, JITTO, which is creating another growth opportunity, that is another strategic initiative at JITTO private level through which we aim to make quality healthcare significantly more affordable by offering medicine at prices of up to 60% in lower terms. Leading Branded Alternatives. We see JITWA as an opportunity to simultaneously improve affordability for customers and create an additional margin opportunity for the platform. At this stage, our focus remains on building the right distribution network, establishing customer acceptance, and scaling the business in a disciplined manner. We are investing ahead of scale while improving economics. On profitability, EBITDA goes today at 14.9 crore during the quarter. As we continue to invest on team and in technology-lead capabilities across procurement, procurement, inventory management, customer engagement, I would like to reiterate that almost all our revenue is contribution margin positive revenue. We have consistently maintained that technology investment needs to be made ahead of scale but capital deployment must ultimately be supported by a sound economy. Our objective is Therefore, to continue investing in capabilities that can provide productivity and customer experience, while progressively moving the platform towards stronger profitability and capital efficiency. What paid is to date, Rs.2 crore, reflecting the improving underlying economics of the business. Technology and fulfillment are also key enablers. Technology remains central to how we intend to scale the platform. We are continuing to strengthen our platform infrastructure. At our existing network, complemented by new capabilities in Guwahati, Lucknowa, and Udaypur, these specialties will allow us to penetrate deeper into the market. We have already entered and improved service level as volumes increase. Our fulfillment centers are becoming increasingly automatic and technology lead, helping us improve throughout inventory management and main part productivity. At the same time, we remain focused on maintaining a capital-efficient model of working capital. Cycle is approximately 28 days. Equivalent to roughly 8% of revenue is provided with a strong foundation to scale. It is proportionately increasing our working capital requirement. Hence, our company is in just an infancy state. But this much, I can say that the model is established as one of the highest growing companies with most capital efficient requirements. Now I speak about the outlook. Overall, we believe that A527 can be important here for health care. This quarter is the best quarter in the history of the company. We are ahead of the composite sales with Flipkart partnership that's intended and ultimately terminated. This quarter we crossed the highest turnover which we reported during our Flipkart partnership era. And this year, we believe that it should be the best year in the history of Haltex. The investments made during the previous year are now coming together. Retailers is scaling strongly. Successful is recovering. All geographic footprint is expanding. New fulfillment capabilities are coming online. And Jita is visually building momentum. Our focus for the year is clear growth of the platform deeper north regions across India, improve technology efficiency and progressive enhanced profitability and capital efficiency. We are continuously working to launch our AI monitored retail air product for our retailers and we are scheduled to launch in this quarter. Hopefully in the next quarter we will confirm the success of the project. He believes the combination of our customer network-forcing capabilities technology platform and expanding infrastructure was a strong foundation to build a large, scalable, and sustainable high-scale platform over the coming years. With this, I now request our CFO, Mr. Lokey Sakharwal, to take you to the detailed financial performance for the quarter-end date, June 2026. Mr. Lokey Sakharwal. Thank you.

Good morning, Mr. Ajit. Good afternoon, everyone. So, again, HealthX delivered a strong top-line momentum in Q1 F527 with revenue from operation growing more than 58% at year-on-year-old level to Rs. 440 crores and registering a growth of over 16% on quarter-on-quarter basis from 378 crores. Gross profit increased by 64% year-on-year to Rs.34 crore and 24% quarter-on-quarter, while gross margin improved to 7.8% from 7.3% in quarter-four of FY26. Operating profitability also improved sequentially, with EBITDA loss narrowing to Rs.15 CR from Rs.20 CR in Q4 FY26. And EBITDA margin improving to negative 3.4 percent from negative 5.5 percent. Despite this strong revenue growth, EBITDA remained slightly impacted by higher employee and other operating expenses. At PAC level, the company reported a profit of Rs.2 CR in Q1 FY27, marking a significant improvement from negative 13 CR loss in Q4 FY26. Although profitability remained below 26 CR, Pat reported in Q1 FY26. Overall, the quarter reflects a strong sequential operational improvement with revenue and gross profit accelerating and operating losses narrowing meaningfully. Going forward, the key focus remains on converting this strong momentum and revenue growth into sustainable EBITDA and FAT profitability through operating leverage and tighter cost monitoring and management. As we move forward, we expect the new geographical market, additional fulfillment infrastructure, increasing retail penetration, and Shasta Sundar's continued recovery and the gradual scaling of JITO to support further growth. Our focus remains on maintaining right balance between growth, margin improvement, and capital efficiency. With this, I would like to hand the floor back to the moderator for any question and answer from the prospective investors. Thank you.

