Ladies and gentlemen, good day and welcome to the Poly Medicure Limited Q2 FY 2027 and Half Year FY 2027 Earnings conference call. 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 touchtone phone. Today on this call, we have with us the senior management team of the company represented by Mr. Himanshu Baid, the Managing Director, Mr. Naresh Vijayvergiya, CFO, Mr. Rahul Gautam, President, Strategy and Corporate Development. I would now like to hand the conference over to Mr. Himanshu Baid. Thank you and over to you, sir.
Thank you very much. Good evening, everyone, and I welcome you all to Q2 and H1 FY 2027 earnings call. I sincerely thank all of you for being here today. Before we get into the financial performance, I want to highlight few strategic updates since our last earning call. We are on track to optimize Medyneo, our subsidiary in Brazil. We had mentioned in our last call that Mr. Renato Rocha has joined as a CEO of the company, Poly Medicure Brazil operations. We have also started dispatching our goods, first shipments to Brazil, the new subsidiary in October. This is a vital step for us to service our customers in Brazil, which is one of our key markets. We also established a direct presence in the U.K. This has been done to capture new opportunities under the India-UK FTA agreement.
We are already working on three important projects. Hopefully, the first project will go live in quarter one, the second one, the quarter four of this current financial year, the next one in quarter one, and then the third one is anticipated in quarter three of the next financial year. So we have three important new projects going on other than what we are currently doing in the U.K. market. So, these are some important initiatives we have taken. We also see similar opportunities in other parts of Europe under India-EU trade agreement, which is going to be operationalized soon. So we are working on building some direct presence in some of the key markets in near future. So, these are some of the important initiatives I just wanted to call out early.
Now on the financial performance summary, starting on our standalone performance, which remains the core for the group. For the half year, revenue was INR 919 crore, up 15%, with domestic revenue of INR 318 crore growing by almost 20%, international revenue of INR 595 crore growing around 12.5%. Gross profit was INR 645 crore, up 17%, with a margin expanding by 111 basis points to 70.1%. Operating EBITDA was INR 255 crore, up 20%, reflecting the operating leverage in the business. Profit after tax was INR 180 crore. For the quarter, revenue was INR 488 crore, up 17%, with domestic revenue at INR 172 crore growing 22%, and international revenue at INR 313 crore growing at 15%. Gross profit was INR 336 crore, reflecting a gross margin of 68.9% with an absolute growth of 16%. Operating EBITDA was INR 134 crore with EBITDA margin of 27.4% with an absolute growth of 20%. PAT for the quarter was INR 92 crore.
Our domestic business continues a strong growth trajectory with a growth of 22% in quarter and more than 19% for the half year, broadly in the lines of our guidance of around 20% given in the beginning of the year. Taken together, we are seeing high growth across all verticals, not only our established verticals like infusion therapy and blood management, but also on the newer verticals. Our export business deserves a particular attention. International revenue grew by 15% in quarter two versus 10% in quarter one, reflecting improving growth trajectory. Export revenue grew by 12.5% for the half year, once we add up the two quarters. We are confident that the revenue recovery that we had spoken about earlier showing up consistency in the numbers.
In international markets, we have added 30 new customers in last six months, deepened relationship with existing customers by increasing our share of revenue and cross-selling new products to them. On the gross profit front, our gross margins increased by 111 basis points to 70.1% in H1, with a gross profit growing around 17%. As you may recall that in the beginning of the year, we had guided for an impact of 200 to 300 basis points in gross margin due to increase in raw material prices on account of ongoing West Asia crisis. We have effectively mitigated that risk by proactively managing inventory, taking calibrated price hikes, and focusing on selling high-value products. We reported a PAT of INR 180 crore in H1, reflecting a margin of 18.4%. For Q2, the PAT was INR 92 crore, reflecting a margin of 18.1%.
