Mr. Anoop Moopen, Non-Executive Director. Dr. Zeba Moopen, Non-Executive Director. Mr. Ramesh Kumar, Chief Operating Officer. Mr. Sunil Kumar, Chief Financial Officer. Mr. Hitesh Dhaddha, Chief Investor Relations and Media 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 Quality CARE to give insights into the business and future plans of Quality CARE , the entity which is in process to get merged with Aster DM Healthcare. It is to be noted that the 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 management, followed by an interactive Q&A session.
Certain forward-looking statements we will discuss in this 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 morning, and thank you for joining us today. I'm pleased to report that in the first quarter of FY 2026, Aster DM Healthcare has delivered a marked improvement over the softer performance we saw in the last quarter. Revenue grew 8% year on year, operating EBITDA expanded by 21%, and PAT rose 22%, a set of results that clearly show our momentum is back and our operating model remains both resilient and agile. With this strong start to the year, we are confident about sustaining growth and further enhancing profitability going forward. Before I move to the detailed performance, I'd like to start with an area that has been closely focused on by both us and our investors, which is our Kerala cluster performance.
After a couple of challenging quarters, Kerala's revenue grew 5% year on year, a sharp improvement from the 4% decline in Q4 FY 2025, driven by a 6% sequential increase in patient volumes. This has been a combination of stabilized leadership, sharper operational efficiencies, and improvement in our medical value travel business, which has enabled us to deliver this growth. In fact, medical value travel revenues in Kerala have jumped 12% sequentially, reinforcing Kerala's standing as a preferred destination for international patients. Taking a step back, our performance this quarter builds up on a solid multi-year trajectory. Over the past five years, leading up to FY 2025, revenues have grown at a 20% CAGR, while operating EBITDA has expanded at an even stronger 38% CAGR.
This long-term growth has been powered by strategic capacity expansion, consistent ARPOB improvement, and sustained operational efficiencies, proof that we are scaling not just in size but also in quality and profitability. In Q1 FY 2026, we achieved INR 1,078 crore in revenue, up 8% year on year. This was driven by our strategic shift towards high-value businesses supported by two key factors. There's been a 14% increase in ARPOB, crossing INR 50,000 per bed for the first time, a reflection of our specialty mix enhancement and focus on clinical excellence, and a 4% reduction in ALOS, which is the average length of stay, improving care efficiency and capacity utilization. ARPOB growth has been led by our continued push into higher-value specialties like oncology and neurosciences.
Oncology's share of revenue is now 11%, up from 9% in Q1 FY 2024, showing our progress in building it into a key pillar of our clinical strategy. ALOS improvement comes from investments in advanced equipment, growth in minimally invasive procedure, better admission planning, and faster TPA discharges, all of which help us deliver better patient outcomes while using our capacity much more efficiently. Together, these levers, specialty mix, the ALOS optimization, and the pricing discipline form a sustainable growth framework that is helping us move further up the value chain. Now, moving to the bottom line performance, our operating EBITDA grew 21% year on year to INR 215 crore, with margins expanding to 20% from 17.7% last year. This reflects the combined impact of Kerala's recovery, the ARPOB gains, manpower cost optimization, and steady lab business improvement.
The normalized PAT rose 22% to INR 90 crore, excluding one-time merger-related costs, highlighting the underlying strength of our core operations. Moving to our core segment, the hospital and clinics continue to perform well, with EBITDA margins improving to 22.6% from 20.8% a year ago. The mature hospitals, those operational for more than seven years, delivered an EBITDA margin of 24.5% and an exceptional ROCE of 35%. Our lab margins have improved to 7.6% from 3.4%, supported again by efficiency gains. In pharmacy, our strategic exit from certain loss-making wholesale segments has helped the business achieve EBITDA breakeven as well this quarter. Moving to our CapEx and expansion, our growth story isn't just about performance, it is also about preparing for the future. Over the past year, we have added more than 300 beds, bringing our total capacity to 5,197 beds as of June 30th 2025.
In the coming years, we plan to add another 2,600 beds, both greenfield and brownfield projects, taking our capacity beyond 7,800 beds. Bengaluru is a prime example of this strategy in action. We're adding 1,439 beds in the city, including a newly announced 500-bed hospital in Yeshwanthpur. Once complete, our total capacity in Bengaluru will exceed 2,580 beds, firmly positioning us among the top three healthcare providers in this very high-growth market. Moving to the update on the merger with QCIL, one of the most transformative steps in our journey is the proposed merger with Blackstone-backed Quality CARE India Limited, QCIL. This is much more than just a transaction. It is truly a strategic leap towards creating one of the most comprehensive integrated healthcare networks in India. We've already achieved some significant milestones towards the merger. Shareholders have approved the preferential share issuance.
The Competition Commission of India has granted its approval. We've completed a strategic share swap, acquiring a 5% stake in QCIL in exchange for a 3.6% preferential allotment in Aster. These shares are now listed on the stock exchanges. The combined entity, with a scale of over 10,350 beds across 38 hospitals in 27 cities, delivered a 12% growth in pro forma revenues to INR 2,157 crore and a 20% growth in operating EBITDA to INR 442 crore for this quarter, delivering a healthy EBITDA margin and ROCE of over 20%, a very solid indicator of the strength and the potential of the merged platform. Both QCIL and Aster delivered strong complementary results this quarter, giving us confidence in the ease of integration and the value creation potential up ahead. The merged platform will significantly expand our geographic footprint, deepen our clinical capabilities, and broaden our patient reach.
As we move towards operational integration, our focus is clear: unlock synergies, optimize resources, and deliver consistent, high-quality care at scale. Moving to our digital initiatives, while physical expansion is critical, the future of healthcare will also be shaped by digital integration, and here we are making strong strides. The Aster Health app has now crossed 100,000 downloads. With the launch of its Malayalam version, we have become Kerala's first regional language healthcare super app. Our Aster Care platform, designed to personalize patient journeys, is delivering 79% engagement at our flagship hospitals. The next step is even more exciting, integrating diagnostics, pharmacy, and home care services into the app, creating a seamless end-to-end ecosystem. This will not only elevate the patient experience but also deepen loyalty to our Aster brand.