Thank you, Samusha. Ladies and gentlemen, we will now begin with 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 handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question comes from the line of Sanchita Sudh with Robo Capital. Please go ahead.

Hi, thank you for the opportunity. So, my question was that for retainer Shakti specifically, what was the gross margin and EBITDA margin in Q1 FY27?

So, in Q1 FY27 at Retailer Shakti, we are maintaining a gross margin of around 7.8% and EBITDA number, we are closer to break-even and expect to make a positive EBITDA in Q3 this financial year end.

Okay. And, Dursha, any revenue aspiration for FY27 and FY28?

I mean, as I said that, we don't project on yearly basis, but I can tell you what happened in May. So, May we ended with 150 crore plus revenue. So, looking to the growth, you can now extrapolate the revenue projection for this year and next year. May we ended with 150 crore subject to audit revenue, ARR.

Alright, that's all for Mayan. Thank you.

Thank you.

Ladies and gentlemen, anyone who wishes to ask a question, press star and one on their touch on the telephone. Our next question comes from the line of Abhishek Singal with WB2T Funds. Please go ahead.

Sir, thanks for taking my question. Thank you. Sir, I first wanted to get some perspective around the gross margin potential of the business that we are building. And, you know, so if you take... How is your private label slash JITO panning out in terms of your percentage of revenue? How that can ramp up and potential impact of that in gross margin? Because if you compare some of the other listed businesses, And look at the gross margin there. They have kind of started reporting almost double-digit gross margin, you know, at the console level, you know, 10, 11, 12% or so. So I just want to get some perspective around how this gross margin ramps up for that. And subsequent to that, if you can, you know, provide some clarity around below gross margin, the current cost structures. How that pans out, and what kind of an operating leverage that we see in this business flowing through as the numbers of quarters roll by. So, you know, if you give some directional context around that, that would really help us understand the business slightly much better than we currently do on the reported numbers.

Thank you, Abhishek. This is very important question. We also look into these things. So, if you see the complete operating in the distribution business, If you see the pharmacy distribution business, at gross margin level, is a fabulous good business, both in terms of retail and both in terms of wholesale. The companies are making good profits, and sufficient gross margin, I would say, has a healthy margin. Now, if you compare the satsasandar with others, then if you compare at the level of, because the gross margin is the function of, of volume, largely volume, how you procure, at what volume you procure. At this level, if you compare other companies, what they were doing, then you will find that the hair tech performance is better than any of the competitors. That is number one. And number two is that the gross margin is from hair is expanded by virtue of one is by volume. Second is by increasing your wallet type of the retailer, and third is by increasing the private level. So private level JITTO ramp up is I am pretty sure. So we launched in the last quarter of financial year, 26, and we sold product of JITTO around 25 lakhs, and this quarter we sold around 79 lakhs. So, these are very minor numbers, but the growth is significant, and the gross margin is above 50%. So, this JITTO revenue ramp up will increase the gross margin. And then since we are the digital business, so we increase the volatility very significantly, like selling of devices, like selling of OTC products, like selling of healthcare products, preventive care products of the pharmacies, and thereby we increase the gross margin. So the gross margin, if you see the industry level, that taken together of both B2B and B2C. We expect to pay out of around 12% going forward. And down the line, we don't look the EBITDA because, you know, the main problem of the industry is the depreciation. If you see the beautiful companies, you know, they kill the gross margin earned in their depreciation. And the depreciation is the real cost. So we, through digital distribution system, we want to eliminate the depreciation cost and interest cost. And straightway comes to the functions whereby from the gross margin to the administrative cost, it goes directly to the zero-order treaty. So similarly, our entire philosophy is that, you know, we should do this. Same kind of business as the industry practices are in a different manner. Adding the digital technology capabilities, add the capital efficiency, and add the distribution capabilities, digital distribution capabilities, and we are done. So the capital efficiency along with the digital distribution, digital distribution will ensure the growth comes in a rapid automated manner, and capital efficiency ensures that there is no depreciation and no interest cost. And from directly sales, it comes to the cash flow. So our focus is not EBITDA, but our focus is cash flow from the revenue. Thank you. I hope it is clear, Abhishek.