Coming on the consolidated picture for the half year, revenue was INR 1,106 crore, up 31%. Excluding the impact of acquisition, organic consolidated revenue grew by 14%, led to continuous strong growth in India and Europe, which grew by 19% and 29% respectively. Gross profit was INR 793 crore, up 36%. The margin expanding by 270 basis points to 71.7% as the better margin profile of acquired businesses and greater contribution in higher value-added products continue to lift group's gross margin. Operating EBITDA was INR 266 crore, up 19%. Profit after tax was INR 180 crore on H1 basis. It is important to know that H1 operating EBITDA of INR 266 crore also absorbs the set-up cost for our new U.K. and Brazil subsidiaries. For the quarter, consolidated revenue was INR 581 crore, up 31%. Gross profit was INR 407 crore, up 32%. Operating EBITDA was INR 139 crore, up 20%. PAT, our profit after tax was INR 95 crore.
Let me give you a quick update on each of the business segments. Infusion therapy grew 11% to INR 542 crore in H1, 12% to INR 284 crore in Q2, with domestic growing in this segment 20% both in H1 and Q2. Orthopedics contributed to INR 92 crore in H1 and INR 43 crore in Q2, reflecting consolidation at Citieffe. Renal business recovered well, growing 7.5% to INR 94 crore in H1 and 20% to INR 51 crore in Q2. Despite the continued dumping from Chinese players, our dialysis machine business continues to scale. We have cumulatively sold now approximately 250 machines till date. We are still waiting for the results of the anti-dumping case which we have filed, which was filed in end of June. It has been four months we have been pursuing with the government, and I think we are seeing some movement there.
Hopefully, in few months, we should be able to see some action from the government on this issue. Cardiology revenue was INR 56 crore in H1 and INR 27 crore in Q2, led by PendraCare acquisition. Clinical deployment is improving month on month. As in October, we have implanted close to 18,000 drug-eluting stents. Our 2,000- patient PACIFIER DES clinical registry has enrolled 1,150 patients, with full enrollment targeted by end of FY 2027. We have also launched the IVL, a minimally invasive technology that uses sonic pressure waves to break up calcium in heavily calcified arteries. This new product launch was done in August in current financial year, and hopefully we will see the revenue taking up from this business also shortly. The other segments grew 23% to INR 317 crore in H1 and 26% to INR 173 crore in Q2, with broad-based growth across critical care, transfusion system, et cetera. Liquidity position and CapEx.
Turning to our balance sheet, our liquidity remains strong at INR 839 crore as on September 30 against consolidated debt of INR 377 crore, net cash position of INR 460 crore. This gives us capacity to keep backing our strategic growth and growth-oriented initiatives. We spent INR 124 crore on CapEx in first half of our annual guidance of INR 200 crore-INR 225 crore. Out of this, INR 110 crore in India business and INR 15 crore in overseas businesses. Forward-looking guidance. Now, let me connect to our forward-looking guidance for FY 2027. We are reaffirming the guidance we have shared previously. Importantly, based on our Q2 performance, our annualized revenue run rate is already close to what is required to achieve our full-year guidance. On a consolidated basis, we maintain revenue guidance of INR 2,300 crore-INR 2,400 crore. On a standalone basis, INR 1,900 crore-INR 1,950 crore, with domestic growing 20% and international growing 15%.
We are increasing our standalone EBITDA margin guidance from 25%-27% to 26%-27.5% for FY 2027 on improved performance. For consolidated business, we are maintaining our EBITDA guidance of 23%-25%. Our CapEx guidance also remains the same between 200%-225%. In summary, H1 and Q2 FY 2027 numbers have reaffirmed the fundamental strength of our business model, diversity of our business across regions, customers, therapies that has ensured our business continues to grow despite geopolitical challenges. Our ability to improve EBITDA margin despite headwinds of raw material price, freight cost increase reflects the inherent resilience of the business and its pricing power. Strong comeback in European business for us in this year reflects strongly on our brand presence in that core market. This is extremely important given Europe is a core part of our business. I remain extremely confident about the future potential of our business.
We are aggressively working to go beyond the vision of doubling the revenue we have set for ourselves under Polymed 3.0. Again, thank you very much for your trust and your time. I now hand over to the operator, and we will be happy to take your questions. Thanks again.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants to ask a question, please press star and one. Ladies and gentlemen, to ask a question, we would request you to please press star and one now. Participants who wishes to ask a question, please press star and one now. Ladies and gentlemen, to ask a question, please press star and one. First question is from the line of Sidharth Negandhi from CWC. Please go ahead.
