Conference Call for the Quarter of FY 2025. Company declared the Q4 and full year results for FY 2024/2025. 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; Dr. Zehba 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. We are also delighted to have Mr. Varun Khanna, Group MD of Quality Care. Mr. Khanna is here solely in the capacity of a representative of Quality Care to give insights into business and future plans of Quality Care, the entity which is in the process to get merged with Aster DM Healthcare. It is to be noted that merger is subject to further regulatory approvals.
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 the management, followed by an interactive Q&A session. Certain forward-looking statements may be discussed in the meeting 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 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 afternoon, everyone, and thank you for joining our Q4 and Full Year FY 2025 Earnings Call. Financial year 2025 has been a year of continued and significant strategic progress for Aster DM Healthcare, starting with the demerger of the GCC entity and then ending with the inking of the Quality Care merger, which is in progress. We remain focused on execution, efficiency, and building a strong foundation for long-term value creation. Our overall business recorded a 12% revenue growth, reaching INR 4,138 crore in full year FY 2025. This was driven by a 7% increase in inpatient volume and a 12% year-on-year increase in RPOP, with an improvement in ALOS by 6%, reflecting much better clinical protocols.
We have successfully reduced the average length of stay due to several key initiatives, which include preponing the discharges through third-party application for TPA patients, improving the admission management of elective cases, a higher number of targeted therapies in medical oncology, and increased minimally invasive and robotic surgeries that enable quicker recoveries. Additionally, a reduction in scheme-based admissions has also contributed to shorter hospital stays, all of which have collectively improved efficiency as well as the ALOS. Operating EBITDA grew by 30%, reaching INR 806 crores, with EBITDA margins expanding to 19.5% in FY 2025, up from 16.8% just a year ago. This improvement was driven by ongoing cost discipline, operational efficiencies, and enhanced EBITDA performance from our lab business. We also reduced material cost, which is excluding the wholesale pharmacy, to 20.9% of revenue from 22% in FY 2024, reflecting much stronger procurement and pricing controls.
Our normalized PAT, excluding the NCI, excluding exceptional one-off items such as the project unity cost of the merger, rose 49% to INR 357 crore, aided by improved operational leverage and higher other income related to the GCC business restructuring. Now, coming to the Q4 performance. During Q4 FY 2025, we witnessed revenue reaching INR 1,000 crore, up by 2% year-on-year, factoring revenue impact in the Kerala cluster, primarily due to a full month impact of Ramadan in March, a lesser day in February, and lower international patient volumes. Despite having a modest revenue growth in Q4 FY 2025, overall operating EBITDA has grown by 16% year-on-year, and operating EBITDA margin has reached 19.3% in Q4 FY 2025, which is up from 17.1% just a year ago. While focusing on profitability, we also strategically exited loss-making segments in our wholesale pharmacy business.
We have delivered strong double-digit growth in our key operating regions, Karnataka and Maharashtra cluster, which grew by an impressive 16%, and the Andhra and Telangana cluster by 11% in Q4 on a YoY basis. These results reinforce the strength of our core operations and strategic focus in high-performing markets. We have strengthened the Kerala leadership team by onboarding experienced professionals who bring renewed focus and execution strength. On the MVT front, we are actively re-engaging with partners in key geographies and expanding our outreach into newer markets such as Africa and Southeast Asia by a more structured digital engagement strategy and an enhanced referral partner network. Based on this momentum and leadership team firmly in place, we anticipate a return to normal growth patterns over the next few quarters.
We remain confident in the long-term potential of the Kerala cluster and view this phase as a short-term correction with a broader trajectory of sustainable growth. Now, moving to our core business of hospitals and clinics, our hospital business continues to perform well, with operating EBITDA margin improving to 21.9% in FY 2025, up from 19.5% last year. Specifically, our mature hospitals, those that have been operational for more than six years, have expanded their EBITDA margin to 24.3% in FY 2025, up from 22.4% a year ago, with a return of capital employed of 34%. 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.
Moving to some of the new businesses such as labs and pharmacy, as of March 31, 2025, we have 262 labs and patient experience centers and 203 Aster Pharmacy branded retail stores. Our lab business has demonstrated a strong performance, achieving 12% year-on-year growth of revenue in FY 2025 while maintaining a positive EBITDA margin of around 8% post-breakeven in Q4 FY 2024. While focusing on profitability, we have also taken a very strategic initiative to exit a few loss-making segments in the wholesale pharmacy business during the year. Moving to our CapEx plan for the future, our expansion plans at Aster DM Healthcare are multifaceted and ambitious, designed to further solidify our position as a leading healthcare provider in India. Apart from our recent merger announcement with Quality Care India Limited, we are also focusing on both organic and inorganic strategies to further drive further growth.
Over the past year, we've added around 300 beds, including 100 beds in MIMS Kannur and 100 beds at Aster Medcity, bringing our total capacity to 5,159 beds as of March 31, 2025. We're significantly strengthening our presence in South India through strategic capacity expansion of the 2,100+ beds earmarked for India expansion. In Bengaluru, Aster will add a total of 939 beds, including 350 beds at Aster CMI, another 159 beds at Aster Whitefield, and 430 beds at the newly announced fourth hospital on Sajapur Road, with 300 beds expected by H2 of FY 2027 and the remaining 130 beds by FY 2029. Strategically located in the fast-growing Sajapur corridor, the new hospital strengthens our presence with Bengaluru's expanding IT hub and enhances our citywide coverage across key zones.
With this addition, Aster's total bed capacity in Bengaluru will exceed 2,000 beds, reinforcing our position among the top three healthcare providers in the city for the future. In Kerala, we will add 818 beds over the next three years with two major greenfield projects: Aster Kasagod, a 264-bed hospital, and Aster Capital in Trivandrum, a 454-bed facility, and in Hyderabad, a 300-bed state-of-the-art women and children hospital are planned to be commissioned. Now, moving to the update on the merger. Under the proposed merger with Blackstone-backed QCIL, we have achieved some key milestones over the last quarter. Shareholders have approved the preferential issuance of shares. The CCI has granted the approval. We have also completed a strategic share swap. Aster has acquired a 5% stake in QCIL in exchange for a 3.6% preferential allotment.
The transaction now awaits final regulatory clearances, including approvals from the stock exchanges and the NCLT, and it is expected to be complete by Q4 FY 2026. Through the merger with Aster DM Healthcare, the combined entity will emerge as one of India's top three hospital networks with 38 hospitals and over 10,300 beds across 27 cities. For FY 2025, the combined entity reported a proforma revenue of INR 8,105 crore and an adjusted EBITDA of INR 1,661 crore, translating to a healthy EBITDA margin of 20.5%. Aster and QCIL each contributed meaningfully to this performance, and this complementary financial profile not only enhances margin visibility but also strengthens the long-term resilience of the entire platform. As we move forward into integration planning, one of the key synergies that we anticipate from the merger lies in the procurement and the supply chain optimization.