Just to expand a bit more on this gross margin perspective, if I remember correctly, you right now mentioned somewhere around 150 crore kind of a revenue for the month of July in your business, right? That is both Retail Shakti and the HealthBuddy business put together, right?

Yes, yes, yes.

And you mentioned that 70 lakh was more like a quarterly. So what I want to understand is that you're talking about JITO at like a 50% kind of a gross margin business. So just from a leverage on this perspective, so for example, once your 150 crore top line goes to say 200 crore a month, In your view, what could the JITO contribution be in this, or the private label, or whatever, like your own push be in that? And at 15, so essentially what I'm trying to arrive at is that if, say, your... Jitore, when you become 2% of your monthly sales, it could almost add like a 100 basis point kind of a gross margin expansion, right? So, how are you factoring that and what kind of, say, if I were to look at next 2-3 years, you know, as a percentage of sales, be it quarterly, monthly, or an annual basis, this part of the business, can we entail like in the next 3 years, this could go to 5-6% of your top line? Some trajectory and direction around that will give us some perspective, sir.

No, I mean, whatever you are mentioning, Visek, I fully agree with you. To that line, I think we are working upon that. That much I can say, but I mean, it's very difficult to predict anything because we are evolving company. We are an emerging company, and we believe that there will be multi, multi more. New initiative coming forward. But JITO, we are quite helpful and whatever figures you mentioned, we internally or working suggest that we will surpass it without mentioning any specific guidelines. So our internal working, our internal projections, our internal business plan suggest that we will surpass whatever figures you mentioned in your narratives.

And so from a region perspective, can you please help, you know, give us some perspectives of your current run rate in terms of revenue, how much is West Bengal contributing, how much are, you know, say, for example, the other parts of India contributing and the new regions, how are you seeing them ramp up some perspective around your geographical expansion and the current growth contributors as well from a region perspective that would be really helpful.

I am very happy to announce that the product has been proven in across the market. So, from West Bengal, this quarter we expended to Odisha, Jharkhand, Bihar, and Satishgarh. From Novida, we expended to Haryana, and UP, and Darasthan. Some notice we are covering. So, 30% is right now out of West Bengal. And all markets are giving very good response. And in terms of the growth, I must tell you that the Northeast is highest growing entity. This shows that this tier 2, tier 3 geographies and where, you know, as per IPM, if you see that Harkand is having the highest growth rate. This is happening because India is changing. This I firmly thank to my internal aid team that you looked at IPM data. That 70, 80 crore new people who hitherto were not taking medicine. You were talking about the JITO. The JITO is no more a substitution. It is the requirement of those 80 crore people who are coming first time in the pharmacy shop to buy the medicine. So, I am very much hopeful. For these new geographies in Jharkhand, we are planning to set up a new warehouse in Darchi, Patna and Satishgarh, so these geographies we will ramp up this year and next year very very aggressively, looking to our success in Atham. And as far as Atham is concerned, it is growing very fast and rapidly. So, the underpenetrated area has more scope of distribution and has more share of the jitto.

Professor, I'll join back with you. Thank you.

Wish us to ask a question. May press star and 1 on their touch on telephone. Our next question comes from the line of Disha with Sapphire Capital. Please go ahead.

Hello. Am I audible, sir?

Yes, I do have audible, Disha.

Yes, thank you so much, sir, for this opportunity. So, sir, for detail, Shasti, you mentioned that we had a gross margin of 7.8% in EBITDA, so that we had a break-even. For the HealthBuddy platform, what is the current gross margin and EBITDA margin level for this quarter?

No, actually, the, I tell you the Shastma Sundar we are building, I must tell you what is the vision about behind Shastma Sundar. Now, if you're building B2C business, so there are two ways of building B2C business. One way is that we go digitally. Digitally, we have to expand the network, brand acquisition, technology, and if you go physically, we have to spend in retail shops and kill money into depreciation. So, the depreciation model will show you the good EBITDA, but the cash flow will not come. The success is that, as per our model, we spend around 15% of the building the revenue. So, suppose we build a 200 crore revenue in this year, then we have to invest around 15% of that means 30 crore. So, if you see the current EBITDA loss of Susha Sundar, health buddy around 90% loss is by virtue of technology built-up, that is number one. The technology built-up, I tell you the AI built-up is both for retailer Sushi and Susha Sundar. As I suggested, we are naturally looking for... This retail area, and we are building AI technology, and second is building revenue, because we don't open shops, so the entire building revenue comes in profit and loss account. My humble request is that if you look health tax and investing health tax, don't look from EBITDA perspective. We are not an EBITDA positive company for next. Two, three years. And we neither looked at EBITDA from perspective. So EBITDA is not our priority. Our priority is building a very, very large company without looking hurriedly EBITDA in successful business. And we will build a solid business with a state care flow without killing any money in depreciation.