Hi, thanks for the opportunity. Just wanted to understand on two aspects. One, organically, what was the growth in Europe and rest of the world? On PendraCare and Citieffe, in terms of their own growth, what was their organic growth, and how are you seeing some of the geopolitical headwinds that were impacting their growth now play out? The impact that you had on your own Middle East business, how are you seeing that play out? That is one. The second was, you saw strong growth on the critical care business. Is that coming from domestic markets? Is that coming from Europe? Where are you seeing the growth? Third is on U.S., if you could give us some color in terms of what is the early traction? Where are you? What is the GTM? Some color on that might be helpful. Those are my questions. Thanks.
Sure. I think on the organic side, we have put out the presentation also which provides data on region-wise growth organically, which is excluding the impact of the acquisition. If you look at that, our Q2 European business has grown at close to 40%, which is on the back of Q1, which has also grown quite well, but Q2 has really come back strongly. Our ROW market is down 7% in quarter two, reflecting the consistent geopolitical challenge that we are seeing because of West Asia war. On a H1 basis, our Europe business has grown at 29%, while the ROW markets are down 1.8%. I think, as we had called out earlier this year, we expected Europe business to come back strongly, which is very clearly getting played out.
ROW market, because of the current challenges due to logistical and freight cost which has gone up, is creating pressure on growth on the ROW markets, primarily in the Middle Eastern region. To your next question on the growth of the PendraCare and Citieffe businesses. PendraCare business this year has, till September, has grown at about 10% as compared to on a year-on-year basis. Citieffe is up about 3%-4% on a year-to-date basis between April and September. Given the work that we are doing on integration, we expect that growth to go up over the next few years. In terms of your question on critical care, I think the business on the critical care segment is growing well both in India and in Europe.
As you might know, our subsidiary in Italy, Plan 1 Health, primarily runs the critical care business, and that business is also witnessing double-digit growth. While our domestic business, which we set up the team about a year and a half back, and it took time for us to develop the product and build relationship with the customers in India, that business is really starting to take off in the Indian market.
Got it. Some color on the, yeah, go ahead, please. Sorry.
You go ahead, then I will come to U.S.
No, that is what. Go ahead, please, on the U.S.
Yeah, on the U.S. side, we got one more product approval in 510(k). It's an irrigation set which we got recent approval of. Business is starting to grow quite well in U.S. as well. The project that we had started, which had come to a standstill last year because of the tariffs issue, have picked up pace, and U.S. is growing quite well for us in the current year. I think we will achieve the guidance from the U.S. that we had given of achieving about $7 million-$8 million sale at the group level from the U.S. geography.
That's useful. Just wanted to understand two additional follow-ups on Citieffe. Where do you think the challenge has been? Even on PendraCare, right, if I recall right, this was growing in the mid-teens earlier, so where is the challenge on that? The second one is on ROW. Given that this is really an essential, right, is there a reason why growth is still not picking? I mean, somewhere this is an essential product, and therefore growth somewhere needs to pick up agnostic of the logistical challenges, right?
So, let me take that one by one. On Citieffe, the primary challenge in calendar year 2026 has been because of delay in tendering primarily in the Italian market, right? As you might know that a lot of the business is public tender-driven in Europe, specifically in Italy, and there have been delays there because of which the business has not grown as well in Italy. For Citieffe, growth outside of Italy, whether it is U.S. or the larger LATAM region, has been in line with our expectation. Hence, primary disappointment in Citieffe has come from the Italian region. With respect to PendraCare, I think as we've guided in the past, this asset on its own can grow in high single digits, and with the integration with India and cost-saving projects that we're doing, we expect it to go back to mid-teens.