Leveraging the purchasing power of the combined entity will enable better supply terms, cost efficiencies, and streamlined inventory management, ultimately reducing material costs and boosting margins. Operational integration will further strengthen our clinical capabilities through the sharing of pooled medical expertise and combined infrastructure to improve patient care and enhance revenue potential. Additionally, the expanded scale will support investments in advanced technologies and digital platforms, driving innovation, improving patient experience, and creating long-term value for all stakeholders. Coming to the promoters' pledge, in line with our strategy, the promoters of Aster DM Healthcare have successfully reduced their pledge from 99% to 41% after completing a debt refinancing transaction with top-tier global financial institutions. This is a testament to our financial strength as promoters.
Moving on to exciting digital initiatives, I'm happy and pleased to inform that we have now rolled out Aster Health app across Aster units in Kerala, Karnataka, Telangana, and Maharashtra in the first phase of deployment. Further, we plan to integrate the services of hospitals, labs, and pharmacies and going live with full in-hospital digitization and personalized care. By leveraging data-driven insights, these initiatives will not only expand our patient funnel but also enhance lifetime patient value and clinical outcomes. Ultimately, this robust digital ecosystem will help in driving sustainable growth as well as delivering superior value to our patients and stakeholders. We are very proud to share some of our recent recognitions during the financial year FY 2025. We are honored that Dr.
Azad Moopen, our Founder and Chairman, received the prestigious Lifetime Achievement Award from AKMG Association of Kerala Medical Graduates, recognizing his visionary leadership and contributions to global healthcare. Also, he was awarded the Global Entrepreneur of the Year at the second ET Entrepreneur Summit and Awards. It is also a moment of great pride that Aster DM Healthcare has earned the prestigious Great Place to Work certification. We also had Aster MIMS in Kozhikode making history by becoming India's first hospital to receive the prestigious comprehensive stroke center accreditation from AHA. We were also honored at the AsterCham Awards, winning the title of the best multi-specialty hospitals as a group. Additionally, Aster DM Foundation was recognized as the first runner-up for Best CSR Excellence in Healthcare.
In conclusion, as Aster embarks on this transformative journey through this merger with QCIL, we extend our sincere gratitude to our stakeholders for their unwavering trust and continued support. The strategic merger represents a significant milestone, establishing Aster as one of India's top three hospital chains, operating 38 hospitals with over 10,300 beds nationwide. It significantly expands our geographic footprint, especially across South and Central India, while unlocking operational synergies under a robust governance structure. With a dedicated commitment to quality, accessibility, and patient-centered care, Aster DM Healthcare is well-positioned to accelerate growth, operational excellence, and continued innovation. I now invite our COO, Mr. Ramesh Kumar, to further elaborate on the cluster-wide performance. Thank you all.
Thank you, Ms. Alisha. A very good afternoon to everyone. I'm really excited to provide you an overview of our cluster performance for the FY 2025.
We have witnessed a continued growth and improved operational efficiency across all our regions during this year, and I'd like to provide a few highlights around the same. Starting with Karnataka and Maharashtra cluster, this cluster has demonstrated significant progress with a total bed capacity of 1,479 beds and 1,014 beds operational census beds. Occupancy has improved by 90 basis points year-on-year, rising from 61% to 62% in FY 2025. Especially when it comes to revenue for Karnataka and Maharashtra cluster, it grew impressively by 28% year-on-year, reaching INR 1,408 crore in FY 2025 compared to INR 1,100 crore in FY 2024. The operating EBITDA also surged by 48% to INR 321 crore in FY 2025, climbing from INR 217 crore in FY 2024. Our operating EBITDA margin expanded to 28.8% in FY 2025, up from 19.7% in the previous year.
This performance underscores our commitment to enhancing the profitability while expanding services, particularly through high-end treatments hospital like Aster CMI and especially at Aster Whitefield in Bengaluru. Witnessing the growth of quality healthcare offering in Bengaluru, we have announced a fourth hospital at Sarjapur with a total capacity of 430 beds in two phases, with a primary focus on onco-care. With the addition, Aster's total capacity in Bengaluru will be exceeding 2,000 beds, reinforcing our position among the top three healthcare providers in the city for the future. Turning into the Kerala cluster, this cluster with a total bed capacity of 2,633 beds and 1,974 operational census beds exhibited the occupancy rate at 71%. Finally, the Kerala cluster posted a revenue growth of 5%, reaching INR 2,108 crores in FY 2025, up from INR 2,007 crores in FY 2024.
Operating EBITDA grew by 15% year-on-year to INR 493 crore in FY 2025, with the margins improving from 21.4% in FY 2024 to 23.4% in FY 2025. Highlighting our effective cost management and focus on operational efficiency, revenue growth in Kerala cluster was impacted by the month-long Ramadan and a short February month compared to the previous years. Advancing in Andhra and Telangana cluster, the total bed capacity stands at 1,047 with the 781 operational census beds. Performance improved notably with the occupancy rate rising by 460 basis points from 50% in FY 2024 to 54% in FY 2025. Revenue for the cluster grew by 15%, reaching INR 473 crore in FY 2025, up from INR 412 crore in FY 2024. Operating EBITDA rose sharply by 45%, moving from INR 41 crore in FY 2024 to INR 60 crore in FY 2025, with the margin strengthening from 10% to 12.7%, underscoring our strategic growth and efficiency improvements.
Looking ahead, we remain confident to maintain our growth momentum by prioritizing operational excellence, broadening our reach, and staying committed to delivering exceptional care. We are very well positioned to continue building on the positive trajectory. Now, I request our CFO, Mr. Sunil, to elaborate more on our financial performance. Thank you very much.
Thank you, Mr. Ramesh. Good afternoon, everyone. I'm pleased to share Aster DM Healthcare's financial performance for FY 2025, a year in which efficiency has been the central theme of our strategic execution. We ended the year with a robust 12% revenue growth, with the top line increasing from INR 3,699 crore in FY 2024 to INR 4,138 crore in FY 2025. This growth reflects not just scale but quality and resilience in our revenue streams. We rolled out revenue assurance initiatives across units and also undertook a reduction in low-margin scheme business, enhancing the overall quality of revenue.
Our POB increased by 12%, driven by multiple levers: a 6% improvement in ALOS, strong growth from Aster Whitefield Hospital, and impressive performance across key specialties such as oncology, neurosciences, and cardiology. The reduction in ALOS is a result of both strategic and operational changes, including a shift in case mix, a streamlined discharge process enabled by a third-party partner, and increased use of minimally invasive and robotic procedures and targeted therapies, which have significantly reduced patient recovery times. On the profitability front, our operating EBITDA grew by 30%, increasing from INR 620 crores to INR 806 crores, with a 270 basis point margin improvement from 16.8% to 19.5%. This performance is a result of relentless focus on cost efficiency. One of the key contributors was the significant improvement in medical cost management.
Metal cost, excluding wholesale pharmacy, as a percentage of revenue declined from 25.3% in FY 2020 to 20.9% in FY 2025. This is a direct outcome of our disciplined procurement practices, centralized vendor negotiations, and optimized usage of consumables. We have further streamlined our manpower cost by approximately 70 basis points within key functional areas. This has been achieved by enhancing the span of control, allowing us to manage teams more efficiently and reduce supervisory layers, ultimately improving organization productivity and cost effectiveness. We also implemented measures to rationalize overhead costs, including consolidation of services and non-medical consumables through centralized procurement. Our standout development this year has been the exceptional turnaround in our lab business. This segment has moved from a negative EBITDA of INR 9 crore last year to a positive EBITDA of INR 10 crore this year.