These gross margins, so, okay, we're not looking at the EBITDA margin. For the gross margin, I think we're at 9.1% this quarter. What will be the target for the entire year?

The entire year, we will be at 8% plus gross margin.

Sorry?

8% plus gross margin.

And what is our eventual target? Where do we want to take this number to, say, in next 2-3 years?

As I said, it will run to 12%, from 8% to 12% if you look at the industry. See, the gross margin is a function where we will be making the similar kind of gross margin where the industry is working. Because the customer's pricing and supply, we are buying from the same company, we are supplying to the same customers. So gross margin will be, as per the industry, the transition will go by that. Infrastructure is built in technology and capital efficiency. That is the only two factors which we differentiate in terms of return on capital employed and in terms of revenue and in terms of growth. So the gross margin will be the industry. The industry in B2B is operating around 12 percent and B2C net of last mile retail shop expenses is also around 12 percent gross margin. So the gross margin is around 12 percent and we should achieve that at that scale.

Okay, okay. And just the last thing from my side. So, we've seen revenues increasing, sir, but quarter on quarter we've seen a bit decline in the other expenses. So, what has led to that?

So, other expenses are not declining. It's percentage of revenue that is declining. As the revenue increases, your fixed cost remains same. So, if you see the percentage that will decline. So, that is the natural phenomenon. As the scale goes, the fixed cost remains same. And the expenses are same. That is how the company achieves the profitability going forward.

Okay, okay. That is it. Thank you.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Our next question comes from the line of Rohit with iThotPMS. Please go ahead.

Good afternoon, sir. I hope I'm audible.

Yes, sir.

Sir, first of all, sorry, I'm a bit new to your company, so please pardon some questions which may be very basic. Uh, so, sir, if I were to look at your business, uh, right now, so, uh, based on your, uh, presentation, you're saying that the last financial year, you did 155 crores in Sasta Sundar and about 1,125 crores in retailer Shakti. So, uh, I mean, so if you were to sort of double click on both these businesses for a minute, uh, so can you sort of, so it seems from the outside that Sasta Sundar is a very different business. from retailer Shakti in the sense that it has to your customer acquisition is much more difficult and also you have much more bigger players with deeper pockets. So can you maybe just help us understand like, like, what is so if you were to step back and then both these businesses are different? So how are you trying to First question is, is this different or is this understanding even correct from your vantage point, these are different businesses or is that not so? So, if you can maybe help us understand the nuances of these two businesses in a bit more detail.

No, your question is right. I mean, but these are not two different businesses. This business is, one part is the procurement, second part is fulfillment, third part is technology and fourth part is the large level of customers. So, the first part, second part, and third part, both Retailer Shakti and Sassanandar are same. Now, coming to P2C business that you addressed to, we have a very unique health buddy model, which are also Retailer Shakti, customer type, they are also small pharmacies, so we run a health buddy model. And we spend around 15% of building the revenue. So we have estimated that if we say with a 2000 crore success in the company, then we spend 15% of that 300 crore. And a 2000 crore company, we can make 5% revenue accreditation. That is coming 100 crore per year. So by investing... 300 crores, we make 100 crores per year. So that is 30% IRR on our investment. That is the pure mathematics of building success in the business. Having said that, because that mathematics is coming only because we need to invest only in one vertical, that is the customer acquisition and building brand. And then from analytics point of view, if you list them, you will see because it will take certain amount of time. Then in excess, it gives us the comfort. But I am going to two-thirds. In 2015-16, when Sastasandar was over 80% business-centered, we just started Retailer Suthi, then the same key search analyst asked us that why are you bidding Retailer Suthi, who will buy without credit? So you have a solid business of Sastasandar, why don't you expand, why don't you focus? So you just wait for one, two, three years, once you start seeing the figures coming, then you get comfort out of it.