But with PendraCare, the biggest challenge has been its exposure to Middle East. Almost 20% of the revenue in last year came from Middle East, and given the challenge there, business effectively come to a standstill because within Middle East, they also had a reasonably large exposure in the Iranian market. I think that's really been the reasons why these assets have not grown as well as we expected them to. On your question on the nature of the product and the fact that they're essential in character, you're absolutely right. The demand for the product continues to remain strong from that region. The biggest challenge is the fact that logistically to fulfill that demand is becoming very, very difficult for two reasons. One, availability of containers has been a challenge. Secondly, obviously, with all the issues going around Hormuz, getting products to the ports is a challenge.
And thirdly, the freight costs have also gone up, right? Which basically means that customers tend to just wait it out and say, "Okay, if the freight rates will come down, they'll place the order." But from an underlying demand perspective, that remains quite strong.
Got it. That's useful. Thank you, and all the best.
Thank you.
Thank you. Next question is from the line of Bhavesh Jain from DV Investment Advisors. Please go ahead.
Hello, am I audible?
Yes, Bhavesh.
Yeah. Thank you so much for the opportunity. My question is related to the Europe business, right? We have registered a growth of around 40% in FY and in FY 2026, we had
Sorry to interrupt you, Mr. Jain, but we are unable to hear you, sir. Your voice is breaking. Can you please come into a good reception area?
Hello?
Mr. Jain, yes.
Yeah. I was saying we have registered a 40% growth organically in the Europe business in Q2. In FY 2026, we had faced challenges related to some inventory issues and dumping from China. Can you just elaborate on what is driving this growth and how sustainable it is for the European market?
Yeah. You are right, Bhavesh, that last year was a tough year for the European business, and we had called it out, reasons for it, over-inventory in the year prior to that, the challenges of tariffs, as well as the dumping, right? We had already started working last year on deepening our engagement with the customers, right? Adding more customers, doing more clinical engagement with the customers. Some of that benefit is starting to accrue now. As Himanshu also mentioned, we have been working on many projects in the larger European region, which some of them are starting to play out, and some will play out in the next year. In fact, quarter four and next financial year.
I think the fact that we have been able to gain share in our existing customer base as inventory situation normalizes, the new projects that we are doing, plus the new customers that we have added, about 28, 29 customers that we have added in the first half, all of those things are helping us in driving the growth in the European region. We believe that the opportunity set in Europe is very much larger for us, and that is why the belief that the business can continue to grow organically in the European region at very, very attractive growth rates is very strong.
So, this growth is driven by inventory normalization, predominantly?
No, it's a bunch of multiple things. As I said, as we engaged deeper with our customers last year, because we started to see challenges there in terms of bringing more clinical side of the story with them, that relationship building plus new customer addition, all of those factors have contributed to the growth.
Okay. Any status of Chinese supply? Did it change here, or is it a rather normalized kind of situation?
Yeah, I think, see, China dumping is not a medical device issue. I think in general, there has been a lot of rhetoric around the fact that despite tariffs, they've been able to grow their export business quite significantly. We are taking steps which are in our control, which is building more customer relationships, deepening the engagement, introducing new products, right? As you've mentioned, we have multiple products which were under registration. Some of them have come through and are starting to get commercialized. So, even the higher value-added segment that we operate in, there we are able to continue to remain competitive and grow, keeping in mind all the clinical engagement we're doing.
Hello? Just one more question on the subsidiary. So you have. Hello?
Sorry, just one more last point. We have 30 new product registrations which are coming up for registration in that market.
Okay. Just one more question on the subsidiary. So you have elaborated on the challenges faced by the Citieffe and the PendraCare subsidiary. My question is, firstly, what is the sustainable growth rate we can look for these subsidiaries? Secondly, the subsidiary margins have been operating at around 4%-5%. That is different than the standalone and the consol numbers. I think that these were operating at around 12%-15% kind of a margin band. What sort of recovery in margins we can hope for in these businesses, and in what timeframe?
Yeah. Bhavesh Jain, on the growth point, as I mentioned earlier in the call, these businesses' growth potential was in the high single digits on their own. They were small assets operating in Europe. On their own, they can grow at between 8%-10% on a secular trend standpoint. With the initiatives that we are taking with them in terms of bringing more procurement synergies, supply chain synergies, distribution synergies, and product development synergies, we expect that to go back, go into the mid-teens from a growth perspective. Again, just to clarify, most of these initiatives have long lead time because all of them need to go through the regulatory approvals. Sometimes they take between one to three years.