This transformation reflects our focused approach towards operational efficiency, scale-up in volumes, and a lean cost structure. Our wholesale pharmacy business also underwent a strategic shift. We chose to exit loss-making operations through outsourcing, which resulted in a temporary dip in revenue growth. However, this decision has been made with a clear view to restore profitability. We are confident that this will lead to a profitable turnaround in the wholesale pharmacy segment starting quarter one of FY 2026. From a capital allocation standpoint, FY 2025 was also a year of efficient deployment. We have made a capital expenditure investment of INR 342 crore while maintaining our gross debt at lower levels than the last year at INR 642 crore. We continue to operate from a net cash position of INR 739 crore, reinforcing our strong balance sheet. Our upcoming organic expansion includes over 2,100 beds, which will increase our total network capacity to 7,300 beds.
I want to highlight that this expansion will be funded through internal accruals and existing cash reserves without putting pressure on our balance sheet. Furthermore, we are pleased to report an improvement of over 300 basis points in ROC from 16.4% in the last year to 19.5% in the current year. Most notably, our core hospital segment now operates at ROC of over 25%. To summarize, FY 2025 has been a defining year in Aster DM Healthcare's growth journey, driven by efficiency across every dimension of the business, from revenue improvements and margin expansion to the turnaround of previously loss-making segments. We have laid a solid foundation for future growth. As we move into FY 2026, we are confident in building on this momentum with the same discipline and focus. On that note, I conclude my remarks. Now, I request Mr. Varun Khanna to take you through the performance of Quality Care India Limited. Thank you.
Thank you, Sunil, and thank you all for joining today's meeting. As you know, Aster and Quality Care are embarking on a transformative merger, bringing together two leading healthcare organizations to create one of the country's largest and most distinguished medical institutions. Over the next few minutes, I'll try and cover three key aspects: a brief recap of Quality Care, our vision, and the initiatives that we have to achieve it and our recent performance. While we've discussed some of these points before, I'd like to provide additional context on QCIL and its latest developments. Quality Care is a leading healthcare platform in India, operating under three trusted brands: Care, KIMSHEALTH, and Evercare.
Ranked amongst the top five hospital chains, we have a network of 19 hospitals and seven medical centers, offering 4,000 operational beds across 14 cities and 10 states. Our financial strength reflects our solid foundation. Annual revenues exceed INR 39 billion, with strong profitability and EBITDA margins above 20%. More than 55% of our case mix consists of complex, high-quality treatments supported by 2,500 highly skilled consultants. All facilities are in ABH, with one achieving the prestigious JCI accreditation, reinforcing our commitment to quality care. Last year, we defined a five-year strategy focused on transformational and structured advancements. Our goal is to enhance service delivery, clinical outcomes, commercial operations, and digital transformation, and all of this while expanding our network. To drive this strategy forward, we have assembled top industry talent from diverse backgrounds to foster a collaborative and growth-oriented culture.
Over the past year, we welcomed eight senior-level leaders, including our Group CFO, CTO, and CHRO, key appointments that will strengthen our leadership foundation. In terms of network expansion, we are on track to add 1,200 new beds over the next three years, a 25% increase in capacity. We are expanding our cancer footprint to six additional centers during the next six to eight quarters, managing the need gap in our micro markets. Additionally, we are making significant strides in digital transformation, including the launch of our call center, CRM, single ERP, digital patient channels, and multiple tools to improve patient service delivery. This year, we embarked on prioritizing our synergy wheel with five key synergy initiatives, which will contribute INR 50-60 crores in EBITDA, with INR 20 crores as run rate for quarter four 2025.
As we complete the merger, scale will bring significant synergy savings, which we will share in due course. On the performance front, despite significant investments in talent and technology, Quality Care delivered strong financial growth in 2025. Revenue increased by 12% year-on-year. EBITDA rose by 14%. In Q4, the revenue growth was 12% compared to Q4 FY 2024, while EBITDA grew 16% due to the impact of our strategic initiatives. These results were primarily driven by 10% growth in inpatient RPOP, fueled by higher surgical complexity, particularly in the field of oncology, cardiology, and orthopedics. Procurement strategies that contributed to an additional realization in Q4, with full potential expected next year. Comparative pricing adjustments, which had a marginal impact in late Q4 but are expected to drive a full year benefit in FY 2026. Clinical advancements remain a priority.
Over the past three quarters, we strengthened our clinical complexity by introducing robotic surgery programs, enhanced super-specialized oncology centers, interventional neuro, and more, fostering cross-learning across our hospitals. Our teams also demonstrated exceptional resilience in navigating complex challenges, managing political instability in Bangladesh, overcoming operational disruptions from the revamp of four hospitals within our network, ensuring swift response and strong cross-functional coordination to maintain continuity, and merging and optimizing three market-leading brands and operations across India and Bangladesh. For a simpler understanding of the network, I've broken it down into certain cohorts, which are four hospital groups: mature and established, because each one of them would need a tailored strategy; mature and established, which is hospitals like Trivandrum, Dhaka, Bhubaneswar, and Raipur. It gave us a 14% YoY revenue growth and 22% EBITDA growth. The strategy here is expansion, and we are focused on adding more beds.
Emerging units, which are the likes of Nagercoil, Chattogram, and Visakh, have 78% YoY revenue growth, and they are all ramping up extremely well. Renewed strategy, which is largely the Hyderabad cluster, had a flat growth this year, but the turnaround initiatives have already been launched: a new DMS for doctor relationship, leadership changes across the network, cost optimizations, and lastly, infrastructure upgrade. In fact, Banjara, our flagship facility, will see a relaunch in this quarter. The expected full year impact will be seen in the upcoming quarters for the renewed strategic focus cluster. Other focus units like Al Shifa, Kottayam, Kollam, and Nampally—we saw revenue growth of 12%, and the strategy is to enhance our case mix and RPOP for the improvement. Looking ahead, we are committed to advancing our clinical outcomes, complexity, and patient-centered care.
With strong momentum across the organization, we remain focused on becoming the most impactful healthcare provider in the country. Thank you.
Thank you, Varun. Dear participants, 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, and you will be able to ask a question. Before now moving on to the Q&A session, I would 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 question. 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. With this, the first question is from Mr. Amey. Mr. Amey, can you please unmute your line and ask the question?
Yeah. Am I audible now?
Yes.
Yeah. Thank you for giving an opportunity, and thank you for an insightful presentation. The first question I have is on the Kerala cluster. I understand our team has been changed over there. However, our expectation was that last quarter would have been a kind of a bottom-out quarter. However, this quarter also, we have seen a worsening occupancy. What is the expectation here? How long can it take for the new team to revive this cluster? Is it the issue with one or two assets within the cluster, or is it across the assets?