No, sure, sir. I mean, your scale-up in detail is quite impressive.

No, no, Sassanandar was impressive. Sassanandar business we sold, you know, you must appreciate that Sassanandar business was 508 crores per year business in the same company. We sold Flipkart for 800 crores. And our company built capital out of that, and out of the treasury income of that capital, we are investing. So, we made huge money out of Krishasundar rating. And right now also, I mean, at any point of time, business like Krishasundar, which has a contributing margin business, can be sold by 5-6 times for your investment. So, I mean, it's a very beautiful business. And for building a very large-scale business with large opportunities, you just need to look at futuristic performance rather than putting it to scale and see the linear progressions.

Right, understood, sir. No, I mean, so, so can you just maybe explain the help buddy model, what is the difference here?

So, the help buddy model we have explained in the slide also. So, the help buddy model is that we don't directly deal with the customer. So, we appoint entirely in each fin code, who don't hold inventory. So, they run the store without inventory. So, they book the customer's order on their shop, and whatever order is coming in our app and website is Sattasundar. Those are transferred to our central warehouse and we deliver to their health buddy. So, the last mile delivery, the compliance part, the last mile customer engagement part is being handled by that health buddy. So, health buddy is an independent franchisee partner who is like a retail store, like general retail store. So, for us, that applies to all the retailers, be it a health body or a general retailer. So, the retailer sector supplies to a general retailer, the customer supplies to a company-appointed entity partner named Health. As I said, we need to spend only 15% of the revenue, while if you see the other companies that are building in this company, because they have to do everything.

So, let's say, I'm sorry, maybe this is a very... Stupid question, but so let's say when you say the franchisees don't hold inventory, so how does the customer know that there is a franchisee? So that's money spending you do. So there is an app on which you will have your franchisee invested and the customer acquisition happens on your app and the fulfillment happens by you at the back end and based on the location, etc. tech, the nearest person will then get paid. Is that how it is?

Yes, so this is a hybrid model whereby, suppose a health party starts, then first thing is he has an opening of his shop. So opening, he calls all his friends, all his relatives, so say 100 people gather 40 samosa parties, and from that he starts selling 20 prescriptions to his friends. And then he pays a health camp in his area, and he gets another 20 customers. Then we build a customer engagement program in this area, and then a 30 health benefits, and 60 customers. Then we take reference and build 100 customers. And 100 customers means 3 lakhs health per year. So, I mean, this kind of data. So, there is a twin effort. One is effort from health buddy, and second is health from our digital capabilities and on-ground activation. So, the health buddy has a center in that particular area that gives comfort and human touch to the customer also. So, that is how it helps.

Got it. Understood. And, sir, this 7-8% of your revenue which comes from finance is basically your treasury income?

Yes, it is stagely income.

Understood. Okay. Okay. Sure, sir. I think at this point of time, that's all for Manishan. I'll probably read more and come back for more questions. Maybe I'll reach out to the IR and set up a call. Thank you.

Thank you. Anyone who wishes to ask a question may press star and one on their touch on telephone. Our next question comes from the line of Amit Mahendale with RoboCapital. Please go ahead.

Thank you. So the first question is again on the burn for Saskatchewan. I think we plan to, if I remember correctly, we had spent about 50 crores and we wanted to spend another 100 crores in FI 27 and 28. I'm just wondering to kind of discuss a little bit on the rationale, you know, of spending 40, 50 crores. My understanding there is that, you know, we don't require too much money for acquiring customers because it's largely a B2B2C model and acquiring health buddies is not very expensive. And from a customer side, the customer comes to us largely for discounts, you know, because we offer, say, 20-22% discount. So that's 50 crore that we are spending. What exactly does it do for the customer?