A lot of the work has happened on the synergy side in the current year, in calendar year 2026, and hopefully we should start seeing benefits of some of those initiatives in the upcoming financial year. To your question on the margins, you mentioned that the margins for these subsidiaries is at 4%-5%. It is actually when you are just doing the subtraction of consolidated versus the standalone, that is when you get to 4%-5% EBITDA margin. If you look at the EBITDA margin of the three subsidiaries separately, PendraCare currently, because of the challenges on the revenue side, is currently making losses at the EBITDA level. The other two subsidiaries, which is Citieffe, which we acquired last year, and Plan 1 Health are operating in mid-teens in terms of EBITDA margin. So, in the consolidated, we also have other subsidiaries which are currently being in setup situation.
As Himanshu mentioned during the call, the EBITDA that you see in H1 also includes the setup cost for Brazil, U.K., and some aspects even U.S., because that is still under operationalization stage. Those are the reasons which is, that is why you are seeing 4%-5%, when you just do a subtraction between standalone and consol.
Okay. So, any outlook on recovery for PendraCare and margins?
Yeah. I think with the projects we are doing with them currently, we are expecting some of those projects to start getting implemented from Q1 of calendar year 2027. And those will start accruing. They have also got one big breakthrough with a large OEM. Revenue for that should start accruing to them from mid of calendar year 2027. So, I expect that calendar year 2027 or FY 2028, we should start to see recovery of EBITDA margins from PendraCare as well.
Okay. Just one more question on PendraCare. When we acquired this subsidiary, it was operating at around 12%, so it is 14% margin kind of number. What led to this subsidiary going into EBITDA losses? Can you explain what operational challenges you faced?
Two things happened. One, because of the war that is going on, the raw material prices have gone up in general, which has led to their increase in raw material crisis. Secondly, and which is probably the bigger impact, because you have to understand that these companies are fairly small, right? EUR 10 million, even small minor changes lead to significant, just from a margin standpoint, right? Just when you look at the margin percentages. Because of the loss of revenue in the Middle East region, which was close to 20% of the revenue of 2025, those are the two primary reasons I will say why the margins have gone down. Fundamentally, there is nothing that has changed in the business. The products continue to get sold in other markets.
In fact, we are gaining more customers, including, we have grown the one of the large OEMs where we have a relationship for over 15 years, has grown at about 40% this year, right? Some of the revenue loss has been recovered from other customers, but when you have a 20% fall for a business which is EUR 10 million in size, the margins do get impacted.
Okay. Thank you.
Thank you. Next question is from the line of A. Sriram Palaniappan from iThought PMS. Please go ahead.
Sir, may I know the lower and upper range of tender values in Europe and U.K. for the kind of medical devices we deal with?
Sorry, Sriram, can you please repeat your question?
May I know the lower and upper range of tender values in Europe and U.K. for the kind of medical devices we deal with?
That is very tough to answer. Honestly, it could be billions.
Maybe 1 billion.
Okay. Understood.
Every company has a different procurement process, and there is like some work on GPOs, some work on tender systems, and because we have a wide product range, I think total available TAM in Europe could be exceeding few billion dollars actually.
Okay. How many dialysis machines have we sold in H1 FY 2027, sir?
Over 300.
Okay, sir. All right. Thank you, sir.
Thank you. Next question is from the line of Simran Thakkar from Beas Capital. Please go ahead.
Thank you for taking my question. First, on extending the prior question, sir, thank you for the great insight on PendraCare and Citieffe.
Sure.
What are the
Simran, am I audible?
Simran, we are unable to hear you.
Okay. Am I audible now?
Yes.
Better.
Okay. Thank you for the detailed insight on the PendraCare and Citieffe and what are the problems that they are going through. But also, one color that I wanted on this missed earnout milestone, right? Because of which we have booked an exceptional item of INR 96 million. If you could just detail out what milestone was missed and why was it the case, that will be helpful.