Thank you. Thank you, Ahmed. Very good point. I think I had touched upon this briefly. So definitely, we've had a little bit of a challenge in Kerala over the last two quarters, which was largely the management change that has happened. Having said that, we have kind of strengthened the teams there. We've had the new CEO, COO, who has come in, especially at our flagship, Aster Medcity, which is a large part of our network in Kerala. I think what's very important to note for Q4 is the significant impact of Ramadan. In North Kerala, definitely, you know Ramadan does have a significant impact for us, not only in the local business on footfalls as well as elective cases, but it also has an impact on MVT because a lot of people who come in are from Maldives and Oman, which also kind of gets impacted with the timing of Ramadan. When we look at Q4, definitely all of March was Ramadan.
When it comes to MVT specifically, people usually start planning a few weeks in advance, right? We believe that almost 2.5%-3% of the revenue hit has been caused because of the Ramadan impact. Now, going to your question on do we see this—I mean, we see this as a very transitionary phase. This team has been set up. We have kind of got the full team now firing quite well. We expect that in the next quarter and two, things should kind of move back to start seeing the growth. I will let Sunil and Anoop also come in for further comments. Q4 was largely because of Ramadan and obviously things like having an extra day last year. When you compare it, there is a half percent difference on revenue that comes on account of that as well.
Yeah. Thank you, Alisha. I'll also just add to that. I mean, Alisha has covered most of the points of why that fall was there in the last quarter. As we all know, the team has been strengthened. There was a leadership challenge over there and a new CEO and COO coming in. Again, to add to it, I think the major effect was in our flagship unit. We have gone through a focused approach over the month. Now the team is in place, and we have added more beds. We have also added on the onboarding of new clinicians. We are seeing the traction in the first quarter and in line with the expectations.
Sure. Thank you so much. The second question I have is on the care performance, basically. Thanks for Varun being here on the call. The first question I have on the care is related to Hyderabad cluster. That has been the underperforming cluster for us within the care hospital chains. What are the steps we have taken so far over the last one year on the Hyderabad cluster? How has the performance improved over the last one year? Is this also an issue with one or two assets within the Hyderabad cluster, or has overall performance across units been poor so far?
Yeah. Thanks, Ahmed. Thanks for the question. Quite an anticipated one, though. Ahmed, if you heard me speaking today, there are four cohorts that I have created to solve for this problem. One is mature established. The second is emerging. The third is the renewed strategic focus. Hyderabad cluster, really, I would say, falls into that.
Hyderabad, we currently run five hospitals, and of which two hospitals have needed significant help, I'd say. Let me give you a narrative of the first part of your question in terms of what we've done. We've done a lot of hiring. We've changed the leadership teams across. We have brought in the medical head of the company. Our clinical recruitment has now got far stronger. We've looked at the operating elements, and we're working with external consultants to ensure that there is no operating leakage. We are also driving efficiency. Most importantly, we've renovated Banjara. Now, Banjara needed an uplift. It had been a hospital asset that was not invested in adequately, I'd say. That turnaround has happened. During the year, we did go through this entire renovation, which was a complex job, but it's now got completed.
We are looking forward to inaugurating this asset. I think a significant turnaround is underway. You will start to see the performance of the Hyderabad cluster getting significantly better. Hope that answers your question. Any follow up on this, Amey?
On the 1,200-bed expansion, which we have spoken about on the brownfield expansion, how much would be coming from the Hyderabad cluster? That is the final question I have. Thank you so much.
Let me just give you a breakup of Hyderabad. Hyderabad, we have a new ramping-up facility as well, which is Malakpet, which started to perform pretty well. That facility will see an expansion of about 100 beds over the next three years. Outside of that, we do see our flagship facility, Banjara, also add about 18-90 beds. Collectively, about a couple of hundred beds will be in Hyderabad. Thanks, Amey.
Thanks, Amey. The next participant who will be asking a question is Mr. Tawseef. Tawseef, if you can unmute yourself and ask the question.
Hello and audible?
Yes. Yes.
Yeah. Yeah. Thanks for the opportunity. Good afternoon. Just a follow up question on Kerala, please. I think we rightly understand this performance is rightly not comparable because this quarter, we might have seen an impact of nearly about 40-45 days of Ramadan. Just wanted to understand, in the last one year, have you seen any attrition rate at the clinician level for most of the flagship hospitals in Kerala? Can you highlight something on this?
Yeah. No, I would come in here. There has not been any major attrition in the Kerala hospitals. I mean, the unit leadership level, we had a strong leadership level at most of our units. We have a legacy factor also in Kerala. I mean, if you look at the MIMS cluster, it's a long-known brand. And the clinicians, especially, they have a bond within the unit, and they feel that ownership. More than many of us, they believe that it's a unit, and they are never thinking of moving on. We have been very blessed in that area.
This quarter, we have seen a 6% decline in IPD volumes in Kerala. Can you give us a clarity? It's mainly alluded to a medical tourism patient?
Yeah. Medical tourism is one. One of our flagship units, as you know, there was a leadership challenge over there. We have to admit that the focus was not that much because of the lack of leadership. That has led to the decline in the numbers and focused marketing and referral approach and all that. We have got the leadership back in place. In fact, we have reinforced it much better, and we are seeing the traction now.
What kind of occupancy level 1-3 for FY 2026 for Kerala cluster?
Sunil, you want to come in on that?
Tausif, thanks for the question. I do not think we would like to give guidance. From the growth point of view, right, because if you look at the last four to five years, we have been growing in a very ramp-up phase of more than 20%. Kerala was growing more than 30%. Now we have reached the capacity where 70%-75% of the occupancy had reached. As I said, the quarter two, quarter four has been a temporary dip.
Going forward also, what we look at is that more than occupancy because occupancy is a factor of the new beds coming in also. In quarter two, we added 100 beds in Kannur because it was running at a 95%+ occupancy. We also added in our flagship hospital, we added 100 beds. As Anoop also alluded, we also started adding a few doctors in the majority of the specialties to drive the volumes. Going forward, we are looking at at least a mid-teens growth, Tausif.
On the Kerala cluster?
Yes.
Yeah. Final question to Ramesh Kumar on the Bengaluru part. I think we have announced a new project in Sarjapur. If you can highlight what is the competitive landscape over there and how Aster is placed in this market.
Tausif, Sarjapur is one of the fastest-growing micro markets in Bengaluru, as you know. It has been having approximately around 3.5-4.0 million population concentrated in that belt. That is one reason. Affordability, insurance penetration is the highest there because of the mostly software people or with that background, people are staying in and around that area. We have affordability is also good. It is right to have a hospital there. Competition, as you rightly asked the next question, competition is also Sakra was doing exceedingly well. Manipal, if you really look at, they also done in that market very well. It is a huge potential out there in Sarjapur market. Others are also coming and pitching in. Definitely, we will be much ahead of time, and we will have the right clinicians there onboarding to immediately ensure that that is a very good, successful project for us.
Thanks. I will get back into queue.