You know, the large part is that, you know, some part of the money goes on bidding success in the brand. So, we are advertising for success in our territories. So, that's why the brand is built. So, one part is that, and second part is the tech team salary. So, tech we are building futuristically. As I said, the retailer sector is building a software called Retail Air, and we are building AI tool for customers based upon counseling artificial intelligence tools. So, these two salaries are being credited in the profit and loss and on. And then, see, the expensive part is also not very easy. As you have said in our presentation, we have given that we have started expanding in new territories. Like Bihar, Jharkand, Odisha. So these, we don't have any acquisition costs. We are not acquiring any existing revenue. We are building revenue from our own resources. So we have to put sales team on the ground, so their expenses are debited into new geographies like these geographies we have taken. We are building new warehouse in Noida, Govati, Lucknow, Udepur. Everywhere require team. Everywhere require effort. So, this 47% of growth which will come there, there are two ways. Either we pay huge premium to outsize and buyout. Then there will be capital allocation and the ROE will be compromised. But the analyst will be very happy to see the good amount of profit. But the capital is gone. And if I say I bid at 10% of the cost, but the 10% cost will be debited into profit as well. And that will see the accounting as a burn. So if you look from my company, my company will look from the capital efficiency model that these burnings are for generating revenue. See the differences in part of our company that we are a company which did not acquire any revenue, rather sold the revenue. And we bought back the shares. We sold the revenue, built our capital base, and out of debt, treasury income building business. We bought the capital rather than expenditure and diluted the capital. So these are the two differences. Not a single penny or pen acquisition of a single revenue. Rather, we sold 90% of revenue to Flipkart and then again building. And it still... I have closed that largest quarter in this quarter. So these are the key differentiation. So these are the magic of capital efficiency which you can realize only after 4-5 years. Once you see that how the capital efficiency measures in terms of shareholder's wealth.

Right. Definitely. I mean, though, it is definitely capital efficient. My just, the point was that, you know, the branding or the technology costs that we're spending on here, at least currently the customer doesn't want, I think my understanding is that customer comes to us for discounts. But anyway, do you have numbers for how much we are spending for technology and how much we are spending for branding?

That is the, you know, I myself asked this question to, I was an analyst at Microsex when I was in a special company, and I was told to ask these things to emphasize a call, that why are you investing in AI? So, I mean, these questions are normal, but you have to look the futures, and we are looking the futures, and not today, but once, after three years, all of a sudden, you will find that, yes, the customer needs AI, the customer needs counseling, and it's not the customer needs AI, customer does not AI, customer needs counseling. The retailers are not required to adopt the AI. Retailers are required to... Minimize the inventory. At that, minimization can be done by the automation of AI. Probably our retailer tools, they will not understand that this is an AI tool. But they will definitely understand that it decreases their inventory level, inventory investment from 40 days to 4 days. Think about a retailer who does not need credit. By automating his retainer stock, everything is automatically connected with retailer safety, the order process is automatically, and he has to invest a 10 lakh in his inventory. There comes two lakh fees. So in a month by adopting the new software. So this kind of technology is not about adoption of AI, but it is adoption of a new special education. And it automatically happens. All of the sudden it happens. It happens in UPI in India. It happens in your capital market in 2020 adoption. So adoption becomes easy when consumers see the value of that in their daily life.

Right, sir. Do I get, is it possible to get split of that 50-60 crore burn in technology, branding, and customer acquisition?

So, you can say that branding will be around 25%, and

technology should be around...

Sir, I am sorry to interrupt. We are not able to hear you, management.

Breakup of this burning is somewhere around 25 to 30 percent is towards marketing and advertisement while the 40 to 45 percent goes towards tech related cost.

Right, sir. And my last point or suggestion is to provide P&L by business segments. That will be of great help if you could. Split the P&L by Sastra Sundar and, you know, Retailer Shakti separately, and then carve out the, you know, the one-off costs, which are the, which is the burn that we are doing. That will help us to understand, you know, the gross margins and EBITDA much better. Thank you.

But right now, what is happening? Two-third of the activities, like procurement. Fulfillment and tech are so integrated that carve-out is not becoming possible, but we are working upon that, we are working upon no tech adaptability. Once it is ready, we will start giving you the separate figures.

Right. And if I may, you know, add just one last point, you know, at least our understanding is that, you know, the burn, you know, the market cap of the companies definitely, you know, if you compare with the scale at which we are growing as well as the cash that we have, you know, definitely, you know, there's a lot of. for improvement on the market cap, but I guess our understanding at least is that the burn, you know, for two years is delaying the, you know, eventual discovery, price discovery. So maybe, you know, if you could just think about that, it will be helpful.

So definitely we will do that. We will do the appropriate disclosure, which helps to understand the investors, but we will explain the so-called bundling, but we will... Continue to burn and continue to invest in technology.