Yeah. Simran, if you go back to our investor presentation when we did the acquisition for PendraCare, we mentioned that there are certain projects for which we had agreed on an earnout structure with the selling shareholders. One of the projects working on, I mean, in medical devices, as you know, a lot of projects which are in development stages tend to not cross the commercialization threshold, right? Because the company PendraCare does, in addition to selling their own products, also does a lot of contract development and manufacturing work with other customers. One of the projects did not pass the regulatory and clinical trials, and hence that project was shelved. Because of that, we reversed the contingent consideration which we had included in our financials.
I understand. Helpful. Sir, on second thing on the gross margin front, wherein it's a quarter-on-quarter reduction of some 73.4% to 70.1%. One is, how much was the reversal of Q1 inventory gains that we had, versus the RM inflation? If you could just dissect these two. Second part to this is, what is your FY 2027 gross margin outlook overall?
Yeah. So, again, in quarter one, our margins had expanded for two things. One, as we had called out, as we started to see raw material prices increase, we took pricing actions proactively to push out some of the cost increase to the customers, right? We were successful to pass on the price hikes about 4%-5% in quarter one. Because we were carrying inventory, which was low-cost basis in Q4, we were able to increase our margins in quarter four. Some of those gains are now starting to get normalized, right? That is why you see on a quarter-on-quarter basis, the margins have come down. Having said that, instead of a 200-300 basis point margin reduction called out at the beginning of the year, we are able to maintain margins close to our historical trend of about 68%, 69%, which I think has been good performance.
We expect the full year to be in the range of 68%-69% from a gross margin standpoint.
I understand. The third question is on the U.S. business. Because like you mentioned that we are targeting $8 million-$10 million by the year end. But then, seeing the U.S. policy changes because of the elections that are going on.
We cannot hear you well, actually. Very hard to understand on the call.
I understand. Am I audible now? I am sorry for this.
Yeah. If you could just go a little slow.
Okay. Sure. Sir, on the U.S. business, like you mentioned that our target is $8 million-$10 million. But looking now on the policy changes, right, due to elections, et cetera, do we stand on this goal, and how do we also see maybe 15+ approvals and 10 + more in the pipeline, and also the GPO contracts that you mentioned in the last con call? How are we there on the U.S. business front?
I think, Simran, it is too early to call out what is going to happen in the U.S. after this election. But I think the good part is that we have a lot of products in the pipeline for 510(k) approvals. As Rahul mentioned, we have approval recently, and we have guided $7 million, $7 million-$8 million this year. Then going forward, it will continue to increase, and we have mentioned clearly that next three, four years, we will build up to between $15 million to $25 million, and that is the plan. For that, already a lot of new development is happening in terms of product side, specifically related to U.S. market. We are also working, we are doing, undergoing some new products that we are undergoing testing requirements in the U.S. labs.
And once those testing requirements are fulfilled, then we hope to get approvals for those products also. I think that remains to be our focus right now. We will wait out for the next few months how things change in the U.S., and probably in the next quarter, we will be able to maybe give more clarity what we see changes happening in the U.S. with the new changes that happened recently.
Sure. Thank you so much. That is it from my side.
Thank you. Next question is from the line of Rashmmi Shetty from Dolat Capital. Please go ahead.
Yeah, thanks for the opportunity. This is Rashmmi Shetty from Dolat Capital. Just on the gross margin again, you mentioned the guidance is around 68%-69% for the consolidated level, right? So, you expect that in the second half, due to the inflationary issues, cost inflation and all, the gross margin will be soft in the coming quarters?
No. Rashmmi, that guidance was for standalone basis. On a consolidated basis, we should still be in 70% plus category.
70% plus category. Understood. On the debt part, I have just seen that the long-term debt has come down, whereas your lease liabilities have gone up. If you can explain that part. The short-term borrowings, there is a spike in the overall number. Will it be going to the March levels again at the end of the year, or it will be on an increasing mode only?
Yeah. I think the working capital debt or the short-term debt is primarily increasing because of the increase in working capital, right? As the business has grown and the working capital has increased, the short-term debt has increased in proportion, right? I do not see any difference in the trend there. The lease liability that you highlight has gone up because we have moved the underlying subsidiaries to IFRS accounting from start of this financial year. So their rental cost, which was getting expensed off in the P&L, is now getting accrued as under IFRS 16 or Ind AS 116.