Thanks, Tausif. The next question is from Mr. Aditya Cheda. Aditya, if you can unmute yourself and ask the question. Mr. Aditya, can you please unmute yourself and ask the question? I think he's not able to hear us. Okay. I'll move on to the next participant. The next question is from Mr. Kunal. Kunal, can you please unmute yourself and ask the question?
Hello. Good afternoon. My first question is again on the Kerala cluster because I'm not sure I fully understood the impact of Ramadan. In 2024, I think you had 20 days of Ramadan in Q4. Occupancy was fairly healthy in mid to high 70s. I'm just trying to understand how much of the dip is because of Ramadan this year because you had 30 days, and how much would be because of other factors that you mentioned?
Sunil, do you want to go a little bit more?
Yeah. Thanks for the question. See, currently, if you look at quarter four, we've grown at 2% across at an overall level. If you remove, but only look at the hospital space, right, in the core entity, it has grown at 4%. The other 2% dip has happened because we consciously reduced the wholesale pharmacy segment. See, wholesale pharmacy has got two segments. One is the segment which supplies to all B2B and trade business. Another is the one which is supplying to the retail pharmacy. There, we thought that the logistics was not working out really well, and we used to have a cash loss. To address that one, we have done that. That way, it's artificially come down to 2%, but actually, it's a 4%.
I think Alisha also alluded to that 2.5-3% has come up because of Ramadan. Because, see, last year, Ramadan started only in late March and ended in mid-April. We saw the pickup happening in the month of May. In this case, what happens is that it started at the beginning of March and ended in March, right? There is a full month impact, which is coming to quarter four. That itself has contributed to 2.5-3%. Second is also the third one, I would say, is the MVT. See, MVT, we had a major drive. If you look at last year, MVT also, from quarter three to quarter four, there was no reduction. It was almost flat. Now we have seen a major reduction also because of a conscious decision there, Kunal, specifically through Maldives.
Maldives, we've seen a major ramp-up in the business in the last year. We have also seen that they are not very good pay masters. We had to control the receivables. That is where you also see in the quarter four, because we were able to reduce the Maldives, the business, very consciously. Even though revenue dip has happened, our collections have become better. Overall, our receivables used to be somewhere 85-90 days DSO. We are able to reduce to below 80 days. Because of which our ECL, the provisions have become better in quarter four. That is also one of the reasons why, even though we have a 2-4% growth in the quarter four, we are able to drive a 16% growth in the EBITDA.
I hope, and also, Kunal, it's very, very important to understand that whatever the dip which you have seen, it's a very, very temporary phase. It's just a couple of quarters. We should be able to bounce back very, very soon. We're putting all the leadership, all the systems in place to ensure that something like this doesn't recur again.
Sure. If we were to kind of go into Q1 now that Ramadan is over, I think we should see occupancy back to close to 70% just from the Ramadan impact.
Usually, when I say I won't give occupancy because occupancy is very secure, let us look at the volume growth here, Kunal. When we say that we have grown at mid-teens, at least 78% will be with volumes, and balance 78% will come from the ARPA. Okay? Now, volumes is something which we are very, very confident that will continue to grow at around 7-8% going forward. Occupancy, you can model it out, but we are back to high single-digit volume growth is something which we are making happen.
Sure. Now, since you touched upon the lower ECL provisions, there was also some rent reversals in this quarter. I mean, these are not something which is sustainable, right, going forward. This 19% margin, would that be sustainable, or you may just see a temporary blip because this time the profit was slightly bloated because of these?
If you look at all the four quarters' EBITDA margin, we started with a 17%+ margin. Then we bounced in quarter two to more than 21%. Quarter three also, we closed at 19.3%. Quarter four also, it is 19.3%, right? You have seen that it is a consistent increase.
If you look at last year, all the four quarters, if you observe properly, we were hovering between 15%-17%, right? We were at 15% quarter one last year. Quarter two, it was around 16.8%. We moved to 17.7%, and 17.71% is how we ended in the last year quarter four. From there, we cashed down to 17%, went to 21%. As I said, 21% because quarter two, always we've seen that is the biggest quarter of all the four quarters. That's one of the reasons why EBITDA margin really jumped. You can see that even though there has been a slowness in the revenue growth, we were able to maintain the margin at 19.3%. What I can say is that going forward also, on a full-year basis, these numbers, what we published, is more of a sustainable.
As I said previously also, we talked about the future margins. We are also aiming to reach 23%-24% in the next three to four years' timeline. We are very much committed in this regard.
That's great. That's 23%-24% without the QCIL synergies, right?
No, no, with QCIL synergies.
Sure, sure. The last one is for Mr. Khanna. You did speak of several senior-level hires and leadership changes. Just trying to understand what is the hiring you have made on the operational front and on which clusters have you done and any more roles that you need to still fill in?
Kunal, largely, what we've done is at two levels. One, we've created another layer, which is the operating layer, which is what we call the regional chief executive layer. We've got a senior industry leader coming into that role already.
He came on board last month. At the group level, we've been able to bring a Group CFO. We've got a CHRO coming in. I think the guy's coming on board next week. We've also got HR head and a sales and marketing head at the Care level for the business. Outside of that, we've brought in a regional CEO outside of Trivandrum Business, which is the KIMSHEALTH business of ours. There is a lot of hiring. In total, actually, 10-odd people have come on board. Each one of them have a great pedigree given what they've done in the past. We've been fairly successful in getting the right people on board.
Sure. Sorry, one more, if I can squeeze in. That's both to Alisha and Mr. Khanna. See, I mean, Aster had this cluster-based approach, right? Obviously, Kerala is the biggest cluster for QCIL. Trivandrum is a big contributor. Going forward, after the merger, how will the operational structure look? Will you still follow a cluster-based approach, or would it be something different?
Kunal, I think we're still thinking through the best structure for the organization, right? I think it would be really premature for me or Varun to comment on this right now. Of course, you are aware Kerala will be one of our biggest markets. We do think it needs to be a cluster, but is it a Kerala whole or break Kerala into two? Those are all discussions we're having to make sure that you find the right people and have the right structure in place. Maybe give us a few more quarters to come back with more details on that.
Sure. Thank you and all the best.
Thanks, Kunal. The next question is coming from Mr. Nikhil Koptani. So Nikhil, if you can unmute yourself and ask the question.
Yes, sir. Hi, thank you for giving me the opportunity. Am I audible?
Yes. Yes, you're audible.
Yes, sir. In the Kerala cluster, last time we spoke that we are going to focus more on the profitability, ARPA growth, rather than the volume growth. Is this still now, after such a quarter, are we still focusing on profitability over volume growth?
Nikhil, I think it's really about a combination strategy, right? I mean, as you're aware, there is a lot more competition in Kerala, but we are the market leaders, and we don't want to go down a discount-based strategy for Kerala. For us, I think it is very important to continue to maintain the ARPAs. We have been price leaders in the market. We don't want to dilute that.
We've been service leaders in the market. We don't want to dilute that. With that, we've been taking a very balanced approach and making sure that we're not really talking about a dip in occupancy, but we also don't want to just show revenue growth and have an erosion on our margins. It is about kind of maintaining that balance as much as possible. When we're looking at occupancy also, I think it's also very important to note we've added 300 beds, out of that 200 beds in the last quarter have been in Kerala. Naturally, arithmetically, there'll be some dips that you will see. I think it's also very important to note that even with that, we have improved on our profitability, which I think is a good place for us to be in.