Thank you, sir.

Thank you.

Our next question comes from the line of Ramesh with SJ Investments. Please go ahead.

Aye, sir. Thank you for the opportunity. I'm audible. Yes, sir. So, I just wanted to understand, you mentioned in the past that, like, all the last few con calls, you mentioned that in a year or two, we'll probably reach EBITDA break-even, while now we are extending the timeline by two to three years. Like, can I exactly, like, sorry, I'll join the call a little bit. Could you explain why are we postponing the timeline to a little later?

No, we are not postponing. The retailer sector, we earlier said that we will achieve the break-even this year. We are near to break-even. And because the branding is coming by virtue of our B2C business, we have never said that taking together B2C, we will achieve the breakeven in the current year.

Got it, sir. So can you exactly tell me what the exact burn is just for Sastra Sundar? I understand your tech cost and marketing cost. Could you just ask the business, could you explain how much the burn is?

So we will, as I said earlier, fully extend the... The methodology of the burning, and we will figure out that to properly disclose segment-wise investment from the time when we are able to segregate the accounting things. Right now, all these are at integrated cost. But definitely, we will show you.

Got it, sir. And coming to our warehouse is... So, we have had an option, like, we have multiple geographies setting up capacities, and with land acquisition and building, usually there are delays with the season and everything. Could you explain what, how are we, like, progressing forward with these warehouses, and where all did we start, and, like, what are the percentages we have done with? So, capacity.

So, then, Noida, we have already started in the November of this, this 17th agar. We are starting the new warehouse only. So, Noida is done. And West Bengal is partly done. Govati, we have expanded existing capacity by taking new warehouse or dent and 75,000. This, we are starting the construction in next six months' time. Others, Udiyapur, we have started the construction. Patna and Govati, we will, Patna and Lucknow, we will start in next two, three months. So, these are the two years' planning everywhere. So, we take on rent and start immediately warehousing, and in the meantime, wherever we see the good potentiality, we start building large capacities side by side, so that we can shift for the next growth page.

So, right now, Goaati is right now a priority in terms of converting the rental to our own facility, right?

Yes.

Got it, sir. So, in terms of the JITO response, could you explain, like, how the market has been taking it? Because I'm just trying to understand, overall, our brands, we have Sastra Sundar, HealthBody, and JITO. Like, both have a physical footprint, as we know, and JITO also has more to it. So, could you explain, are we able to communicate this to the channel properly, or has it been in disharmony in terms of anything on the ground?

No, no, we have communicated very properly. So, JITO revenue, as I said in my earlier comments, That we started in the last quarter and we sold 25 lakhs of product of JITTO in Q4 FY26 that rise to 79 lakhs in current quarter. So these are very case, base figure is very low but the growth is 200%. So we see the good potentiality of JITTO and good traction of JITTO because it is the need of the consumer requirement and this will grow.

Sir, so is there a timeline in terms of all of them?

Which timeline?

So, we converted, I think, few of the health parties into JITOs, right? So, is there any plan to convert all the health parties into JITO clinics, like JITO pharmacies?

No, no, no, JITO, we have already converted 19 health parties into JITO and 25 are in pipeline. So... Around 50% of the HBD will be converted into JITTO in next 3 months time. And remaining our cell operate standalone HBD without JITTO. So these are the timelines for conversion of existing. We are creating a new channel of Pure Play JITTO franchisee partners. We have invited partnership interest. So we are moving ahead in this year. But we have not set the timeline for this. Let the progress come on, and then we decide how to measure by timeline.

Thank you, Ramesh. I am sorry to interrupt you, but you may please rejoin. Thank you for more questions. Thank you. Thank you. Our next question comes from the line of Abhishek Singal with POP2T Fund. Please go ahead.

Sir, thanks for taking my follow-on here. I just wanted to get a perspective on our readiness as far as our warehouses are concerned. So from what I understand currently, the way you are scaling your business, you know, your current infrastructure, what kind of top line per quarter can it sustain? And, you know, how are you thinking about the back end from that perspective? And also, if you can add that perspective, because there's a lot of automation you had done at your, you know, at your Calcutta, Kolkata warehouse. So have you replicated that kind of an automation across the board and something around the back end, if you can help us? And secondly, on this also, sir, if you can please help explain that this last mile delivery, are we having riders with us? You know, how does that pan out, if you can just give us some perspective around that?