Correct. Got it, sir. I understood that. Any further repayment in the long-term debt is expected, or it will be at the same level at the March end?
Long-term debt actually on the balance sheet at a consolidated level as well. One of our subsidiary in Italy has long-term debt, and that has a repayment plan agreed. That amount in total is, I think, about $6 million-$7 million max. That is getting repaid over next five years, so it should be between Yearly repayment is between EUR 1.5 million-EUR 2 million.
EUR 1.5 million-EUR 2 million. Okay, sir. Thank you, sir. That is it from my side.
Thank you. Participants to ask a question, please press star and one. Next question is from the line of Jasdeep Walia from Clockvine Capital. Please go ahead.
Hi, sir. Thanks for taking my question. Sir, in the renal segment on the dialysis side, you have been facing significant competition from Chinese players. What is the status on that, considering that you have grown around 20% in this quarter on a year-over-year basis? Does it imply that the competition has reduced? This is my first question.
I think, let me answer that. Basically, as you know, we had filed an anti-dumping case, and government had initiated that process, and this is a public knowledge. It has already been four months now, and I think what we hear now is government may take some action on this. There is some maybe movement in that direction, but as these issues take longer than what we think, we are just waiting it out. Hopefully, there is some relief coming to us, and I don't know how it is going to come, but it is a matter of time. On the competition part, yes, the competition is still there. Nothing has changed.
I think one good thing which has happened, and I think I wanted to highlight that also, which I didn't mention in my opening comments, that there is a recent notification from Government of India, DGHS, to use medical devices only one time. I think this is a very big thing which has happened because currently, dialyzers were used four to five times. Now with this notification, I think most of these dialysis chains will be now forced to use it only one time. Because earlier, they were able to leverage this cost by using the same product four to five times, though it is only designed for single use. Now this notification has been issued by DGHS, and that is a very important step. I think this will also increase the demand for the product in the long run.
I think what we are seeing is that once this is implemented fully, as all states are obligated to take this action and everybody has to follow this, all hospitals will also have to follow this. I think this will lead to a demand, but I think it will take some time to build up. We are also pretty hopeful that this is a very important notification which has issued, which is in our favor, which helps us to sell more products to the dialysis centers.
Sir, this new policy which has come up, when is it supposed to be implemented on the ground?
Immediate effect. They have said immediate effect. There is a DGHS circular, you can Google it. It is issued by DGHS, Directorate General of Health Services, Government of India, sometime in end of October. If I remember correctly, it should be 22nd or 23rd October. This is from immediate effect because today, the biggest challenge which the patients are facing in hospitals is reuse of devices and not properly sterilized, and hospital-acquired infections are actually increasing rapidly in hospitals because of reuse of devices. I think this is something which has to stop, and I think government has taken some initiative. Let's see how it is implemented because India is a big country, and implementation will take time, but at least there is a direction which is set.
Got it, sir. Sir, you had plans to take the renal business outside India as well. Where are you on that front?
I think, firstly, we are looking at Southeast Asia. I think that's the market we're developing. We are working with some, right now, consultants to help us explore that possibility. The first markets would be Southeast Asia markets, where we'll go.
When do the revenues start outside India in this segment?
Depends on the registration process. It's a cycle of one to two years. We already initiated in some of the markets. So either when we get registrations, but I think India is for us a bigger opportunity because what we are doing is full import substitution in the country. Still 90% market is import-driven. So I think for us, that is the big opportunity where we can replace that with our product. And this is the portion. So I think, and especially for machines, we need to set up the whole service setup and network and spare part and everything, and service engineers. So I think India, we are very well positioned to do that. So initial, maybe next 12-18 months, we will be more focused on India right now.
Got it, sir. Thank you. That's all from my side.
Thank you. Next question is from the line of Ashish Sethi from UTI Asset Management. Please go ahead.
Yeah, thanks for the opportunity. Sir, your acquired businesses, obviously you said your standalone margins are 27%-28%. By when do you expect your acquired business margins to trend above 20% mark? How long would it take?
Yeah, I think, Ashish, as you called out earlier, these companies, Citieffe is already operating in mid-teens, 14%, 15% EBITDA margin. PendraCare, before the crisis, were operating in 10%, 11%, 12% margins. I think once some of these crises and raw material prices come down, you should have PendraCare back to similar kind of margin range. Our even three to five-year target is to take these companies to close to 20% EBITDA margin, and which is what we are working on, which will come through the synergy projects that we are running with them, as well as the benefit of operating leverage as the business scales up from the current levels.
Yeah. In the overall scheme of things, at consol level at least, since you are guiding for 23%, 25% margin, we should not go below the lower end of the band, right, in the next two to three years?
Yeah, I mean, I think we would expect it to. Obviously, we will give the guidance as we go closer to the end of the financial year. But our aspiration is to obviously keep improving our consolidated EBITDA margins also as we grow the business.
Great. CapEx, hopefully, so what is the
I'm sorry, Mr. Ashish, your voice is breaking, sir.
Hello?
Yes, sir.
Sorry for that. The INR 500 crore CapEx guidance, what is the facility status? We have given a broader guidance of doubling our revenues in the next five years. Are we staying the course? Any update on that would be helpful.
The CapEx guidance for this current financial is between INR 200 crore-INR 225 crore. Of course, we have already laid out very clearly that by FY 2030, we will double our revenues. That's the plan. We are already, I think, on that path. A lot of CapEx have been currently undergoing to balance those activities in different plants and capacity. We are already working on it. Some of these new projects are also coming in, where we're expanding our orthopedic and cardiology business, which we started just one and a half years ago. I think that lot of that is happening also as we speak.
Yeah. Great. Lastly, sir, India still does not have a dedicated MedTech ministry. Since you are also on the cardiac stents, you obviously are manufacturing all those products.
Yeah.
Any chance, as far as the industry representation to the Government of India is concerned, would you guys have had any sense whether there would be a dedicated MedTech ministry in place?
That is the question which I cannot answer honestly, Ashish. But yes, currently the pharma ministry is taking care of, which comes under chemical and fertilizers, which has oversight on the MedTech industry. But the good news is that maybe we will hear in next, maybe Government of India is already working on bringing out additional PLI scheme for MedTech sector, because the first PLI did not work well, and because of the shortage of time when it came during the COVID period, so many companies could not meet the expected targets. So there could be something there. Then also there is a scheme for R&D promotion in MedTech. So there are some things which are happening. On the policy front, I think Government of India is very clear that they want more Make in India products to happen, and they want to reduce the import.
I think we will see some action from Government of India as time progresses on that front.
Great. Finally, since you are planning to double your revenues, roughly three to five years down the line, as far as the portfolio mix is concerned, how would you see infusion contribution panning over the next three, five years?
Yeah. I think, our infusion business growth is also expected to remain strong because a lot of our U.S. expansion out of India is infusion-driven, right? As the U.S. business expansion happens, infusion will also continue to grow. I think we will be happy if the infusion contribution remains between 45%-50% over the next four to five years.
Great. That is good to know. Thank you and all the best.
Thank you.
Thank you.
Thank you. Participants to ask a question, please press star and one. As there are no further questions from the participants, I now hand the conference over to Mr. Himanshu Baid for closing comments.
Thank you again, everyone, for your keen interest and very relevant questions you have asked. I think, as we have mentioned earlier, I think the Q2 numbers are a reflection of what we wanted to achieve during the whole year. I think next two quarters also, we are striving to achieve a similar or a better growth. Hopefully, we are very sure about meeting the expected range of EBITDA and revenue for the year. I think this has been a big year for us in terms of adding new customers and also new products. A lot of these will become more productive in next year, where we see almost 30 new products getting added in European markets through new registrations, which we are going through. Then, Brazilian subsidiary picking up and U.K. business coming up, where we have already established subsidiaries. A lot happening right now.
Hopefully, you will see much better performance in coming years. Thanks a lot. Thank you again, everyone.
Thank you, ladies and gentlemen. On behalf of Poly Medicure Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.