That's great to hear. The second thing that I want to ask, are we still focusing on the corporate segment? Because now we need to also grow the MVT segment again. We said that we are looking at different regions to grow the MVT segment too. How will be the focus approach over attracting the new patients?
I think, again, in Kerala, it was a big focus on Oman and Maldives. In Maldives, since the change of the government, there's been a lot more pressure on the payment and the receivables, and we didn't want to get caught up in that challenge. Opening up new markets has been a key focus for us. Again, strengthening the MVT team has been something which Ramesh and the teams are working on. I think it's very important for us to open up a lot more markets.
I think there have been challenges with Bangladesh also, which used to kind of yield some traffic for us. We said, how do we make sure that we are able to diversify that portfolio of MVT patients? A much more structured approach in building the portfolio for MVT. Ramesh, you want to come in here on MVT, please?
As rightly mentioned, we are looking at onboarding leadership where they can take on expanding the team of MVT. Certain geographies like the African countries, we are looking at. Iraq is another market which is still continuing to yield well. As rightly said, Oman will still continue to yield because a lot of traction from Oman is still coming in. Of course, Maldives market, as you rightly said, cautiously, we would be approaching. Overall, we will be expanding mainly into African countries.
Oncology is also one of the focus areas. We get a large good number of patients for oncology from the African market. That is going to be our focus as well.
That is great to hear. Can you just summarize what is our strategic outlook for each of the clusters like Kerala, Andhra, and Maharashtra? How we are approaching those clusters in terms of adding patients, beds, and everything? If you can summarize that, and even for the QCIL for their four segments.
Sorry, Nikhil, you wanted to understand what on the Aster side, and then could you just repeat that?
Yeah. In our Aster side, our four clusters, Kerala, Andhra, and Karnataka cluster, how we are approaching these clusters in FY 2026, what is going to be our major focus in each of the clusters. Similarly, on the QCIL side, on the four segments that they have bucketed.
Ramesh, you want to start with that?
Let me start with the Karnataka Maharashtra cluster. As you have seen, all the three units have been yielding very well. Aster Whitefield is doing exceedingly well. We are anticipating good growth coming in there because we have just, it has just registered within one year's time, it has registered a very good growth. Both Aster RV and Aster CMI would also be continuing to fuel the growth of Karnataka and Maharashtra from Aster Aadhaar. We continue, it's still growing there. We are looking at how to add a more number of beds there. Of course, we have the mother and child hospital expanding around 156 beds additionally coming up in Whitefield. That will also add to the revenue of FY 2026. That is about Karnataka, Maharashtra.
Moving on to Kerala, we have right now Medcity, as we said, the change in leadership. We are looking at onboarding. None of the clinicians have moved out. All our clinicians are intact. We are adding more clinicians. That is the strategy. We are adding all the specialty-wise. We are focusing a little bit more focus on oncology. We are also trying to add in other specialties as well. The flagship will continue to perform and further grow. We are trying to add more volumes. We have added another 100 beds there. Second, MIMS Calicut, and of course, Aster MIMS and Aster Kannur. Aster Kannur is really doing well, even though there also we have added another 100 beds.
We are going to continue to look at focus on volumes and focus especially on certain specialties like, again, going back to oncology and some renal transplant and other things. In MIMS specifically, we have seen it is steadily growing, doing very well. That has been contributing very well. I think MIMS, we continue to have the same strategy. We will have volume focus. We are trying to focus on how to create additionally more volume growth as far as MIMS, Calicut is concerned. Shortly, we would also be adding Kasargod Hospital as well for FY 2026. That is also going to give us growth in entire Kerala. That is a Kerala cluster. Moving on to Andhra cluster, Tirupati, Narayanagiri Hospital is really one of our good strategies.
Tirupati is really doing very well, both top-line revenue and good EBITDA margins. We are planning to add, again, expand further specialties like oncology. We are looking at a bunker adding there. Narayanagiri will do very well for us. Ramesh Hospitals, Ramesh, Aster Ramesh, we have been focusing on Guntur and Vijayawada. Vijayawada, especially the cardiology team, has been doing very well. We are trying to add more, what we call, clinicians there and accelerate the cardiology part of it. Guntur, yes, I think we are adding on more clinicians now, especially cardiology and gynecology. There has been one or two doctors' attrition, but we are adding more clinicians at Guntur as well.
Ongole, we are trying to focus and ensure that we add more clinicians to augment the entire oncology, entire onco, sorry, ongoing business as well, top-line revenue as well. This is what the overall strategy for all the three places is. We will be driving both some of the additional units, some expanded beds, driving volumes, and looking at adding more clinicians on board.
That's great to hear, sir. I have one more question.
Nikhil, I would request you to put on the queue, please. We would like to restrict each participant to two questions, please. Okay. Next, we have Mr. Damayanti. Damayanti, if you can unmute yourself and ask the question.
Yeah, hi. Thank you for the opportunity. I want to understand your EBITDA margins trajectory better. This 23%-24% number, which you indicated for the next 3-4 years. You mentioned that on the procurement side, you have seen good synergies, which is one of the key drivers in the last year or so. That is one. I just want to understand what kind of headroom you have, where you have visibility to improve on this part from here on. What kind of contribution will come from, say, procurement synergies? Then some of the initiatives which you mentioned on the other cost line items, if you can elaborate on those. Also, this 23-24%, I understand, is it at the network level, right? Hospitals plus your other business. Similarly, if you can give that number for hospital business, the core hospital business over the next 3-4 years. Thank you.
Thank you, Damayanti. On that question, see, with respect to the, because I said that as a group put together, which we can achieve at 23%-24% in the next 3-4 years, looking from the middle cost point of view, because we are just a 5,000-bed hospital, when the volume doubles, the leverage comes in. There, at least another 100 basis points should really kick in. The second most important point I see a leverage is the manpower cost. Manpower cost is very, very important because we track it not only as a percentage of cost, but also we look at what is our manpower per occupied bed. We see that there is another 1 to 1.2 per occupied bed is the efficiency which we can do it.
Accordingly, if I think I called out in my speech also, even in the current year from the last year to current year, when we say manpower cost, I'm talking about including the junior doctors plus the employees and the outsourced manpower. We already done a 70 basis points efficiency reduction in the current year. We see a major reduction coming from there. Second, to a small extent, we should also bring a consolidation of the functions, which should give a synergy. That is the third part. The fourth part would be more of overheads. Overheads also is something which is more desegregated and also fragmented. That is where we can look at a consolidation of insurance, consolidation of a lot of AMCs and CMCs, consolidation of non-medical consumers, and also bringing efficient electricity also.
We are already in the way to bring more than, I think, 30-32 megawatt plants, which is in the works today. That is something which is going to kick in sometime in the second half of the year. I think all these things put together, we should be able to look at another 300-400 basis points improvement in the margins. Now, second is that because we also talked about the wholesale pharmacy. See, apart from that, we've got two more verticals, right? There's the labs and wholesale pharmacy. Labs already we reached around 78% margin the current year. Also today, the most important thing is that it has to be more dependent on the non-Aster business. Already we are from 23% in the last year. Current year, we moved the proportion of the contribution to 28% there.
Once we are able to take it to 40-45% or near 50%, we can really move the margin supports of 20% in the labs. That way, it will not be a drag. In terms of wholesale pharmacy, I already told you that we have moved out the second segment of the business. We do not expect a major growth coming in the wholesale pharmacy. Wholesale pharmacy is always known to have lower EBITDA margins. Keeping that in mind, I think overall 23, 24, and I think maybe another 100 or 200 basis points higher, it should be for the hospital segment.
Okay, that's clear. My second question is on your women and child hospital, which you have planned in Hyderabad. Did that unit see some delay? Because earlier, I remember you were planning to launch that in the second half of this fiscal, and as per the presentation, now it moved to 2027. If you can clarify that, and in 2027, when we should expect it, in the first half or second half, that will be useful. Thank you.
Ramesh, you want to? This is slightly, as rightly said, we were looking at certain, since it was a warm shell, which we have taken over, and infra-wise, we had to really do some more work on it. That was a slight delay which has happened. Now, I think it is almost, most of these plans are the plan, as well as most of these things are in place. We are able to accelerate further. We will be able to ensure that we could kick off the project. By 2027, we are very positive. At least the second quarter, at least we should be able to kickstart the hospital.
Second quarter of fiscal year 2027, right?
2027.
Okay, that's helpful. I'll get back in the queue. Thanks.
Thanks, Damayanti. The next question is from Mr. Beenu. Dr. Beenu, can you please unmute yourself and ask the question?
Good afternoon, everybody. A couple of questions. One, in your slide on synergies, I see a INR 30 crore synergy in QCIL in FY 2026. May I know where it comes from, given that the merger is actually happening only towards the end of FY 2026?
Yeah, so let me take this, Sunil. So I think a large part of the synergy essentially comes from the procurement side of it, which is where the mat cost, as you grow your scale, you're able to bring down the material cost.
You're also able to optimize when you start working as a group, you're able to optimize your formularies, use the right mix. A couple of other things that we're doing is the repair and maintenance contracts. We're looking at them again, and we've been able to bring some degree of improvement there. Food and beverage is another significant piece that we are looking at. In our Kerala cluster, we actually have an insourced F&B company. We've started to do that the same way for Care as well. Those are the three prominent things that we're looking at. Outside of that, there's a lot happening, which will be a bit aggregative. For instance, working on medical value travel as a group, that's going to have a significant benefit emerging this year.
Got it. You have given your FY 2025 EBITDA at about INR 855 crore. I mean, just trying to model it out, I can possibly add another INR 30 crore to that and maybe apply the usual 15% sort of growth.
Can you be a bit louder, please? Get closer to the mic.
I'm sorry. Am I audible now?
Better.
Okay. So I was looking at your FY, the QCIL FY 2025 EBITDA of INR 855 crore. If I add INR 30 crore to that and maybe grow it by the usual 15% roughly, which you are doing, is that a right direction in which I'm moving into estimate your FY 2026 and maybe FY 2027 numbers?
Yeah, let you do the calculation, but let me give you some color around it so that the favorability that you are trying to build, you are able to. See, INR 50-60 crore is the synergy number that we're looking at the QCIL level. This is outside of synergies that will be driven post the merger, right? Of which, from a run rate standpoint, we've been able to get to about INR 20 crore, is what I told you in quarter four, largely driven by procurement. Some of the other elements are to kick in, which I alluded to. We do see significant favorability on the synergy side of it.
Okay.
Answer your question.
Yeah, yeah, yeah.
Go on.
Sunil, a quick question. In your breakup of other expenses, there is a benefit coming of about INR 7 crore coming from movement in contingent payable number. What is that related to? Is that something which continues?
Yeah, thanks for that, Bino. Bino, if you recall, we had recognized a gross obligation for the put option, which is available for our Dr. Ramesh hospitals, right? They were holding around 42.5%.
We recognized, and they had a put option, I would say, limit up to basically the right was there up to March 2025. In the beginning of March, they actually raised a put option notice of around 13%. Now, what has happened is that because of that, we unlocked the liability which is sitting there. Because in quarter one, quarter two, and quarter three of this current year, we had recognized the liability because when you're nearing to the put option date, the liability keeps going up, right? That we had recognized. In quarter four, because the complete 42.5% was not exercised and only the 13% was exercised, the balance got reversed. That is a benefit.
Good thing is that it's more of a permanent benefit because after this year, next year onwards, there is no hit coming into the P&L from quarter one onwards.
Got it, got it. What would be the total number of shares outstanding once the merger takes place?
I think it's around 870 million, but you can kind of look at the exact number in our publicly disclosed documents.
In the original. Okay. Thank you very much.
Thanks, Dr. Beenu. We would request participants to limit your questions to two, but not more than three per participant at a time. In this line, we have next questions from Mr. Angad. Mr. Angad, if you can unmute yourself and ask the question.
Yeah, can you hear me?
Yeah.
Yeah, hi. I just wanted some guidance on debt in the future. Considering the bed expansion that you are guided for, how are you looking to finance this in?
Angad, let me, rather than putting a number, let me give you how we are looking at it. Currently, Aster DM is a net debt company with a net cash of around INR 700 crore+ . We have 2,100 beds in pipeline, which will cost me approximately INR 1,900 crore. Out of INR 1,900 crore, we already incurred INR 350-400 crore. Balance INR 1,500 crore, which we need to spend over a period of next three to four years, right? From the pre-ind AS or post-ind AS point of view, my cash flow from operations, right, is approximately 70-80%. I think that should help you do the modeling.
Thank you.
Thank you.
Thanks, Sunil. The next question is from Mr. Siddharth. Siddharth, if you can unmute yourself and ask the question. Siddharth, we are not able to hear you.
Hi, thanks. Thanks for the opportunity. Two questions. One, I wanted to understand what is the guidance on pre-ind AS EBITDA, considering a large part of the expansions going forward are leased rather than owned land. The second question was on the drop in EBITDA margin in the Kerala and the Karnataka and Maharashtra clusters on a sequential basis. That drop is much sharper this year than it was last year. Is there anything that you have to say on that? What drove that sharper drop?
Yeah, Siddharth, the second question, let me answer first. With respect to the margins, as I said, it is all to do with the revenue, right? There has been a certain unlock of the provisions, which is I talked about receivables and everything that has happened at the corporate level at the Aster DM Healthcare legal entity. Whatever the decline which has happened, it's just a one-time because of the revenue not being there. On a YTD or a full year basis, the Kerala cluster still boasts a margin of 23.4%+ . Also, the Karnataka cluster is still maintaining a margin of operating EBITDA at 22.8%. We only think that it'll keep going up. As I said, I already given a broader guideline of our next 2, 3, to 4 years. That's how we look at the numbers. I'm sorry, I didn't get the first question, please.
The first question was you mentioned a 23-24% EBITDA margin going forward, right? I'm assuming that's a post-indice EBITDA. Considering most of your expansion is leased, how do we look at pre-indice EBITDA margins going forward?
Got it. See, currently, if you look at the gap between the post-indice, sorry, I would say operating to post-indice, there is a variable rent, which is approximately INR 8 crore per quarter, accumulating to INR 32 crore per annum. When you look at the difference between a post-indice to pre-indice, there is around INR 92 crore, right? That is approximately INR 26 crore or INR 27 crore per month, or INR 23 crore per month. If you look at both put together, the variable rent and the fixed rent, what we pay to the leased assets, it comes to approximately INR 124 crore, which may amount to approximately 3% of my top line.
Going forward also, yes, see, it's not like, okay, we are making by choice going to lease the asset because in Bengaluru city, for example, the recent one, Sarjapur, it's not easy to purchase land. A lot of these lands are ancestral land. They don't want to sell it off. You have to work with the builders to do a JDA and accordingly take an asset on the lease. Keeping that in mind, even going forward, you can, because when the business increases, with regard to the thing being in Kerala, where the volumes and the new hospitals at Kasargod and Trivandrum coming into the picture, as a percentage of revenue, the rental, both fixed and variable, you can model it out somewhere between 2%-3% for the next three to four years.
Okay, that's useful. The second question was on the delay in projects, right? We have seen all the brownfield expansions being sequentially delayed from the last quarter to this quarter. Bengaluru, Ongole, CMI, Medcity, and even Hyderabad, which you addressed. Any specific reasons? Are we seeing competitive intensity and therefore pushing these out? Is there any other reason?
Yeah, I do not think it has been per se by design. I think as Ramesh had called out, there have been just some challenges with projects, different reasons for each of them that has delayed. I do not think we have had anything more than three to four months of delay for these projects. It is definitely not because of any competition. We had some change in the team of the project team as well. We have just changed the project lead recently.
I think that has also been one of the reasons for some of these delays. I don't know, Mr. Wilson, if there was anything you wanted to add to that.
Certainly, Shahril, we are in control at the moment. Actually, projects are going as per the schedule. Whatever happened in the past will not be repeated in the future. Now, we have a team and we are recruiting more people also. Things will be in play. It will go as per the schedule now.
Clear. The last question was on QCIL and the funding of the expansion there. How do you propose to fund that expansion, Mr. Khanna? What's the net debt position for QCIL currently?
Siddharth, thanks. Of the beds that we're looking at, on the CapEx side of it, the few projects that we have, we're looking at raising some debt at the entity level. My sense currently, I may not have the exact numbers, is about 70% of what we'll invest in the project, CapEx. Details can be furnished later is the way I see it.
Thank you.
Thank you, Siddharth. We would request each participant limit to two questions only. Next, we have questions for Mr. Deepak. Mr. Deepak, if you can unmute yourself and ask the question. Mr. Deepak, can you hear us? I shall now move on to the last question. Mr. Nikhil, can you please unmute yourself and ask the question?
Yeah, hi. Thank you for giving me the opportunity again. My question is basically, what is the price hike that we are planning for FY 2026 across our payer mix? Now we have the two greenfields coming up, H1 and FY 2026, another one in H2 FY 2027. What is a break-even occupancy on our RPOP level that we are supposed to target to achieve the break-even of it now?
See, Nikhil, on the price increase, usually whatever the RPOP growth, what we achieve, the price increase would be somewhere between 3%-3.5%. That is a price increase. That is why I am saying cumulative of the walk-in cash patients + the TPS. Usually insurance companies, we renew every two years once. That is a jump, what you say. That is where I am giving an average number of 3%-3.5%. There is no right time to take the price increase because it all depends on the geography of each hospital. It's based on the hospitals we take that call. That's on the price increase bit of it.
On the greenfield side, what is the break-even occupancy or RPOP level?
I won't say RPOP, it's usually 30% you should be able to break even, Nikhil. I'm talking about on a full capacity basis. If it's operational on a 30% capacity, you should be able to break even. In terms of timing, Nikhil, it all depends on where are we really commissioning this project. For example, Bengaluru, Aster CMI was the first hospital which we operationalized sometime eight years back. That time it took more than 18 months to break even. When our second hospital in Whitefield, when we opened up, that's the south of Bengaluru, we were able to break even between 12-15 months.
The third one, which we opened up just a year back, we were able to break even in three months. It is also about brand recall, right? We will be able to get the right doctors in place. That is the whole reason why we are developing a cluster approach, right? That is where in the Bengaluru market, as even Ramesh alluded, the idea is to ensure that is the fourth hospital. Today we are in the top three and we will continue to be the leader in the Bengaluru market. Similarly, it is all about if you go to the new cluster, geographic location where you are not present, it usually should take around 18 months.
Okay, thank you. That is it from my side. All the very best for FY 2026 and great work on margins. All the very best.
Thanks, Nikhil. We have the last question from Mr. Siddharth.
Hi, can you hear me? Yes, Siddharth. On the Andhra Pradesh-Telangana cluster, just wanted to understand that was on a turnaround path. We have suddenly seen a very sharp sequential drop in occupancy from 55% in Q3 to 51% in this quarter. Therefore, do you see that along with the fact that the Ongole piece is also pushed out a little bit, do you see that coming back to mid-50s, late-50s occupancy next year? How do we look at that? That was one part. The second part was to understand on the guidance, if you could share anything on the proportion of non-Aster business in the labs business next year.
Ramesh, you want to take the first part?
Yeah, the first part. Coming to Andhra, if you really look at, we had some certain impact as far as one or two clinicians leaving as far as Guntur is concerned. That is the cardiology and the volume was driven by the gynecology. That is the dip which happened in Guntur. We have immediately corrected that. Cardiology we had sustained because we are very strong as far as Ramesh Kumar is concerned. It is not a concern. Cardiology, we could retain at least the angioplasty, angiogram, whatever we are doing. Only the OPD numbers and a little bit of inpatient for gynecology has come down. We are quickly rectifying that. That is a temporary dip which has happened at Guntur. Vijayawada continues to do well. Coming to Ongole, Ongole has also had the same reasons. We had two or three clinicians moving because of competition.
We are quickly filling up that. It will happen. We have already onboarded one or two clinicians and are adding a few more and augment. We are trying to ramp up the place as well. Both the places will be up and running in this quarter.
Just on the Siddharth, on the second point with respect to non-Aster business in the labs, as I said, FY 2024, it was 23%. FY 2025, we moved to 28%. This year, a lot of consolidations happened in terms of the ramp-up of a lot of FPCs which we opened up. We look at somewhere between 36%-38% as the non-Aster business which we want to drive in the labs.
Thank you. Thanks for your time and great performance. Thank you.
Thank you, Siddharth. There is no more question to the management now. Thank you all. This concludes the earnings call for this quarter for Aster DM Healthcare. I thank the management and all the attendees for joining us today. If you would have any further queries or questions, please do get in touch with us. Thank you all.
Thank you everyone.
Thanks, everyone.
Thank you.