Yes, so I must give you that perspective around that. So, the first part I should take is the automation of the warehouses. So, our existing warehouse infrastructure or fulfillment center infrastructure are ready to take up around 100% growth from the current level. So, 258-3000 crore, it means next year. We don't have any issue for the existing infrastructure. After that, we require the massive infrastructure as per the growth plans and going to the new territory. So, for massive infrastructure, since we are into a pharmacy warehouse, whereby, you know, those are required licenses and those are required more hygiene and more capacity and more locality and more suitability. So, we don't want to be dependent upon outside warehouses, but want to own the entire logistics and the fulfillment center. We want to make this also as an USP. Because pharmacy is not selling potato. These are very, very delicate things where, you know, we have to ensure that there is a proper atmosphere in the warehouse system and we don't need to change because we are dealing with 50,000 excuse. So, the expiry of the leave means transmission means huge losses. And we are into the continuous operations. So we can't afford to that. So that is how we are building. And the logistic, all the riders are on our payroll. And we treat them very nicely as our full-time employees. And happy about that.

Thank you very much.

Thank you. Our next question comes from the line of Preet Shah with Kenny at home. Please, go ahead.

Mitchell, sir, Preet here. So, firstly, many thanks for the strong numbers and for continuing to walk the talk. And the vision and ambition are remarkable for building such a futuristic, AI-enabled and forward-looking company. So, thanks for that. The question that I have, what is the current capacity utilization and what is the maximum revenue can be achieved with existing infrastructure? And the second question is, are we facing any issues with the authority or permitting or anything for any upcoming warehouses?

We are not facing any authority problem or any licensing problem of any of the warehouse. Those are fully compliant and issued. And as I said, there are three parts of the fulfillment center capacity extension. One is the pure existing, one is the existing plus that is already in side by side extension, you can say. And then third is building capabilities. So existing, we are running about 90% of the capacity, but you say that existing plus sideway extension, that will cover another 50% to 100% of our revenue, so up to 3000 crore revenue, our existing plus side extension will be sufficient. Then we will need a massive amount of infrastructure development for building seamless infrastructure into a large company. And for that we have invited the CapEx plan also. We have started building our new warehouse capabilities. But that will be a strong USP of our company going forward.

Okay, got it, got it, sir. Many thanks for this. And, sir, last question, are we on track with this AB approval for this merger and de-merger scheme?

Yes, we are absolutely on track. We have started taking questions from Stock Exchange and deploying them. We don't find any problem into anything so far.

Okay, thank you, sir. That's all for my many thanks. Thank you.

Thank you. Ladies and gentlemen, we will take the last question from Neelam Punjabi with Pupu TT Ventures. Please go ahead.

Thank you for the opportunity and congratulations on some great set of numbers. So, my first question is, you mentioned that 70% of our revenues is from West Bengal. So, what's the current market share that we have in the region, and what is our target market share in the next three to four years?

So, current market share in Kolkata and Veshwanga should be around 3-4%. In the next 2-3 years, we want to make it double from here. So, say 7%.

Got it. And sir, my second question is, in the retailer Shakti business, out of 75,000 retailer pharmacies that we have as per the DEC, how many are active transacting pharmacies and what is our current wallet share right now?

So active, I mean, All registered, do some transactions in a period of one year, but if you say last 30 days, pure and super active, then 40,000 pharmacies are active in last 30 days.

Got it. And so what would be our average wallet share with these pharmacies?

Somewhere around 2% would be the average wallet share.

Okay. And what's our target in terms of, you know, gaining additional wallet share from these existing pharmacies? Any number that you'll have in mind?

The target is mainly, as I said, that this AI enabled starts launching retail air. So once we launch the retail air, our entire target is to eliminate the inventory requirement at the pharmacy level. So, suppose a retailer is keeping an inventory of 30 days. Our target is to eliminate that from 30 days to 5-6 days, because you guarantee the next delivery. So we want to automate that, and the wallet, sir, we want to increase the double of each retailer. So these things we will start working once we launch this retailer software, AI-based start in the next quarter.

Got it. That's helpful. Thank you so much and all the best.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the concerns over to the management for the closing remarks. Thank you, and over to you.

Thank you, Craig. Thank you so much.

Thank you. Ladies and gentlemen, on behalf of HealthEx Platform Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines.