Good morning, everyone. I welcome you to the Aster DM Healthcare Earnings Conference call for the third quarter of FY25. The company declared the Q3 and nine months for FY25 results. With us, we have the senior management of Aster DM Healthcare, namely Ms. Alisha Moopen, Deputy Managing Director, Mr. T. J. Wilson, Non-Executive Director, Mr. Anoop Moopen, Non-Executive Director, Mr. Ramesh Kumar, Chief Operating Officer, Mr. Sunil Kumar, Chief Financial Officer, and Mr. Hitesh Dhaddha, Chief Investor Relations and M&A Officer. I would like to inform everyone about how we will conduct this call. All external attendees will be in listen mode only for the duration of the entire call. We will start the call with opening remarks by management, followed by an interactive Q&A session.
During the Q&A session, you will get a chance to ask a question by raising your hand by clicking on the raise hand icon in the Zoom application at the bottom of your window. We will call out your name, after which your line will be unmuted. You will be able to ask a question. We request you to please limit your question to two, but not more than three per participant at a time. Certain forward-looking statements may be discussed in this meeting, and such statements are subject to certain risks and uncertainties, like government actions, local political or economic developments, technological risks, and many other factors that could cause actual results to differ materially.
Aster DM Healthcare Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. With this, I will now request Ms. Alisha Moopen to start with opening remarks. Over to you, Ms. Alisha.
Thank you, Puneet. Good morning, everyone. Wishing everyone a healthy and happy 2025, and thank you for joining the Q3 and nine months FY25 earnings call. With a shared vision to enhance healthcare accessibility and excellence in India, we had announced a strategic move to merge Aster DM Healthcare with Blackstone-backed Quality Care India Limited, QCIL, bringing together two organizations with a strong legacy of patient care. This merger will create one of the top three hospital chains in India. This strategic alignment brings together two resilient and high-growth organizations with Quality Care's renowned network of CARE Hospitals, KIMSHEALTH, and Evercare. We're excited to combine Aster's presence and expertise. The merged entity will have a portfolio of 38 hospitals and over 10,000 beds, extending our footprint across nine Indian states and strengthening our presence in South and Central India.
Our unified goal is to deliver world-class healthcare to the communities we serve. While providing an update on the merger, I want to express my profound gratitude to our esteemed shareholders for their overwhelming approval of the resolution regarding the issuance of equity shares on a preferential basis as part of the strategic merger progress. Voting on the resolution concluded on 31st December 2024 with 92% overall shareholder participation. The resolution was approved with 99.99% of the votes in favor. Ahead of the merger, Aster will acquire a five percent stake in QCIL from Blackstone and TPG in exchange for a primary share issuance by Aster, representing a 3.6% stake. Following this, QCIL will be merged into Aster through a scheme of amalgamation subject to the necessary approval. This transaction marks a very important step towards the merger and facilitates a smooth integration once regulatory approvals are secured.
The share acquisition transaction further strengthens the commitment of both organizations to the proposed merger. The application for merger has already been filed with the Competition Commission of India and stock exchanges for their approval. The completion of the transaction is subject to the fulfillment of regulatory and compliance requirements, including no objection certificates and letters from the stock exchanges, approvals from the CCI, and the NCLT. Now, moving over to the financial performance. If we look at the long-term India performance, over the last five years, our operations have demonstrated strong growth with a revenue CAGR of 23% and an operating EBITDA CAGR of 38% up to FY24. The success has been driven by our strategic focus on capacity expansion as well as ARPOB enhancement.
At the same time, disciplined cost management, operational efficiencies, and an optimized service mix have significantly improved margins, enabling us to scale profitability while maintaining high-quality care. Now, coming to the nine months FY25 performance, our business has recorded a 15% revenue growth, reaching INR 3,138 crores in the first nine months of FY25. This was driven by a 12% year-on-year increase in ARPOB and a four percent increase in average occupied bed. Aster's operating EBITDA grew by 35%, reaching INR 613 crores, with EBITDA margins expanding to 19.5% in nine months FY25, up from 16.6% a year ago. This improvement was fueled by operational efficiencies, including a reduction in the ALOS, the average length of stay, cost optimization initiatives, and enhanced EBITDA performance in our lab business. Notably, our material cost, excluding the wholesale pharmacies, has decreased to 20.7% in nine months FY25 from 22.3% in the previous year.
Our net profit, adjusted for the merger transaction costs, grew by 65%, reaching INR 251 crores in nine months FY25, up from INR 153 crores a year ago. This is driven by very strong operational performance and higher other income from investing the proceeds from the GCC business segregation. Additionally, we have seen a positive shift in our payer mix, with the insurance segment's contribution increasing by over 300 basis points to 30%, partially offset by a corresponding reduction in the scheme business. Coming to our core business, hospitals and clinics. Our hospital business continues to grow strongly, with operating EBITDA margins improving to 22.3% in FY25, up from 19.5% of the previous year.
Specifically, our mature hospitals, those that have been in operation for over six years, have achieved an impressive EBITDA margin expansion to 25% in nine months of FY25, up from 22% a year ago, with an ROCE of 36%. Our strategic focus on a well-diversified specialty mix ensures that no single specialty accounts for more than 15% of the total revenue. This enhances our resilience and strengthens our long-term growth prospects in the healthcare sector. Now, moving on to oncology expansion, we are making significant strides in enhancing our oncology services with the launch of precision oncology clinics that has Aster Cancer Grid and Onco Collect. These initiatives focus on precision medicine and collaborative research, enabling personalized, cutting-edge cancer care. Now, moving to the new businesses, the pharmacy and the labs. As of 31st December 2024, we have 254 labs and patient experience centers and 203 Aster Pharmacy branded retail stores.
Our lab business has shown strong performance, achieving 14% revenue growth year-on-year in nine months FY25, while maintaining a positive EBITDA margin of eight percent, both break-even in Q4 FY24. We remain committed to our expansion plans. Over the past year, we have added 271 beds, including 100 beds in MIMS Kannur and 100 beds in Aster Medcity, bringing our total capacity to 5,128 beds as of December 31st, 2024. Looking ahead, we plan to add approximately 1,700 beds, increasing our total capacity to over 6,800 beds by FY27. Our expansion pipeline includes major brownfield projects at prominent hospitals like Aster Medcity, Aster CMI, and Aster Whitefield, which are progressing steadily to become high-capacity facilities with approximately 950 beds, 850 beds, and 500 beds, respectively. Moving to digital initiatives, I am pleased to announce the launch of the Aster Health app this quarter.
The app offers appointment management, video consultation, and digital health records access, significantly improving the patient convenience and experience. Now, going into the leadership changes, we are very pleased to announce the promotion of Dr. Prashanth N to the CEO of the Karnataka Cluster. Previously, he served as the CEO of Aster RV Hospital in Bengaluru. Dr. Prashanth N will now report to Mr. Ramesh Kumar, COO of Aster DM Healthcare India, and will be responsible for driving the continued growth and development of the Karnataka Cluster. Moving to some of the recognitions we've had in the past quarter, we're delighted to share that Aster DM Healthcare was recently honored at the ASSOCHAM Awards, winning the title of Best Multi-Specialty Hospital Group. Additionally, Aster DM Foundation was recognized as the first runner-up for Best CSR Excellence in Healthcare.
As Aster embarks on this pivotal expansion through the merger with QCIL, I sincerely thank our stakeholders for their continued trust and support. This merger marks a transformative milestone, creating one of India's top three hospital chains with over 10,000 beds and 38 hospitals. It will enhance our geographic reach, strengthen our presence in South and Central India, and drive synergies while ensuring a strong governance framework. With a clear focus on quality, accessibility, and patient-centered care, Aster DM Healthcare is well-positioned for substantial growth, operational excellence, and innovation. I will now invite our COO, Mr. Ramesh Kumar, to elaborate further on our cluster-wise performance. Ramesh, over to you.
Thank you, Ms. Alisha, so good morning to everyone. I'm really excited to provide you an overview of our cluster performance for the nine months of FY25. Actually, we have witnessed a continued growth and improved operational efficiency across all our regions during the year, and I'd like to provide a few highlights around the state. Starting with the Karnataka and Maharashtra cluster, actually, this cluster has shown strong progress with a total bed capacity of 1,446 beds and around 1,014 operational census beds. We have seen an occupancy improve by 241 basis points year-on-year, from 61% - 64% in this FY25. The revenue of Karnataka and Maharashtra cluster has grown by 33% year-on-year, reaching INR 1,054 crores in nine months of FY25, up from INR 793 crores in FY24.
The operating EBITDA for this cluster also saw robust growth of 58%, increasing from INR 154 crores in nine months FY24 to INR 244 crores in FY25. Our operating EBITDA margin also improved 23.2% in FY25, up from 19.4% in the previous year, demonstrating our ability to enhance profitability while continuing to expand the services, especially through high-end treatments in hospitals like Aster CMI and Aster Whitefield in Bengaluru. Next, turning to the Kerala cluster, with a total bed capacity of 2,635 beds, we have 1,971 operational census beds with a 74% occupancy rate. This utilization demonstrates the trust our patients place in the quality of care at our facilities. In terms of financial performance, total revenue from the cluster has increased from 1,489 crores in FY24 to 1,609 crores in FY25, making a growth of eight percent.
The operating EBITDA for the Kerala cluster has grown by 21% year-on-year to INR 382 crores in FY25. Margins have also improved to 23.7% in FY25 from 21.3% in FY24, reflecting both our top-line growth and our efficiency in managing operational cost. Finally, the Andhra and Telangana cluster has also delivered improved performance. With a total bed capacity of 1,047 beds and 781 operational census beds, the occupancy rate improved by 530 basis points. That is from 50% in FY24 to 55% in FY25. Revenue for the Andhra and Telangana cluster has grew by 16%, reaching INR 357 crores in FY25 compared to INR 307 crores in FY24. Operating EBITDA also grew by around 42% from INR 33 crores in FY24 to INR 47 crores in FY25, with margins improving to 13.2% compared to 10.8% in the previous year.
Altogether, our bed capacity, if you look at it, stands at 5,128 beds, with 3,766 operational census beds as of 31st December 2024. Overall, outpatient visits have grown by 11% and inpatient visits by 10% year-on-year in FY25, which highlights the sustained demand for our services. Looking forward, we are very confident in sustaining this growth trajectory by prioritizing our, especially the operational excellence, and broadening our reach, and of course, maintaining our commitment to delivering the exceptional care. We are all well-positioned to build in a positive momentum. I now request our CFO, Mr. Sunil, to elaborate on our financial performance further. Thank you.
Thank you, Mr. Ramesh. Good morning, everyone. For the quarter-ended 31st December 2024, India revenues have increased to INR 1,050 crores, up by 11% from INR 949 crores in quarter-end FY24. Our operating EBITDA has increased to INR 202 crores, with a margin of 19.3% compared to INR 168 crores in quarter-end FY24, with a growth of 20%. Adjusted PAT post NCI for quarter-end FY24 is at INR 81 crores compared to INR 62 crores in quarter-end FY24, with a growth of 30% year-on-year. For the year-ended nine months FY25, India revenues have increased to INR 3,138 crores, up by 15% from INR 2,721 crores in nine months FY24. Our operating EBITDA has increased to INR 613 crores, with a margin of 19.5% compared to INR 453 crores in nine months FY24, with a growth of 35%.
For the nine months ending 31st December 2024, our operating EBITDA margins have grown more than 300 basis points, increasing from 16.6% - 19.5% year-on-year. This growth is driven by several factors. The hospital and the clinic segment has achieved over 17% revenue growth, with margin expanding by more than 280 basis points from 19.5% - 22.3%. Our mature hospitals, which contribute 73% of our hospital and clinic segment, are now operating at an operating margin of 24.5%. Revenue growth in this segment from a combination of increased volume of more than 10% across our hospitals and a 12% rise in ARPOB and a six percent improvement in ALOS, alongside revenue assurance measures. The growth in operating EBITDA is a result of various optimization initiatives across our hospitals.
Our material cost percentage, excluding wholesale pharmacy, has steadily decreased from 25.3% in FY22 to 22% in FY24, and further to 20.7% during nine months FY25, making more than 450 basis points efficiency improvement over three years. Additionally, manpower costs and overheads have contributed through operating leverage to the EBITDA growth. Aster Labs achieved break-even in quarter-end FY24, with margins increasing to 3.4% in quarter-end FY25 and further to 9.4% in quarter-end FY25. This impressive turnaround has fueled by a strong 27% year-on-year growth in external business, improved operating leverage, and material cost efficiencies. For the nine months ended 31st December 2024, our capital expenditure totaled INR 238 crores, with approximately 65% spent towards expanding our capacity.
We have commissioned Tower 4 of 100 beds in Aster Medcity during the quarter, and over the next three years, we aim to further add nearly 1,700 beds, with the majority of these being brownfield expansions to ensure there is no dilution in our margins. Optimized capital allocation coupled with margin improvement, our ROCE has experienced a significant growth. ROCE surged by 430 basis points year-on-year, reaching 19.4%. Hospitals and clinic segment ROCE rose to 25.8% from 20.6% in nine months FY 2024. Matured hospitals saw an impressive increase in ROCE by over 700 basis points, reaching 35.7% in nine months FY 2025. Aster India net cash stands at INR 1,014 crores as of 31st December 2024. On that note, I conclude my remarks. We would be happy to answer any questions that you may have. I now request Puneet to open the question-and-answer session. Thank you very much.
Thanks, Sunil. We can now move on to the Q&A session. Before moving on to the Q&A session, I would also like to request all the participants if you can introduce yourself with your name and the company that you are associated with before asking the questions. If you are not associated with any company and you are an individual investor, you can highlight that also. Moving on to the Q&A session, the first question is from Amey. Amey, can you unmute yourself and ask the question?
Yeah, am I audible?
Yeah, right.
Yeah. Thank you so much for giving me an opportunity. I have a first question on the Kerala performance. Is it possible to highlight what were the key reasons for the low growth for the quarter?
Yeah, sure. No, thank you. Thank you, Amey. So there have been some changes, of course, in the flu season as well, if you look at last year. When you look at the flu season, it extended into Q3, which also helped in the occupancy and the revenue. However, when you look at this year, the flu season actually ended in Q2. So a little bit, definitely, there's been a footfall difference we're seeing quarter on quarter. Other than that, from an MVT perspective also, there has been some reduction in the footfalls from both GCC as well as Maldives, which were key regions for Kerala. But having said that, I mean, we're seeing a nice restoration that has happened even in January as we talk about it.
But I think we should also be mindful of the fact that there were some leadership changes that happened last quarter for our main flagship unit in Medcity. We've had the new CEO who's now on board as well. So we expect some of this, a little bit of the muted growth to be very temporary. And already in January, we are seeing a restoration. Anoop, if you wanted to come in as well with anything or Ramesh?
You know, you have covered it, Alisha. I mean, so with the new leadership in place, I mean, things are really looking positive. In January, we could see the traction happening, and in the coming months, we are hopeful that that ramp-up is going to be very positive.
Sure. Thank you so much. The second question I have is on the occupancy of the more-than-six-year-old vintage hospitals, which is around 65%-67% I believe for nine months. Is it possible to highlight which are the hospitals here that would be dragging the overall occupancy? And is there a scope for this occupancy to increase in the future? Thank you.
Sunil, would you want to add anything?
Amey, thanks for the question. See, with respect to above six years, it is a 67% occupancy because all our matured units are there. Two important reasons, which is also bringing down the occupancy, is also the important thing is we added 250 beds in the Kerala region, right? In last, if you look at the quarter-end, we added the 100 beds in Kannur. And also in the quarter, I would say in the current quarter, the quarter-end closing, there we added another 100 beds in our Aster Medcity Hospital. And also we added additional 25 beds in Kottakkal and also another 25 beds added in PMF. So these are the almost 250 beds added. So that means what has happened is the operational bed sources have gone up. That's where you can see occupancy bringing down largely, right? That is very specifically Kerala cluster.
Yeah, even in Karnataka cluster, we can see a little bit, see, as Alisha called out, last year, flu season moved from quarter two to quarter three. If you look at the medical and surgical mix also, we had almost 60% medical mix as compared to 40% in the last year. And now 60%-40% was the ratio in the last year, quarter three. Now it has changed, right? So what has happened is that the revenue, the growth, what we've taken in surgical mix, it's very similar. But at the same time, your medical surgical mix has done a large change. That is also one of the reasons why in Bengaluru, you can see a little bit of a reduction in occupancy. But otherwise, you can see, and also very important, Kannur, with the current before on adding 100 beds, it used to be run at 95% occupancy, right?
We used to manage with the transit beds and everything. Now we don't have that issue. That's where that source has come down. So these are the multiple factors, I would say, why the occupancy is lower. It's across the board.
Sure. This last question I have on the Karnataka and Maharashtra cluster, the performance has been very good for the last few quarters, the growth as well as the profitability improvement. Is it only led by the Whitefield commissioning, or is there anything other than Whitefield, any other unit which is contributing to this improvement? Thank you.
Amey, even Karnataka Maharashtra cluster, yes, I would say Whitefield is driving the growth. No two ways about it. Because Whitefield only, because last two years, we were running with the Whitefield block C, which is only 50 beds women and children care, where the revenue was lower and also the ARPOB was lower at INR 40-INR 50K. Only in the last October, we started the A and B block, which is a true multi-specialty hospital, wherein because of which ARPOB has risen to more than INR 75-INR 76K in quarter three, very specifically in Whitefield. That is one reason. Growth very much, growth has been driven Karnataka and Maharashtra cluster, I would say majority growth is coming because of the Whitefield doing really well. At the same time, our RV Hospital has done well.
There also, you can see, even though you can look at an overall 29% ARPOB growth, what we have in quarter three, even for a nine-month figure, when you look at, there is a 33% growth in revenue. And that is possible only because there is a good performance from Whitefield Hospital. There is also very good performance from RV. Again, they are growing at more than 12%-14%. Then also very good growth in terms of Aster Aadhar Hospital, which is in Kolhapur. So there also, there is a tremendous growth. CMI, as I said, CMI is affected barely because the growth is not visible. Because if you look at last year quarter two, quarter two to quarter three, the revenue was quite flat because of the flu cases.
We have seen that in this quarter three from quarter two, there is no such medical cases due to which the occupancy has come down there, but otherwise, most of the hospitals are really doing well in Karnataka.
Sure. Thank you so much. I will go ahead.
Thanks, Amey. The next question is from Mr. Kunal Randeria from Axis Capital. Kunal, can you please unmute yourself and ask the question?
Yeah, hi. Good morning. So just taking over from the previous question. So in Whitefield, it seems that all the blocks are now commissioned, including women and child. So wondering what more headroom you...
Ramesh, do you want to come in?
Sorry. Kunal, you got muted.
Okay. Okay, sure. I hope I'm audible now.
Yeah.
Yeah.
Yes, so I was just asking about the Whitefield facility. So all your blocks, including the women and child and the ENB are commissioned. So just wondering how we should see the growth from here on.
Kunal, so what we have presently, we have A block, B, and C, all the three blocks commissioned, as you rightly said. This is around 350 beds. Now, a D block is also coming up by the month of June, which will add 150 beds, taking the bed capacity to 507. Right now, the occupancy is wobbling around 50%-52% in the operational beds of existing A, B, and C block. So we are not still yet maxed the capacity. So what is doing well is right now the oncology high-end work. We have been doing HIPEC, PIPAC robotic surgeries, IOERT, and these are all high-end surgeries we have been doing.
Thereby, the performance of onco is really doing well. Neurosurgery, also high-end surgeries have been happening. The ARPOB is really good, and overall performance by most of the departments, they have been doing well because of the high-end cases. So still, we have capacity, and by June, we will be adding this 150 beds more. I hope I have answered your...
That's clear. That's clear. Thank you very much. The second question again is on the Kerala cluster. So you mentioned there has been a leadership change. So I was wondering if you can share what are some of the changes that the new team is putting in place?
Yeah. So Kunal, what we said is the leadership change. I would say that's a small transition because now we have taken over immediately. There was some kind of the contract changes for the MVT, which was coming in a little bit with the Maldives. And we have stopped a little bit since occupancy was slightly on the higher side. We had to slow down on the ECHS patients and all that. So some correction had to take place. So there was a drastic slowdown. Some intake had happened. And also the seasonal changes, what we spoke about, the flu impact, which was there last year at the same time. We had a better impact. And the ICU occupancy was slightly on a higher.
So all put together, it is, I would say that small, the transition has happened during that time. And now we have a perfect leader, Dr. Jay, in place to take over, and it has already started. So as Ms. Alisha has rightly mentioned, the January has really taken off. It is just that last one quarter what we have really seen kind of slowing down. Otherwise, it is back to track.
So Kunal, just to add to what Ramesh has said, I think strategically, we have sort of said that we want to focus more on the quality of the patients that are coming in as well, right? Earlier, we were talking much more volume-based. So that was where the strategic shift in terms of moving some of the lower schemes and all has happened. So that's kind of the direction with Kerala also going forward because you're seeing more and more corporates coming into Kerala. You're seeing that there will be pressure on the volume. So we said with our market leadership in Kerala, we should be focusing more on sort of improving the ARPOB, quality of the occupancy. So that's a general direction we have said we will take.
Sure, sure. That's helpful. But in that regard, have you made some changes to your pricing strategy also? And secondly, Alisha, the point you made on volumes, there's one big competitor who's entering Kerala with around 3,000 beds also in the next few years. So just wondering whether there'll be a lot more supply than demand here?
Yeah. So I think, again, like I said, we do have a very good legacy in Kerala and leadership position. And we also believe that once the merger is complete with the KIMS Trivandrum asset also coming as part of the merged entity, we will definitely have a very strong position. We'll continue to have a very strong position. There will be some pressure on volume, which is where we said, let's focus more on stabilizing our ARPOBs and not really play the price game. Our pricing strategy, as the year is ending, we're working on it for the next quarter, how we should be thinking about it. But we'll be agile and dynamic in that process. But we don't want to be playing the price pressure game, to be honest.
Sure. Perfect. That answers all my questions. Just one more, if I can squeeze in, would you by any chance give us some indication on how CARE Hospitals performed in the last quarter?
I don't think it's recommended. I mean, we don't have access to that information yet because we are still waiting for some of the CCI approvals for sharing all of that data, to be honest.
All right. Thank you very much and all the best.
Thanks, Kunal. The next question is from Mr. Veenu. Mr. Veenu, can you please unmute yourself and ask the question, please?
Hi. Good morning. Just a couple of questions from my side. So last quarter, your margins had seen a significant improvement, both QOQ and YOY. And if I remember correctly, you had mentioned some structural changes you have made, etc., which has led to this margin improvement. Could you give an update on that, especially in the context that this quarter compared to last quarter, we have seen slightly softer margins? Are these kind of structural measures that you are taking, are they done, or is there some more margin expansion we can see? And if you could give some indication of what sort of sustainable margins can we look forward to?
Thank you. Thank you, Veenu, for the question. Yeah, I know what you're referring to. So quarter two, we were at 21.4% margin. And now at quarter three, we are at 19.3%, right? So you're saying there is a dip in there. How do we address it? See, also we should look at what is the nine months because quarter on quarter, there will be a lot of case mix changes comes in, due to which always the margin always will return. But when you look at a nine-month number, at a consolidated India, we are at 19.5%. And the hospital and clinic, which is our core segment with the 93% revenue, that is at 22.3%. And even the 19.5%, if you look at year- on- year, we added more than 250 - 300 basis points in the current nine months as we compare to the previous nine months.
That's the expansion which has happened. Now, very specifically to the change which has happened with the quarter two to quarter three is that, see, there are multiple reasons. One is the material cost itself. When you look at our specialties, because in the oncology specialties, what we have, cardiac has grown by 16%. Your oncology has grown by 28%, and also your neuro has grown by 19%. So you can see that these are top three departments, which is driving the revenue. That's one of the reasons why ARPOB is very, very strong. At the same time, whenever oncology is taking the front in driving the growth, usually we see that the material cost takes impact. That's where what also we have seen is that almost near to one percent, material cost also has increased between the quarter two to quarter three.
If that wouldn't happen, we would be more than 20% EBITDA margin, even in the quarter three at the consolidated basis. That is one thing, but again, as I said, oncology is something which we are taking very strongly. We have Dr. Somashekhar also who is heading our Aster Institute of Oncology. And across the board, we are trying to basically specialize and increase the oncology specialties per se, so all these things are a very important thing for to cater to the patients. At the same time, they have certain negative outputs also with respect to medical cost, but as I said, this is just a quarter-on-quarter glitch, and we think we will be able to stabilize. Even with that, we are at a 20.7% medical cost at a India level on an nine-month basis.
So we still see that there is a certain room to further if we bring efficiency. In terms of the optimization measures which we have brought, as I already called out in my speech also, we got more than 450 basis points in the last two and a half years. I would say very specifically, it is approximately 33 months we are able to bring so much. And still, we see that in material cost, there is another 50-100 bip s still available for us to do it. Now, the next is that we are also bringing certain solar power efficiency. For example, we have almost a 26-megawatt plant that is in work in progress in Kerala. That should give more than, I would say, INR 15-INR 16 crores worth of savings in the coming year. This is expected to be operational sometime partially.
It should get operational in this quarter and partially in the quarter on FY26. So I would say, and also non-medical consumables is something which we have not worked upon. So that is something which is going to happen in the next year. So from the efficiency point of view, still, there is a lot to do it. But just on a broader sense, which we have even previously spoken today at consolidated India, we are at 19.5%. I expect in a couple of, I would say by FY26-FY27, I'm talking about, we should be somewhere near 21%, right? And also from the hospital and clinic segment, which we are today at 22.3%-22.4%, there you can expect around 24% margin. I think this is very much these are not something which is very updated this one.
These are all very sustainable margins which we can reach and continue to be there.
Understood. Thank you. Next question on just further clarification on Whitefield Hospital. So your presentation says about 159 beds in Block D is going to be added in FY25. So you also told about some beds being commissioned in October. So what's the current bed status? And is the total number of beds in the cluster 1,446 which you have given? Does that include the beds that commissioned in October and the 159 of Block D?
Veenu, I referred to the beds we commissioned in Kerala around 250 beds. Whitefield overall is around 500 bed hospital, wherein we have commissioned 350 beds. Balance 155 beds we were expected to commission in quarter four. But as Ramesh called out in the previous response, it has moved to around May or June. It's just a two, three months change which we have done. But otherwise, it's on plan to operationalize sometime in the quarter one of FY26.
Understood. I thought you told in October some couple of blocks were commissioned in Whitefield.
Oh, okay. I was referring to last October.
Sorry. And finally, when do you think by when do you think you can give some sort of pro forma joint financials of CARE QCIL plus Aster?
Hitesh, you want to take it?
Yeah. See, as Alisha mentioned, we are going through some of the regulatory approvals, and hence, both companies, as suggested by our lawyers, don't share any information with each other on all these data, so I think once we get some of the relevant approvals, we will start looking into that as well.
Okay. Got it. Thank you. I'll jump back. Thank you.
Thanks, Veenu. The next question is from Mr. Amrish. Mr. Amrish, can you please unmute yourself and introduce yourself as well?
Thank you for the opportunity, Amrish. I'm an individual investor. First question is on this recent IRDA Circular on limiting senior citizen insurance increases and impact possibly on ARPOBs going forward. So the health insurance companies seem to indicate that the two ways they will deal with this, one is, of course, they'll spread it across their portfolio of other custom clients. But the other is they say that they will have to renegotiate packages with hospitals. I'm not sure if it's too early to comment on this, but is there any reaction you may have considering now our insurance is 30% already and growing?
Let me add the initial response, Amrish, then Ramesh can add to that. See, as of now, we don't have any such, I would say, response which has come from any insurance companies. And today, very specifically in Maharashtra, Telangana, and Karnataka, that's where the GIPSA is there. There, almost 50%-60% of our insurance company insurance business is coming from GIPSA. There we're getting a usual. I'm talking about recently, we had a price increase. After two years, we had the increase which has happened. So we are not seeing any such requirements which has come up as of now. Maybe going forward, we are expecting some discussions to happen sometime in the quarter on FY26. But as of now, it's very early to comment on this one, Amrish.
Okay. Thank you.
Thanks, Amrish.
Yeah.
Yes, another question?
Yeah, second question. Just wanted to get some logic or rationale for the dividend announcement, considering we'd already given a very healthy and I understand we had cash leftover, but just keeping in mind our expansion plans, any rationale for the dividend?
Yeah, Amrish, see, I think as Aster as a group we listed sometime in 2018, right? Last six years, we're not giving any dividend to any shareholders, right? And the first dividend is the special dividend we gave in April and the final dividend which we declared from our AGM around in August. That's for the FY24. So other than these two, we have not released any very specific dividend. See, from the expansion point of view, we are today at a net cash of INR 1,000 crores plus. And also, we have a very good cash flow from operations, right? Almost my 80%-85% of my pre-indicated EBITDA, we have a cash flow from operations. We have a very good free cash flow also.
For example, the 1,700 beds which is in pipeline today, as of 31st December 2024, we need approximately INR 1,100 crores for a period of three years. I'm talking about the 25 closing, 26, and 27. You can see the way EBITDA is increasing. We should have more than 600-800 upwards of cash flow from operations every year. Keeping that in mind, even for the balance, whatever the existing line of credit, we are even not looking at borrowing any additional money. With existing cash flow, we're able to manage the, what you can say, the expansion plans. Even with that, with the additional coming in, at least in next five years' time, if you have three to four years' time, if you look at, we can even add more than 1,500, 2,000 beds.
I'm talking about the brownfield or the satellite beds which we can add without adding any more debt. So keeping all this in mind, we thought, unless we're also at the same time looking at any inorganic opportunities. If something really comes up, we should always look at it. But otherwise, we also thought that we're not rewarded the shareholders. And that's where we thought we would like to do that by through interim dividend. Alisha, you would like to add anything to this?
No, I think you, Sunil, you've covered it. I guess, Amrish, since the merger has also been sort of finalized, we said that that takes care of a large scale-up for the organization and exactly like Sunil mentioned, in terms of our organic expansion, we've kind of got the internal accruals for that. Even when you look at our leverage, it's hardly there, right, so we still feel like we're in a strong position to continue to look at both in our organic expansion and organic is taken care of, so we said, why not give some back to the shareholders with the performance and to catch up for some of the years we couldn't do it?
Thank you.
Thank you for that.
Yeah, we would like to highlight that we'll be giving preferences to attendees who have not asked the questions so far. So in that line, next question is from Mr. Harith. Harith, can you please unmute yourself and ask the question, please?
Hi. Hope I'm audible?
Yes.
Yeah. So thank you for the opportunity. So the expansion plans that you've shared, I can see we have around 450 beds in Trivandrum, 300-odd beds in Hyderabad. And these are markets where QCIL is quite strong, especially Trivandrum through KIMSHEALTH. They have a strong presence in that region. So any change of plans or any rethink on some of these expansions post the merger?
Just to give a yeah, please.
Alisha, you want me to go ahead?
Yeah, go ahead.
Yeah. No, Harith, see, just look at, we have to look at always the demand and supply, right? The gap. When you look at us very specifically in Trivandrum, you can see a lot of fees coming in already. Other than the KIMS Trivandrum, there is no other very, I would say, up to that mark, there's no corporate hospital in Trivandrum. If you ask me, there are still three to four big hospitals can really come and survive in Trivandrum. And also, see, Trivandrum's catchment area is quite large. If you look at from the Kerala belt altogether, right, from north, you've got so many hospitals, including Calicut, Kannur, and Kottakkal, and then Kochi in the central. But after Kochi, if you go down south, you don't really have hospitals there, except for the main hospitals in Trivandrum.
So that way, we don't see any reason why we should not go ahead and do that. So there is no real change in plan. We are very happy to do that. If we don't do it, someone else will come and do it. So there is no difference in that. Next, in the Hyderabad bit of it, if you look at today, already, there's still a gap of almost 3,000-4,000 beds. And as per the market research report, there's still another 4,000-5,000 beds coming up in next five years' time. So with that, we wanted to grow there in Hyderabad. Again, we don't see any change in plan. Also, QCIL, if I'm right, they have somewhere between 800- 800+ beds. And with this one, we will have more than 1,000-1,200 beds. This also helps us into clearer leadership position in Hyderabad.
Okay.
Got it. Next one, Sunil is on the labs and pharmacy segment. On the pharmacy side, we've seen a muted YTD performance, and you talked about some change in sourcing. But the first question is the store count has also declined. So the change in strategy in terms of sourcing, why there is a lower store count is the first part, and how we should think about growth next year.
Yeah. Thank you, Harith. Maybe initial part I'll cover. Maybe Ramesh can add to that. See, when you look at currently, we have taken more than 250 around facilities. Out of that, the processing lab is 14. See, here, we are only seeing 14. In addition to that, they also have more than eight to nine labs as HLM labs. That is our Aster Labs which they do it. That's also more or less you can use it as a satellite lab. If you club it, you have really more than 20 labs across Karnataka and Kerala put together. And in addition to that, we also have more than 240-plus collection centers. Majority of it is in Kerala and 40 - 50 in Karnataka also, which is very true. One thing is true is that initially, we are spread out into Tamil Nadu and other particular states.
But we are very mindful that we want to be there as a very clearly called out. We were trying to bring an app, right? An app is already launched, I would say, in January. Basically, we are already in CMI has already been into the digital app. And we're expecting all our hospitals to get into the app sometime in the March, right? With that, and also, we are also trying to bring in labs and pharmacy as a phase II sometime in the quarter three in the FY26. With all this coming together, that ecosystem what we wanted to create. And if the ecosystem is to work, means the labs and pharmacies should be within the districts or the states where the Aster Hospitals are present. That is one of the reasons why we are curtailed to the regions where our hospitals are very, very strong.
That is on the growth bit of it. Now, at the same time, we don't have to grow too much on the processing labs because logistics is very easy today. And also, as I said, we have 14 plus another eight to nine HLM labs. 20 plus labs in these two states is more than enough to cater to our own patients. In addition to that, what we will be increasing now is the patient collection centers. That is our franchisee PECs, right? So there already, you can see there's a growth there around 240. And we expect it to grow more in Karnataka and further in Kerala. In terms of the growth, see, most important thing for us is to improve the non-Aster business within the Aster Labs. A year back, if you look at 72% or 78% of the business used to come from the Aster business.
Now that has reduced. Our non-Aster business has moved from 20%-23% to almost 28%-30% in the current nine months' period. And we expect this to grow in a very big way in the coming year because it's always the initial growth which takes time. But now that we have got the stability there and we are able to break even, I think the next year, the growth, I would say, see, Aster business, which is part of that, will grow as per the Aster Hospital because it's a captive business. Only the non-Aster business, I'm expecting to grow more than 35%-40% in the coming year.
Yeah. Sunil, thank you for that. My question was more on the pharmacy side. We have a store count of around 200 now, which was 250 at the beginning of FY24. So this decline is what I'm trying to.
Yeah. So I explained the lab a little bit. Pharmacy, 250 we had initially, but again, that is again spread out over three states. That is Telangana, Karnataka, and Kerala. The idea was that because you know that we were bleeding cash there. And now the only idea was that we wanted to limit the number of stores. We will for very sure will not go below 200. We will maintain above 200. Also, wherever the locations are bad and we think that we are not able to drive the yield per day per store above certain benchmark level, then we are moving. So it's only the movement which is taking time. Otherwise, we will be around 200-225 stores overall. We will never go below 200 stores. But the concentration now, as we promised also, is to break even there.
So, as the way we broke even labs in FY24 last quarter, we're expecting to break even sometime in the last quarter of FY26.
Okay. And last one, with your permission. Last few months, we've seen a few of your former CXO-level leaders joining one of your competitors. And then that competitor has big ambitions in Kerala. They've already announced a few projects. They're talking about setting up a large hospital in Kochi. So is there an impact that one should expect for Aster from these aggressive moves by this particular competitor?
So let me come in here, Mr. Harith. So we feel that, see, now with more and more corporates coming into Kerala, I think for a competition point of view, it is only going to put pressure on the ARPOB levels or the price increase. Because as you know, the ARPOB compared to the other regions, like when in Kerala, it is between INR 20,000-INR 40,000. In Karnataka, it is INR 60,000 or INR 70,000 above. So Kerala has always been a price-sensitive market. And we already having a legacy there, a brand, and also all seasoned units, we stand at an advantage there. So anyone who is coming in, they will be forced, then they will have a pressure on the price. Otherwise, they cannot perform. So either they will be forced to increase the prices, which in turn, again, will raise the ARPOB level.
So we see that competition is going to. It's not going to affect Aster in any way. We see it positively.
Okay. Thanks, Harith. That's all from my side.
Thanks, Harith. The next question is from Mr. Nikhil Mathur. Mr. Nikhil, can you please unmute yourself and introduce also yourself and ask the question?
Yeah. Am I audible?
Yes.
Yeah. Thank you for giving me the opportunity and congratulations on a great set of results. So the highlight of this quarter was Telangana cluster and Karnataka and Maharashtra cluster. So what were the drivers for the margin improvement in both of these clusters? And can you also highlight what drove the occupancy specifically in the Telangana and Andhra cluster? So that is my first question.
Ramesh, do you want to come in?
So as you rightly said, the Karnataka-Maharashtra cluster, you have seen the performance is well, especially the ARPOB has gone up. The reason why ARPOB is good is because of the case mix. Especially in Whitefield, you can see the high-end cases have gone up. So the surgical numbers, if you really look at two or three departments like Onco and Neuro, they have been performing very well. So it's all to do with the surgical mix where the ARPOB has really gone up. And you'll find, like I mentioned about the flu season, which has come, usually the average length of stay of the flu patients are a little bit high. The ALOS also to some extent because surgical numbers have gone up, high-end cases. So we find the ALOS also come down by around point two.
So, thereby, it is also the performance has gone up very well in Karnataka-Maharashtra cluster. As far as Andhra is concerned, it is also to do with where Prime Hospital primarily we have taken over Prime Hospital last year. At the same time, couldn't really do well. Now they started performing. It is also we had new clinicians onboarded there. Thereby, the Prime has started doing very well. We also have the Tirupati Sadguru Hospital, so it is also doing very well after we had taken over, so the Tirupati Hospital has contributed well, and of course, the Andhra cluster, you'll find Ramesh Hospitals, especially Vijayawada Hospitals, have done exceedingly well. That is because of the cardiac season during the third quarter, because they have started really doing well, so predominantly being a cardiac hospital, that's how the Andhra Telangana cluster has started doing well.
Okay. That's great to hear. So my second question is, what are the peak ARPOB potential for the Karnataka and Maharashtra cluster as well as Telangana cluster? Because on a nine-month basis, we can see that ARPOB in Maharashtra and Karnataka has reached INR 60,000. And in Andhra and Telangana has reached INR 29,500 approximately. So is there a further scope for improvement as soon as the seasonality goes off?
It will sustain. As I told you, the surgical numbers, I'm sure the surgical numbers are going to grow. And of course, the seasonalization should have minimum impact as far as I think because it will be an add-on only. It doesn't bring in if we are able to sustain and grow the surgical numbers with these high-end surgeries, I'm sure our ARPOB would also continue to grow.
Okay. That's great to hear. And so my third question is, when we look at the maturity-wise hospitals, we are over six years have 24.5% operating EBITDA margin. Three to six years have approximately 22%. And over zero to three years is approximately 13%. So let's say in the next two to three years, our three to six will move over six, and zero to three will move over three to six. So when we are guiding towards 24% sustainable margins, can we have an upside risk over there? Because there will be a drastic improvement because we have six hospitals in zero to three years. So those are going to drive margins a little more further upside. So is there a further scope beyond 24%?
I'll leave it to Sunil.
Yeah.
So Nikhil, see, the zero to three years, if you look at, there are basically six hospitals. Out of that, the biggest is your Whitefield Hospital. Otherwise, all other hospitals are very small, 100-bed hospital, which is basically out of six, even four hospitals are our overall Maharashtra hospital, which we already guided previously saying that ARPOBs are going to be low. It is going to be around 20, or even some places it's lower than that. And also the margins, you don't expect it to be around 20. It's around mid-teens. That is the number. But even though it's going to be mid-teens, you don't expect it to drag the margins in any way. At the same time, it cannot go beyond that also, right? So for example, our Tirupati Hospital, Narayanadri, they are all doing at 16% margin with a good occupancy.
We expect maybe another 100 basis points improvement because ARPOB is going to be lower. The way case mix is done, it's more towards the cardiac and the ortho there. Also, the doctor models are very different in Tirupati. All this will impact in driving the margins. But at the same time, Whitefield today is doing high-teens margin. And at a full maturity with another block D coming in, you can look at very similar to what our CMI hospital is doing near 30%. With all these things being in picture, I think around 24%-25% is a good number to be there.
Okay. Thank you. That's it from my side. And congratulations on a great set of numbers. And all the best.
Yeah. Thanks, Nikhil. We would like to highlight that we'll be giving preferences to attendees who have not asked the question before. So in that line, the next question is from Mr. Nikhil. Nikhil, can you please unmute yourself and ask the question?
Hi. Am I audible?
Yes.
Yeah. Yeah. Good morning, all. I have two or three questions. The first question is on the rental cost for full year FY25. From the cash flow statement, first off, it is around INR 65 crores. So should we analyze the full year FY25 number at around INR 130 crores rental cost?
See, you're referring to the rental cost. There are two parts. One is on the variable cost also. If you include variable cost, yes, you can go up to INR 120-INR 125 crore.
Okay, and with the expansion that will happen in the next two years, how should this number change? Should it increase in proportion to the bed count increase?
Not very much to the proportion because Block D is one which is coming in Bengaluru. In addition to that, all your Kerala hospitals which is coming up doesn't have these huge rentals coming in. So you don't expect it to grow in proportionate to that.
Okay. That's helpful. Secondly, on the Kerala cluster side, what percent of business is coming from international patients today?
Kerala, see, in Kerala, majorly the MVT patients are driven by Aster Medcity Hospital, right? In addition, Calicut, Kottakkal, they do very, very minimal. But when you look at only the Medcity, it's around 12% of your total business comes from MVT.
Okay. So overall, I suspect it would be six, seven percent, perhaps not more than that, or eight percent.
Yeah. A little less, yes.
Okay. And in the past, can you give some indication that how does your patient inflow behave versus INR's performance at a global level? I mean, if INR were to be weak, let's say, versus dollar in the coming months or so, how does that impact your business coming from Middle East or those areas?
See, with respect to, we don't expect. First of all, all our MVT billing happens in the INR. We don't do any foreign currency to ensure we hedge ourselves from the fluctuations, right? For example, if a patient bill is going to be around INR 5 lakh, we expect the other party to transfer at that particular point of time equal into that INR. So we don't do foreign currency any billing foreign currency. We always do the INR. That way, we are always hedged on the foreign currency fluctuations. And also, currently, we do around only four percent or 4.5% in terms of MVT business across India, I'm referring to. So there is still very high scope to grow because new markets which we have not tapped into it.
And even the SAARC region, we have not really got many patients from Bangladesh or other region here. So keeping all this in mind, there is still a very, very big potential for us to explore in MVT. Rather than the downside, I would say there is a lot of upside here, Nikhil.
Yeah. I think that was a definite too, let's say, find out what to weaken. In the past, when such situations happened, has it led to improved competitive positioning versus many other countries that you compete with? Perhaps, I mean, 2013, 2014 is one period where you can have some experience of this. I'm not sure if you can call out something on that front.
Nothing as of now.
Okay. Got it and one final question. Can I just see one more?
Please come in the queue.
Okay. Because we have some more people in the queue as well. Yeah. The next question is from Mr. Proling. Mr. Proling, can you please unmute yourself and ask the question?
Hi. Am I audible?
Yes.
Yeah. Thank you so much for taking my question. So two questions from my side. One is on Kerala, right? So while you mentioned January is back to normal, right? But some of the changes that you have highlighted there are focused on, let's say, value or upper end of the mix versus volumes, so on and so forth, together with the leadership change. This, at least to an external party like us, sounds as if this might take some time, right, before it settles down. So when you say January is back to normal, are these changes already in place before the quarter as well? And is there anything to do with, I mean, some of your employees going and joining competition? And do we expect such kind of transitory issues in some of your other clusters as well?
So, Proling, let me come in over here. First of all, if you really look at, see, Aster's base is pretty if you look at Aster Medcity and across all the chain of hospitals what we have, there is a good amount of patient base Aster is already having. So it doesn't mean the employees moving out, they can have. And those who have joined the competitors also, competitors doesn't have an existing hospital to divert the patient out for that matter, create that kind of impact. It is all to do with a little bit as we told about the seasonal fluctuation, redirection on our MVT patient GCC. We had a little bit of patients coming down. And for that matter, Maldives also was slowed down drastically.
So only MVT bit impact, a little bit to do with the seasonalization, and a bit to do with what you call. I wouldn't say that any changes as far as the employees thing and where they are able to divert the patients. It is definitely not going to happen because even competitors doesn't have a hospital within the vicinity to attract, divert the patients. So that's about Aster Medcity. That's the reason we were saying now the leadership is in place. We have a CEO who has come in. We have a COO who's come in. He's already two months in the system. And we leadership are there, including it's a flagship hospital where chairman is directly involved in interacting with the clinicians and having a kind of base over there.
So I really doubt if there is any chances of patient getting diverted or for that kind of performance coming down.
And those are changes you see in any of your other clusters, right?
Let's see. Competition is bound to be the next challenge because, yes, as and when they come up with the new facilities, there might be some small disruption here and there that is bound to happen not only with one competitor. I mean, most of them, there will be a kind of, but we try to keep our clinicians. They are very happy. They are the people who make the difference. For that matter, I think almost all clinicians are intact. The other staff, it won't make a major difference. The revenue-generating doctors are the key people. If we are able to ring-fence them, I think we are there. So that is what we are doing right now. And we are able to; almost all our clinicians are happy.
Right. And one more last question from my side on the merger, right? While it's in the regulatory kind of court as to when we get approval, but before we get the approval, what are the things that we can do from our side which will ensure that the transition happens quite smoothly or some of the synergy benefits that we envisage can be monetized or materialized sooner than expected? I mean, are there enough levers at our end that we can do things before the actual merger from a regulatory standpoint rectifies?
Yeah. Hitesh, will you come in here?
Yeah. So there are definitely a lot of levers. At the same time, I think we would not like to jump the gun here until we get some of the key regulatory approvals. But definitely, when we were doing this merger or announcing this merger, right, we had thought through the potential that both entities have post-merger and then the synergies that can be created across multiple areas, whether it be on account of costs or revenue or also some of the corporate aspects and all. So clearly, there are areas, there are opportunities that we'll work upon. But I don't think we'll get into much of a hurry to jump the gun here before we get some of the regulatory approvals.
But Hitesh is saying you're right that there have been a lot of opportunities identified. And I think prep work can happen once initial approvals are in place. But of course, we cannot start with integration until the merger is complete. So what we would do is try and prepare so that at least from a data collection and analyzing perspective, we know where we can start implementing sooner rather than later to avoid the time gap. So that's how we're going to do that.
Great, Alisha. Thanks a lot and all the very best.
Thanks, Proling. In the interest of time, we would like to take the last question from Mr. Mithun. After that, we will like to conclude this call. Mr. Mithun, can you please unmute yourself and ask the question?
Yeah. Hi. Can you hear me?
Yeah. Sure. Please.
Yeah. Just wanted to understand. Usually, the third quarter is typically a non-seasonal lower quarter. So I understand your revenues may have been impacted. I just wanted to know about the company that you're going to merge with. How have they performed in the third quarter? Just wanted to see if you can kind of share some highlights there as well so that we kind of know how the trajectory of both companies are faring.
So Mithun, thank you for that. I know there's a lot of eagerness to know about the merging entity. So we're still yet to receive the information, which will depend on some of the regulatory approvals coming in place. So we are hoping that once we have that guidance, we will be able to share with the shareholders as well in some sort of pro forma performance later. But at this point, it's a bit premature, to be honest.
Sure. Sure. But is the point, right? The third quarter is typically a non-seasonal quarter, right, for the healthcare sector? Or just wanted to understand that.
Mithun, I promise we have seen that either it goes flat from Q2, quarter two is the major season. That's when due to rains and every other thing, dengue and other flus, right, because of which usually the medical case is very high Q2. If you look at a complete year, highest peak revenues you hit sometime July, August, right? So after that, from September onwards, you have festivals starting in October, November, December, every month. And it's not like patient doesn't want to come. One is that your medical cases go down in the quarter three. And also because there is a huge number of, I would say, festivals and holidays, even doctors travel. So due to these both reasons, Q3, we always see a muted sequential as compared to the other quarters. And always we see quarter four goes up.
That's fine. That's fine. I just wanted to understand that. And going into FY26, what kind of addition in terms of capacity do you have compared to FY25?
This year, we have started, as I said, around 250 beds plus we have added in the current year. We don't see anything coming up in the quarter four of FY25, but we are expecting our Women and Children block that is 150 beds get to operational in the H1. And also in the H1, we expect the Kasaragod Hospital also to come in. That's again a 260-bed hospital in the north of Kerala. At least these two hospitals we expect to come in. And also there is one very small hospital of just a brownfield expansion in our Ongole around 75 beds. These are three things which we can expect in the coming year, FY26.
Understood. And just wanted to understand, compared to your competitors, your margins obviously are lower because you have several hospitals where capacity utilization is improving and your margins overall will go up. Do you believe there is scope to expand these margins over the next couple of years by 200, 300 basis points at an overall company level?
See, I think I even answered this very similar question previously. See, look at hospitals and clinics where we are today at 22% on a nine-month basis, and we expect to close in the same range for the full year, and even your mature hospitals are beyond 24%. So we see that hospital and clinics segment itself should go beyond 24%, right? That's very much possible, and the other, like a wholesale pharmacy or a labs is where you can see the margins dragging down. That's where your consolidated Aster Group margin is around 19.5% on a nine-month basis. There, we also expect labs to do really well in the coming years to go beyond 20% margin because labs you always seen very high-margin business.
At the same time, wholesale pharmacy should become smaller and smaller because we are not seeing a very important growth which we can expect here. Keeping all this in mind, hospital and clinic segment should grow in the next two to three years' time. I'm talking about around FY27, somewhere above upwards of 24%. And consolidated margin should be upwards of 21%.
Thank you, sir.
Thank you.
Thank you, everyone. This concludes the earnings call for this quarter at Aster DM Healthcare. I thank the management and all the attendees for joining us today. If you have any further questions or queries, please get in touch with us. Thank you.