We're also proud to share that Q1 FY 2026 has been a quarter of notable recognition for both our leadership and our institutions. Our Founder Chairman, Dr. Azad Moopen, was named Healthcare Leader of the Year at the Financial Express Awards 2025, recognizing his visionary leadership and lifelong commitment to accessible healthcare. I was also humbled to receive the Women Entrepreneur of the Year award at the same event. On the institutional front, Aster MedCity, Aster CMI, and Aster MIMS Calicut ranked among India's Top 10 hospitals by Times of India, Outlook, and Fortune India, while RV and Aster Prime joined them in Newsweek's Global Best Hospital Rankings. As we move forward, Aster DM Healthcare stands at an inflection point. Our core markets are performing strongly. Our Kerala cluster has delivered healthy growth, and that specialty mix is moving us higher up the value chain.
The merger with QCIL is a transformational milestone, one that will create an unmatched healthcare network in India and will drive operational synergies, expand our clinical depth, and significantly extend our patient reach. We are investing in scalable, integrated care, combining physical infrastructure, digital platforms, and specialty depth with an unwavering commitment to excellence. With these strategic levers in place, we're not just poised for sustained growth and market leadership, we're truly reshaping the future of healthcare delivery in India. I will now invite our Chief Operating Officer, Mr. Ramesh Kumar, to elaborate on our cluster-wise performance. Thank you.
Thank you. Thank you, Ms. Alisha, and a very good morning to everyone. I'm pleased to provide an update on our cluster performance for quarter one FY 2026. We have seen sustained growth and improvements in operational efficiency across all our regions. Let me walk you through the key highlights, starting with the Karnataka and Maharashtra cluster, with a total bed capacity of 1,497 beds and 1,027 operational census beds. The cluster has demonstrated continued growth. Revenue grew by 13% year on year, reaching INR 372 crores in quarter one FY 2026, up from INR 329 crores in quarter one FY 2025. Operating EBITDA surged by 23%, amounting to almost INR 86 crores in quarter one FY 2026, resulting in operating EBITDA margin expanded to 23.2% in quarter one FY 2026, from 21.2% in quarter one FY 2025.
The performance was driven primarily by ramp-up at Aster Whitefield and also exit of some low-margin businesses and improved operational efficiencies. Moving on to the Kerala cluster with a bed capacity of 2,653 beds and 2,014 operational census beds, we are encouraged to see an early sign of growth, recording a 5% year-on-year revenue growth this quarter and 11% quarter-on-quarter growth, regaining earlier revenue levels. This improvement reflects the positive impact of leadership enhancement and operational measures initiated over the past few months. While the domestic volumes are stabilizing, we remain optimistic about the growth in the Medical Value Travel through enhanced digital outreach and targeted enhancement in the high-potential market. Now moving to the Andhra and Telangana cluster, which comprises a total of 1,047 beds with 791 currently operational beds, this region saw a revenue growth of 7% year-on-year, reaching INR 218 crores in quarter one FY 2026.
Operating EBITDA stood at INR 9 crores in quarter one FY 2026, with a margin at 7.9%. Looking ahead, we are confident on our ability to accelerate the growth momentum. Our commitment to operational excellence, expanding our reach, and delivering exceptional care are our position, as well as continuing to build on this positive trajectory. I will now hand it over to CFO Mr. Sunil, who will provide further insights into our financial performance.
Thank you, Ramesh. Good morning, everyone. For the quarter ended 30th June 2025, revenues have increased to INR 1,078 crores, up by 8% from last year's quarter one FY 2025. Operating EBITDA has increased to INR 215 crores with a margin of 20% compared to INR 177 crores in quarter one FY 2025, with a growth of 21%. Normalized PAT post-NCI for quarter one FY 2026 is at INR 90 crores compared to INR 74 crores in quarter one FY 2025, with a growth of 24% year on year. For the quarter ending 30th June 2025, our operating EBITDA margin expanded over 230 basis points, increasing from 17.7% to 20% year on year. The significant improvement has been driven by a combination of strategic initiatives, disciplined resource management, and operating leverage across the business. In quarter one FY 2026, the ARPOB registered a strong 14% year-on-year growth, sustaining the double-digit momentum from FY 2024 and FY 2025.
This performance was driven by a mix of strategic initiatives, including a reduction in average length of stay from 3.2 to 3.1 days, contributing to a 4% uplift in ARPOB. Aster Whitefield played a key role, with a 31% increase in total revenue and a 21% rise in ARPP, fueled by a higher contribution from Oncology and Neurosciences. The discontinuation of low-scheme business in one of our hospitals also improved our overall ARPOB by eliminating a drag on averages. Additionally, oncology grew by 16% across the group, further enhancing ARPOB due to its high ticket size. Price revision in both Cash and TPA segments and favorable case mix further contributed to the ARPOB growth. Aster Labs has delivered a turnaround since the beginning of FY 2025, with EBITDA margins improving from 3.4% in quarter one FY 2025 to 7.6% in quarter one FY 2026.
The margin expansion has been driven by robust 46% YoY in external business, alongside enhanced operating leverage and significant material cost efficiencies, reflecting in strengthened financial performance. Aster Labs now operates at a healthy ROCE of 13.7%, a notable recovery from a negative ROCE a year ago. As part of a focused strategic shift, we exited a loss-making unit within the wholesale pharmacy business, effectively eliminating a key drag on the overall performance. This move has resulted in a successful turnaround, with the segment now delivering a positive margin of 1.7% in quarter one FY 2026. With the foundation reset, margins in this segment are expected to expand further in the coming quarters, reflecting a more sustainable and profitable growth trajectory. We have optimized our manpower cost by approximately 100 basis points across key function areas by enhancing span of control, enabling leaner team structure, and reducing supervisor layers.
In parallel, we undertook targeted initiatives to rationalize overhead expenses, including the central price procurement of services on non-medical consumers and the adoption of renewable energy. Combined with the benefits of operating leverage, these efforts have resulted in an additional 110 basis point reduction in overhead costs, reinforcing our commitment to operational excellence and margin expansion. As of quarter one FY 2026, we maintain a strong liquidity position, with cash and cash equivalents totaling INR 1,455 crore, while gross trade remains lower at INR 643 crore. Additionally, we are pleased to report a significant improvement in ROCE, which has increased by over 400 bps from 16.5% to 20.7%, demonstrating enhanced capital efficiency and disciplined financial management. With this, we have laid a solid foundation for future growth. As we move into the future, we are confident of 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 QCIL . Thank you.
Good morning, and thank you, Sunil. As you are all aware, we began this journey together a few months ago, united by a shared vision to transform the Indian healthcare ecosystem. In my previous address, I outlined how QCIL is evolving, touching upon our vision, leadership, performance, and strategic initiatives. I'm excited to share that strategic interventions we implemented last year are now yielding outstanding results, driving a significant turnaround across several of our units. This momentum has positioned us among the top quartile performers in the industry this quarter. Most importantly, these initiatives are being embedded as long-term performance enablers, further strengthening our confidence for the quarters ahead. Let me give you a sense of what the quarter one financial performance was like. In Q1 of FY 2026, QCIL reported a revenue of INR 1,079 crore, reflecting a strong YoY growth of 16%.
This performance was driven by both ARPOB and volume-led growth, further supported by an improved payer mix. Our payer mix actually moved almost 2 percentage points, so 200 basis points, to about 80%. Cash and insurance is now 80% of the total business. ARPOB rose by 15% year on year, reaching approximately INR 45,000 in Q1 FY 2026. QCIL recorded a 4.2% YoY increase in inpatient volume and a 12% increase in OPD volumes. EBITDA post-index stood at INR 227 crore, reflecting a 19% YoY growth, and the margin profile improved from 20.5% to 21.1%. We continued to witness strong momentum in our mature units. These mature units contribute more than 60% of our business, which delivered 16% YoY growth and a healthy EBITDA margin of 31%.
Our cash conversion cycle remained healthy at 10 days as of end June, while strong cash generation in Q1 drove a significant reduction in net debt from INR 410 crore to INR 308 crore. Our ramp-up of initiatives in Emerging Units also showed encouraging results, with revenue growing by an impressive 87.5% YoY. Notably, Nagercoi l, operational since October 2024, has already achieved EBITDA breakeven and is showing strong growth potential. Further, Emerging Units recorded a 24% revenue increase over the previous quarter, underscoring the effectiveness of our expansion and operational strategies. In parallel, our Focus Units posted a 10.3% revenue increase compared to Q4 FY 2026, reaffirming the positive trajectory and potential of these assets. Let me give you a quick update of some of the key changes that have driven this turnaround. Foremost is leadership hiring.
Our ability to attract diverse leadership was clearly demonstrated last year with the successful hiring of 10 CXO-level leaders, each bringing unique and complementary skills to the table. Building on this momentum, this quarter, we welcomed our Group CHRO, further strengthening our leadership team. To enhance our execution capabilities, we introduced a regional structure aimed at ensuring effective strategy deployment down to the last mile. As a part of this initiative, we have appointed two Regional Chief Executives to oversee operations outside of Hyderabad and outside of Trivandrum, bringing sharper focus and stability to our emerging growth regions. Clinical augmentation, while last year our clinical talent in key markets faced some challenges, our doctor hiring efforts over the past two quarters have delivered strong turnaround in quarter one, resulting in a positive net revenue contribution of around INR 10 crore in monthly run rate for Q1.
The newly onboarded doctors have driven a significant shift towards high-acuity care, with our converse share increasing 210 basis points to 58.4% for this quarter. Key specialties include ortho, neuro, and cardiac sciences. Additionally, our average length of stay improved by 3%, decreasing from 4.0 to 3.9. With the launch of new clinical programs, we've also invested in advanced technologies. This quarter, we added two robots, two cath labs, and three MRIs. A lot of initiatives to accelerate growth. We've launched the first phase of Mock Call Center Operations, partnering with Tech Mahindra to lead this transformation. As a complementary initiative, we've also introduced a new CRM-based patient enrollment system, currently in its beta launch phase. This combined effort is projected to generate INR 18 crore in incremental revenue over the current fiscal.
Our broader objective is to establish a centralized, workflow-driven call center to manage the entire patient lifecycle, ultimately enhancing our ability to influence patient lifetime value. As a part of our sales transformation, we onboarded 11,800 doctors to our CRM system. We revamped our MVT organization structure, and Q1 has already shown a revenue growth of 80%, indicating early success of these efforts. To drive operational excellence, let me give you a couple of initiatives that have scored very well. Our initiative to drive sustainable procurement savings through formulary compliance and platform-led operations has delivered INR 20 crore of saving in quarter one. We've also launched a new company focused on food services. This venture contributed to INR 2.1 crore in net revenue and INR 0.6 crore in incremental EBITDA for this quarter.
In addition, we've initiated revenue cycle management, which will be instrumental in driving operational efficiencies in the coming quarters. As Alisha mentioned, there are a lot of awards that we've received this quarter, and let me mention a few. Firstly, QCIL brands were honored by Economic Times as the best healthcare brand in the country. In recognition of our ongoing dedication to sustainability, we were awarded the best sustainable initiative of the year by UBS Forums at the 2025 Green Sustainability Summits and Awards. Thank you, and it's a pleasure to be here. I pass it on back to you.
Thanks, Varun. Dear participants, during the Q&A session, you will get a chance to ask a question by raising your hand through the raise hand icon in the Zoom application at the bottom of your window. We will call out your names, after which your line will be unmuted, and you'll be able to ask your question. I would also like to request to all the participants if you can introduce yourself with your name and the company you are associated with before asking the question. If you're not associated with any company and you're an individual investor, you can highlight that as well. Now, moving on to the Q&A session, the first question is from Mr. Tausif. Tausif, can you please unmute yourself and ask the question?
Hey, thanks. I'm audible, Puneet.
Yeah, can you please introduce yourself and the company as well?
Yeah. Hey, hi. Excellent research. My first question is to Ramesh , sir, the Kerala business. Can you provide some qualitative color on the business, such as what are the changes we have seen in the medical tourism on a quarter-to-quarter basis, and what's the directional trend for Q2?
Thank you, Tausif. I think overall, as you see, the Kerala cluster has grown pretty well. The way the growth has been around 5% year on year in the revenue, and volume growth has been 6% overall, the performance of Kerala. I think, as we mentioned about the change in leadership, has made the whole difference there. The team is stabilized. They are able to deliver. We are focused on we have hired some of the good, able marketing team, leadership team there, and they are able to also deliver as far as the go-to-market strategy, what we have laid out. Some of these strategies have really helped us to really increase the volume quarter on quarter as well. Coming to MVT, back to the business, we have focused back again on Oman business as well as Maldives cases. It is really doing well now.
I think most of the patients in between, again, it was the leadership concern. Now I think we have, again, a good leader there to take care of the MVT. Overall, it has been, and you can be rest assured, second quarter performance is going to be much better than compared to the quarter one FY 2026.
Ramesh, I look for the margin for that. I think we have delivered a healthy 25% EBITDA margin for this quarter. Do we expect this trend to continue?
No. Can you come again? Sorry.
For the Kerala business, we have reported a healthy EBITDA margin. Do we expect this trend to continue? I think we have done some cost-saving during this quarter.
Yes, yes. This is definitely going to continue the way, especially operational efficiency is brought in. There is manpower optimization, which has happened, and overall, even as far as the admin costs, have also been under control. I think overall this efficiency will continue in the second quarter as well.
Thanks, Ramesh. I think my next question is to Alisha. Recently, we have seen the exit of one of the CEOs who has been with Aster for several years. How one should look at this exit? Means whether it's a part of restructuring, which is ongoing before the merger, and whether Aster is looking for the replacement of the CEO.
Thank you, Tausif. Thanks for that. As I had mentioned, the in-state organization is going to be a very significant and very large organization. We are looking at it very holistically on what would be the right structure, how should we be doing the cluster-wise CEOs. I mean, we had Kerala as one cluster. We had Andhra, Telangana as another cluster, Karnataka, Maharashtra as one cluster for Aster until now. Varun obviously alluded to a structure that he's putting in place at Quality CARE as well. Once the NCLT approval comes, we do have some thoughts around what that structure will look like eventually. We are being very mindful and conscious of how we are hiring on account of that in-state of the organization. I hope that answers. We are definitely adding a lot of bandwidth across organization.
As Ramesh also spoke about, there's been extensive leadership hiring that has happened at different units and very key resources who have come on board in the last three months and a few more who are coming on board this quarter. The whole idea is to strengthen Aster as a whole for a combined strength of this 10,000-bed entity that we're going with.
Thanks. That answers my question. I'll get back in the queue.
Thank you, Tausif. The next question is coming from Mr. Amey. Mr. Amey, can you please unmute yourself and ask the question? Mr. Amey, can you hear me?
Puneet, maybe you can move to the next question.
Hello. Thank you. The first question I have is on the low volumes. I believe you explained the part on the Kerala side, but I guess during this quarter, even the Karnataka volume seems to be on the lower side. I guess you mentioned in the opening remark that there was some discontinuation of the contract. Is it the only reason for the lower volumes in Karnataka, or is something else also we should look at?
Sunil, would you?
Yeah. Yeah. Thanks, Amey. Yes. In case of Karnataka, I think we had posted around 5% negative volume. That's basically driven by our Aster Aadhaar. In Maharashtra, we discontinued the schemes. This is a 240-bedded hospital census beds, wherein the occupancy was a little higher. You know the scheme business was occupying more than 20% of our beds. We had to cut down that to make space for the other patients. Accordingly, that has also resulted in a good ARPOB growth in the unit and also giving a good ARPOB drive in the Karnataka and Maharashtra cluster also. You can see that in Q4, we had a ARPOB of approximately 15%. It has moved to almost 17% in the current quarter. At least 3% upside has come because of this discontinuance.
I think we already have seen that once we had discontinued sometime in April, we saw a dip of approximately INR 1 crore or so, but we were able to bring it back through walk-in and TPA patients in May and June.
We should consider this occupancy as a base going ahead for the next three quarters as well.
See, I won't give a guidance on the occupancy percentage because the occupancy percentage has got multiple impacts. For example, you look at the ALOS reduction. If the ALOS gets reduced, occupancy percentage is reduced, and even the occupied beds also reduce. If I add more beds, right, then also that impacts occupancy percentage. I would suggest better to look at the volume growth.
Sure. Second question I have on the Bangalore hospital strategy. This is the fifth hospital we have announced in Yeshwanthpur. How are we going to think about this particular Bangalore city? Is it because of the aggressive competition which is expected in the future? That's the reason why we are becoming more Bangalore-focused, or how are we thinking about Bangalore as a city? Also, considering Bangalore already has a good bed density, if you can elaborate more on the Yeshwanthpur locality as well, how does it fare in terms of bed density versus the city?
Yeah, I may see what is Yeshwanthpur. This is definitely one of the right localities to come up with a multi-specialty hospital of 500-bedded hospital. The reason being is this is one micro market which is not catered to, especially it is an affluent market, and there is a requirement. If you know the geography of Bangalore very well, Malleshwaram, Vijayanagar, Rajajinagar is towards that side, and there are not many bigger hospitals of this size. We would like to serve that class of population. On NH4, we have a good traction coming in, especially from the interior markets like Tumkur and the entire till Bellary. There is a whole lot of not many big hospitals. Those patients would drain into this hospital. There is a huge potential out there. Despite all of the smaller hospitals, the largest hospital competition is having is just a 200-bedded hospital.
Looking into that, we would be able to serve that class of population. Strategy-wise, we are looking at a different concept altogether. We wanted to create a center of excellence for our transplant programs. We want to create a neurosciences center, and also, oncology would be a key strategy in this hospital. Not many in a holistic approach to oncology is, I mean, I'm talking of the radiation and bunkers and others. Not many in that micro market. We definitely would like to have this, and there's a huge potential there.
Yeah, the last question.
Yeah, go ahead. Sorry.
After what Ramesh was talking, of course, this is just in the last 10 years that we've kind of started in the Bangalore market. We've been seeing very good traction for Aster brand in Bangalore. With the traffic in Bangalore, care is becoming extremely localized, right? People don't want to go beyond one hour to access care. Like Ramesh said, most of the hospitals in this area are 150, 200, max 250 beds. There are limitations on the provision of services when you are at that size. For us, when we strategically look at the Bangalore map, it was to make sure that we are pretty much covering the entire city as the city is expanding. To your point on, yes, there are a lot more, a lot of beds coming up, a lot of competition.
Even then, when we did the supply-demand scenario, we saw that there is a gap. As the city is expanding and as the population is increasing, and with the connectivity that Ramesh was talking about with Mysore and the adjoining states and stuff, we think that this would be a great asset to kind of complete our story for the next at least three, four years in Bangalore.
Thank you so much. Just the last question I have on the Ramesh acquisition, the stake which we have increased. This increase in stake is going to increase our control over the asset? That's how should we look at it? Or we would need a 100% controlling stake for us to see visible changes in these particular assets?
Sunil, you want to go or do you want to?
You go ahead, Alisha.
I mean, Ramesh, we don't go into operating control with this. This was part of the initial agreement with the group and with Dr. Ramesh on having a put option over the course of the three, four years. We are honoring that commitment. There is a larger discussion on how we want to look at Vijayawada, Guntur, and Ongole in the market. Those discussions are going along quite healthily, and we hope that we'll have an update on how we think about the market in the next three to six months.
Sure, I will join that. Thank you so much.
Thanks, Amey. The next question is from Mr. Parth Agarwal . Parth, can you please unmute yourself and ask the question?
Hi. Thank you for the opportunity. I just wanted to take an update on the contingent consideration that was attached with GCC divestment. Any update on that?
Parth, can you give more clarification on this?
At the time of divestment of our GCC entity, I think we did not receive the entire consideration, right? There was some contingent on the performance of FY 2024 or 2025 for the GCC unit, if I remember correctly.
Hitesh, you want to come in?
Thank you for the question. That one already got closed. That was dependent on FY 2024 performance, I believe. You know that got closed with a certain portion of that deferred consideration we got, and that got closed probably a couple of quarters back. I would say we got roughly $30 million overall on the deferred consideration. Overall, the number that got closed at that point of time. It was during the period when we finally announced the closure of the transaction is when that EBITDA was to be looked at and closed upon.
Sure. Also, considering we are going for a greenfield expansion in the next few years, how do you see your occupancy numbers and entire ROIC and margins shaping up in the next few years? Also on the same point, when you do a greenfield expansion versus a brownfield expansion, what does a payback period look like?
Yeah, Parth, thanks for the question. Let me answer the first or the second question, what you have. See, payback period, if you ask me, if you're going to do your own hospital in a metro like Bangalore, it'll cost you somewhere between INR 2 crore- INR 2.5 crore per bed. In our case, you look at the numbers. We are doing between INR 1 crore -INR 1.1 crore per bed if it's a leased asset. In this case, what happens is that I'm not investing on the land. I'm also not investing on the warm shell. It's not just a cold shell; with the warm shell including the high-end MEP and everything, I'm only investing on the interiors and medical equipment, right?
The question is that, and also the thing is that it gets evened out because in my case, I'll have the cash flow to be paid out in terms of rent, right? If you ask me on a lease basis, on a cash, the payback period, it's approximately nine to 10 years. Going back to your other question, sorry, the first question was with respect to the EBITDA margins, right?
Yeah, margins and in general, blended occupancy when you go for the greenfield, you know, greenfield takes a longer time to get ramp up.
Yeah. See, with respect to the occupancy, I would not like to give occupancy percentage guidance because I informed in the previous answer also, is that because occupancy percentage always gets diluted because when you add more beds, it gets diluted. We are also being very efficient in reducing ALOS. I don't think that's a great parameter to look at. Better to look at the IP volumes. That's a better way to look at and see the growth. What we always say, I think in the previous sessions I called out, is that on a midterm period, basically between three to four-year horizon, we have to look at a growth of between three, you know, mid-teen growth. In mid-teen growth, approximately volume should give a driving force of approximately 7%-8%, and balance 7%-8% should come from ARPOB. I think that's a broad thing.
In terms of EBITDA margin dilution, maybe three, four years back, when you used to add beds, the dilution used to be major because the capacity or the initial size was lower. In the current case, we are more than 5,000 beds. You'll see that whatever the capacity which you're operationalizing is less than between 5% - 10% every year. We will have some basis points impact, but there will be no material impact on the EBITDA margins.
Okay. Just one thing. I understood the payback period for Greenfield is nine to 10 years. What about Brownfield? Is it four, five years, or it's less?
See, in case of Brownfield, what happens is that, you know, for example, we have two examples in Kerala. We added 100 beds in Aster Medcity and 100 beds in Kannur. I think initially, someone had asked Mr. Ramesh about the EBITDA margin expansion in Kerala cluster, why it has gone to 25%. See, there is literally no drag in brownfield expansion. For example, in Kannur, we used to have occupancy of more than 90%- 95%. When we added 100 beds, the capacity got expanded, and we were able to basically operationalize the additional beds with our existing resources. There is no negative EBITDA impact. It's more of an EBITDA accretive, right? Immediately, it starts flowing in. You'll have a positive EBITDA growth also at an absolute number, and also EBITDA margin will expand. The same thing happened in Aster Medcity also.
You can see that the EBITDA in the growth, what we talked about in Kerala overall, the last quarter, we had shown a negative -4% growth. Now we will move to more than 5% +. That's almost a 9% movement, the quarter four to quarter one, right? That has happened because of the capacity expansion. In Brownfield, I don't like to say it's all about payback period because you have to look at the asset as a whole. What I'm trying to say is in Brownfield expansion, it is EBITDA accuracy and margin accuracy.
Okay, that's all from my side. Thank you so much, and best of luck for the future project.
Thanks, Parth. The next question is from Dr. Bino. Dr. Bino, can you please unmute yourself and ask the question?
Hi. Good morning. A couple of questions on the QCIL side. I believe most of the growth seemed to have come from the Kerala cluster. What is driving this growth? On the other hand, what's holding back growth in the Hyderabad area?
Hi, Bino. Thanks for the questions. Okay. The way we look at our business, I think geography is one aspect, and the maturity of assets is the other, right? We gave this color last time as well in terms of how we categorize because each of our geographies will have different kinds of units. Instead of getting into just the geography, I think I want to give you the color. First, if you look at quarter and trailing quarter, even our hospitals in Hyderabad have done extremely well. It's a very competitive market, but even in that market, we've seen a growth rate which is nearly double-digit over the trailing quarter. Volumes have really picked up.
In fact, if I was to give you some highlights, one of our units which used to do in the third quarter last year, INR 14 crore-INR 15 crore, has started to deliver in excess of INR 20 crore on the top line on a monthly basis. There is a significant ramp-up that's happening there as well. If I look at the four categories that I defined earlier, let me give you some color on YoY as well as quarter and trailing quarter. Our mature units, which is a bulk of our business, grew 16% and 27%, 16% on the top and 27% on the bottom for this quarter. What's interesting is that these units actually grew 5.5% on the top, quarter and trailing quarter as well.
While you know sometimes we see the impact of seasonality, this is a quarter where we haven't seen any seasonality, which is where our complexity of work has gone up, our CONGO mix has gone up, and that's reflecting in our ARPOB as well. The other categories that we've put together are the emerging units, which is Vizag, which is Chattogram, which is Nagercoil, the new hospital that we opened. I mentioned in my talk that's grown 87.5% over last year. Because these are new units, you should always look at quarter and trailing quarter as well. It's got a 25% top-line growth, quarter and trailing quarter. That means the ramp-up that we are building up is phenomenal. In fact, now that you've asked me this question, Nagercoil facility has grown up from almost, I think it started in October last year, and we are now doing positive EBITDA.
The run rate of EBITDA seems to be double-digit. That's the level that we've been able to achieve so quickly. I know the previous question was about payback, etc., etc. Some of these markets really turn around very fast, and I can go into o ne such example. The third category is where I think there's a little bit of, which is where I would say focus units, which is where Banjara comes in, Hi-t ech comes in. What's interesting is that these units have also shown significant growth over the last quarter. Water and trailing water, 7% growth on the top and 60% on the bottom. Essentially, the way I look at our performance is it's not skewed only by one cluster. While we may have seen volume growth coming from one cluster, value growth coming from another. If you look at the performance, it's quite blended across our network.
I hope that answers your question.
Great. Thank you for the detailed answer. Just a couple of quick questions. In Bangladesh operations, are you seeing any difficulty managing the operation out of here given the geopolitical situation?
I shared a story last time. I'm happy to reveal it again. Even during the worst times at Bangladesh, there was one, you know, our assets were not impacted at all. In fact, the patients around us ensured that we were working pretty fine, and that's not changed. Bangladesh continues to grow, do exceptionally well. In fact, the Dhaka facility is continuing to get better every passing quarter.
Got it. One last more question. At a consolidated level, is there any debt on the QCIL books? If I could get the quantum, that would be great.
Our debt is, you know, we generally, I don't know the exact number, but the way I see it is our debt is significantly lower than our current EBITDA, if that's a question.
Yeah. Let me add to that. You know, the number that we had reported, we knew for FY 2024, when we announced the merger, we, on the combined level, had almost zero net debt for Aster plus QCIL. I don't expect the numbers to materially move from that direction. That kind of also supports what Varun mentioned around the numbers should be lower than the EBITDA.
Yeah, thank you, Hitesh.
Thank you. Thank you, Hitesh and Varun.
Thank you, Bino.
Thanks, Dr. Bino.
Next question is from Mr. Harith. Harith, can you please unmute yourself and ask the question?
Hi, hope I'm audible.
Yes, you are audible.
Yeah. Yeah. The beds that you've guided for commissioning in the first half of FY 2026, I see Kasargod, which is a greenfield expansion, and then the brownfield expansions at Ongole and Whitefield. What's the status of these expansions? Are these already commissioned, or should we expect these in this quarter?
Yeah, let me start with Whitefield. Whitefield, it is 159 beds we'll be adding. That is the tower four. We call it the D tower. This will be in another two months' time, we should be able to commission this. It'll be moving the women and children, which was in tower C, into tower D. That's our strategy, adding a few more clinicians there. By another two or maximum three months' time, we should be able to commission this tower, additional 159 beds. Moving on to Kasargod, we are already there, and it's a matter of another two months' time to fully function the hospital. Already we have onboarded the clinicians, the staff, and everything, and we'll kickstart the hospital in another two months' time, two to three months' time. Of course, Ongole is getting ready, and we are yet to fix a timeline for that.
Slowly, we will be tracking it very, very closely, and we should be able to tell you the exact timeline, maybe another two quarters down the line.
Thanks for that. The pipeline that we've shown for Aster around the 2,600 beds over the next few years, is there a similar number that you can share for QCIL or any color on what QCIL's pipeline looks like?
Harit, I'll take it. Harith, from a pipeline standpoint, we're looking at about 1,200 beds. We've added a couple of hundred already and 1,200 beds across various projects or expansions within the hospitals we've laid out earlier, and that number has not changed.
Okay.
Yes. Harith, at a group level, the goal was, I mean, we expect at least 14,000 beds in the next two to three years. Like what Varun was saying, the combination of that 1,200 plus the 2,600 that we're talking from Aster, will get us to that.
Harit, wherever we mature and we're doing well, you know we identified that we need more bed capacity, and all of those projects are underway.
Okay.
There is a significant capacity addition in our existing hospitals, which means the scale-up will also be fast. It will come in over the next six to eight quarters.
All right. Last one, with your permission, on ARPOB growth, we've seen very strong momentum for the last few quarters, and this quarter as well. We saw a very strong YoY growth there. You talked about a few reasons on what's driving this growth. What is the sustainable level that we should look at? We've seen some moderation when we look at some of your peers. Is that something that we should make in a moderation in ARPOB growth?
Harith, you know I think we feel the trends are likely to continue. I think it's more the specialty mix, right? Right now, on oncology, we're still only at 11%. We do think that there is an opportunity for us to go further up and take it to sort of higher teens, which will definitely help sort of increase the ARPOB. Overall, when we look at the specialty mix, the acuity mix, there is a tendency. We don't see any moderation. The mix of where our beds are coming as well. When we're talking about almost 1,000 beds coming in from Bangalore, that will actually be at a higher ARPOB, which is why Whitefield coming up has sort of enhanced the ARPOB levels for us.
Also, the way we are kind of looking at scheme patients, where we need to reduce it, how to sort of optimize capacity as capacity is increasing in units. We feel pretty confident that we should consistently be able to see growth on the ARPOBs.
Harith, just to add to what Alisha called out, there is a one-time impact in the ARPOB currently, 14% where 4% is coming from ALOS. ALOS, we're already efficient at 3.1, right? We don't see much of a change in the ALOS. At least it should be between 3- 3.1. Keeping that in mind, and I think previously called out, on a long-term basis, it's a three to four-year term. We're looking at a 7%- 8%. That could get only tweaked, as Alisha called out, because of oncology. If oncology has been driving the growth, that should yield more better ARPOB. On a neutral apple-to-apple comparison, we are looking at around a 7%- 8% over a period of three to four years.
All right. Thanks for taking my question.
Thanks, Harith. We request you to please limit your question to two, but not more than three per participant at a time. The next question is from Mr. Nikhil Mathur. Nikhil, can you please unmute yourself and ask the question?
Yeah. Hi. Good morning. I hope I'm audible. My couple of questions are on QCIL side. Sorry, I have a bad throat. I hope I'm able to put across my question. I'm trying to understand the INR 20 crore EBITDA uplift that QCIL has reported this quarter. I mean, it's a pretty material number, almost 10% of your operating EBITDA. What was happening incorrectly? What was the procurement strategy previously, and what is getting changed now? I mean, it's a big number. Why was the procurement so inefficient in the past, and why is it so easy to change that you are able to deliver this kind of EBITDA uplift?
Nikhil, first of all, thank you. You've very ably put forward your question. I should also tell you that our Medical Director's name is Nikhil Mathur, and the moment we saw your name up there, we were thinking as to why he's asking a question. First of all, INR 20 crores in the quarter has not been easy. It's taken us a lot of external help, etc. Nikhil, there are three things that we try and do when it comes to material cost optimization. One is scale. This is the first time the three entities that we currently have, which is CARE, which is KIMS, and Evercare, have come together. The procurement is not centralized across the board, so the three entities are no longer operating independently from a procurement standpoint.
It's a single source which is now procuring, and when scale comes in and you're able to vendor optimize, you're able to bring down the cost quite significantly. Half of our, maybe more than half of our savings are coming in just from the efficiency on procurement optimization. The second part is formulary, and formulary compliance is a huge thing, right? There are various parts of our business, our scheme business, cash business, insurance business. When you optimize formulary, you're able to bring down your vendors from 10 different vendors for the same molecule to two vendors for the same molecule. Molecules, it doesn't matter. Optimization on demand also helps this in a very big way. Third, margins do vary from one pharma company to the other, and sometimes when you do this in a scientific manner, you're able to move to margin optimization as well.
The good part about all of this is this is sustainable. Nikhil, you'll see it not only in this quarter. This is something that you will continue to see quarter on quarter. I hope that answers your question.
Yeah. Basically, this initiative still continues. Like you mentioned, F&B insourcing, clinical talent , and some other levers as well, this number can continue to improve in the foreseeable one, two years?
Oh, absolutely. These are pre-merger synergies. When we did the merger conversation, we told you that there are synergies that will be built on top of this. We have a synergy wheel which takes care of our 10 - 15 initiatives, which either get impacted by scale or get impacted by efficiency. All of these will continue to be at play. I did mention in my comment earlier, we've currently insourced food, and that's already started to bring us savings. The savings will continue to grow. We are doing a lot more on revenue cycle management, which is a very focused exercise, which will continue to bring us more. From a procurement standpoint, as we close the merger, the group-level synergies will also come into play.
Understood. I have one more question on the OPD business. Not specific to QCIL or Aster, but what is the level of OPD business in overall hospital mix today? What is the outlook on the OPD business over a two to three years period? I mean, the reason I'm asking about the outlook is that if OPD were to grow faster than inpatient business, that obviously is ARPOB accretive , right, if my understanding is correct. Any thoughts on the OPD business over a two to three-year period? Is it a very fast-growing space that most of the hospitals, not just Aster and QCIL , but pan-India hospitals are kind of recognizing?
Okay. I'll take a part of the question. OP business has grown pretty well for QCIL, Nikhil. We've grown the volumes about 12%. It's been a very focused thing that we are trying to drive. OP volume impacts the ARPOB favorably. One of the questions that previously was asked, and I think Sunil addressed it on the ARPOB. We see continued growth in this network on OP. If there's anything specific around OP that you want to know, certainly. OPD, OP diagnostics, OP r adiology, the more numbers you bring in. I told you we grew 12% on OP. That will have a traction on pharmacy, that will have a traction on radiology, etc., etc., and diagnostics, which is good business to get.
Basically, what I'm trying to understand is that obviously, we are slightly confused with the level of ARPOB growth that continues to come in across hospitals, not just Aster QCIL, but across other hospitals as well. Just trying to understand that, can OP volumes sustainably outgrow the IP volumes, and that itself leads to some bit of ARPOB accretion?
All right, Nikhil. Let me add to what Sunil's already said. I think, and I'll take the QCIL view around ARPOB. ARPOB growth is happening on four factors, and let me break all four factors for you. One is price. I think ARPOB should not be confused with price. A 2% 3% increase in price over the year can also lead to a double-digit growth in terms of ARPOB because of the other factors. In our case, we've been very conscious of how can we enhance our CONGO mix, right? Alisha alluded to the oncology mix, and I'm going to use CONGO because largely, CONGO does impact ARPOB very favorably. I think we moved 200 basis points on the oncology mix this quarter. We moved from 56% - 58%. The question you may want to ask is, what's the best in class?
Who's the current leader in CONGO across the country? That number sits in excess of 70%. Can we get from 58% to 70%? Absolutely. As the network starts to mature, as the clinical hiring gets better, as the investments in technology get better, you'll certainly see that number growing. That number will continue to grow, and therefore, ARPOB will get favorably impacted. Second, oncology does play a very significant role when it comes to ARPOB expansion, right? The focus of the group is quite strong. The other element that's impacting for us favorably, our cash and insurance mix is also moving northwards, which means we were, again, 210 basis points of the quarterly improvement. We moved from 77% change to 80% odd now. That has a very significant upside, very, very significant upside because the scheme business comes at 40% of the cash tariff, sometimes broader than that, right?
As you move the needle towards cash and insurance, and as the brand gets stronger, the paying propensity of people and people who can pay start to get to your hospital, making it stronger. We're at about 80% there. ALOS, and you've seen Alisha and Sunil report the ALOS for Aster at 3.0 or something. QCIL is at 4. We've got down to 3.9. We have a significant enhancement that will continue to happen over the next six to eight quarters again on ALOS. As you make the ALOS better, that's inversely proportional to the ARPOB as well. Lastly, I must also say that we are nowhere close to what the benchmark today has been set for ARPOB. I think we have a journey to grow, is the way I'll see it.
OP mix does play a role, and I think if you have the right level of diagnostics and services at play, and you're able to manage footfalls well, that revenue will also continue to grow. That will not become so significant. At some point in time, the level to that is about 35%, 65%. Rupee revenues generally don't go beyond the 35%, 36% contribution to the total business. That's where the level will be. Nikhil, I'm sorry. It's a bit long.
All right. Sorry to be. Yes, it's very clear.
Yeah, thank you.
Thank you so much.
Thanks, Nikhil. The next question is from Mr. Sumit Gupta. Sumit, can you please unmute yourself and ask the question?
Hi. Am I audible?
Yes, you're audible.
Yeah. Hi. Thanks for taking my question. A few questions on the Bangalore market. First is with the new hospital, which is planned in Yeshwanthpur. I just want to know how do you plan to fund it? [audio distortion].
[audio distortion].
Yeah, just give it.
Yeah, now it is.
Am I audible now?
Yes, now it is better.
Yeah. A few questions on the Bangalore market. First is on the new hospital, which is coming in the Yeshwanthpur. How do you plan to fund it? Second is on the overall Bangalore market. Can we expect this Karnataka, Maharashtra cluster to grow over the next two to three years to contribute more towards the overall business, and Bangalore market in particular to the overall.
Sunil, y ou want to give some more of the?
Thanks, Sumit. On the funding bit of it, it will be a mix of internal and external funds. We don't get into because we have a very good cash flow from operations conversion from the pre-IndAS. Today, we're running at more than 80%- 85%. I think we should be able to do with the internal accruals itself. You know that this is a greenfield project. The CapEx funding will record over a period of a year. In our case, because we're only doing the interiors and the medical equipment's, it should be more in the fag end of around 20 months on the project. That's how it is going to be. What is your second question, Sumit?
Basically, your outlook on the Bangalore market. How do you see the Bangalore market?
Yeah. See, in the Bangalore market, if you look at the quality beds today, right, I'm not talking about the other beds where there are 50 beds and 25 beds. I'm talking about the quality beds, right, more than 100, 150 beds hospitals. It's approximately between 8,000 - 9,000 beds. If you look at a population or the quality, I would say the patient density, it comes to around 0.6 - 0.7 per 1,000 population. Very specifically, in the micro market we are talking about, that's the central to northwest zone. There, you see almost a 4 + million population. If you look at the bed density, it's only 0.5 on the quality beds bit of it. That is also another, I think Alisha also very clearly called out. There is no oncology in the extreme northwest zone. It's only 100 - 200 bed hospital.
That's where we want to make a difference by adding the hospital there with the complete oncology and super specialty, including the transplants. Also, this particular hospital is situated exactly on the NH4. That is where it links to the upcountry in Karnataka. Complete referral channels can be built into this.
Understood. With regards to the profitability, on the EBITDA per bed side, Bangalore would be how much? What kind of growth can we expect on the profitability side per bed?
What can be?
What can we expect on the EBITDA per bed growth over the next three to four years, considering Bangalore market in particular?
Yeah. You can calculate. You know the loss is around 3.0 in Bangalore. Overall, K&M cluster ARPOB is approximately at INR 70,000. When you look at the Bangalore market alone, it's between INR 80,000 - INR 85,000 per bed, the revenue ARPOB. Margins are approximately around 25% - 27% only in Bangalore.
Understood. Cool. Thank you.
Thank you.
Thanks, Sumit. Next follow-up question from Tausif. Tausif, can you please unmute yourself and ask a question?
I hope I'm audible.
Yes.
I just want to understand your thoughts on the diagnostic business post the constitution of merger. Since the rest of the large hospital chain has got into this business very aggressively and becoming a pan India play, what's your thought on this business going ahead?
The diagnostic business for us is much more to make it a full ecosystem play in the markets that we operate. As Sunil was talking about, the lab business has become positive, and you've seen a good improvement in the margins as well. At this point in time, we're not talking about becoming a Pan India player. For us, it is about an extension of what our patients in our key clusters will need. We'll continue to focus on building that in Kerala, Karnataka. If we think that the business model is working well, we'll, of course, look at expanding to the other regions that we've now got as part of the merger. At this point, it's more about stabilizing the model that we've built, and we're seeing it at least moving in the right direction right now.
Thanks.
Thanks, Tausif. The next question is from Mr. Amrish. Amrish, can you please unmute yourself and ask the question?
Thank you for the opportunity. The first question is relating to ARPP. We've been reporting this now for a couple of quarters. I'm just trying to understand what information we get from ARPP beyond what is there in ARPOB. I mean, I can understand if ALOS changes, we get some additional information. A specific question on the ARPP, we've got Bangalore increasing 19%. Is this just, again, back to what you earlier explained about the numerator and denominator changing?
Amrish, two parts. ARPP, we are trying to give because in case of ARPOB, ARPOB growth always has a linkage to ALOS. Whatever the plus or minus, the growth or degrowth which happens in the ALOS, that doesn't get reflected immediately, right? It's always skewed. For example, in our case, 14% ARPOB growth. That has already inbuilt a 4% ALOS efficiency. If you look at the ARPP, that doesn't have the ALOS impact. It's very clear. You can always look at the volume and the ARPP. That's one of the reasons why we are trying to give an understanding there. What was your second question? Sorry, Amrish.
Yeah. The ARPP number for Bangalore has jumped 19%, and I'm just trying to see the suspecting.
There are two parts. The ARPP is for both Karnataka and Maharashtra cluster. It has two basically impacts. One is the impact for the Aster Aadhaar I called out, where we had to do the scheme because of the capacity bottleneck to drive more walk-in and TPA paid patients. That has helped at least 2% into the growth here. The second biggest, I would say at least 4% - 5% growth is coming in the ARPP only because of the Whitefield. You know that Whitefield started only in the, I would say, one and a half year back. Only in the last quarter one, it was just a ramp-up stages. After that, we have seen a very good growth in the oncology and also in the neurosciences. Specifically, Whitefield, I have very clearly called out, it's grown year on year for the quarter one at 31% and t he ARPP itself has grown more than 20%.
Thank you. Just a side comment on that. I think there's some discrepancy between the ARPP reported in Q4 and the ones reported in this quarter. There's a 20%, 30% difference. I'm not sure what the reason is for the same quarter. The second question is a broader question just relating to robotics. I mean, we've been calling out robotics, you know, the robotic surgeries. Last two quarters, we've now put a whole separate page in the annexure showing our improvements in modernization and automation. There's a lot of robotic equipment. I think Mr. Khanna also called out a little bit about robotics. Is there something structural we need to be thinking about over here? Or is it just like a feel-good that we are up to date and technology advanced and so on?
I'm trying to understand your point. I mean, there's obviously the associated benefits in terms of ALOS reduction as well that comes from robotics, apart from the early discharge, better outcomes, precision. I think it's much more than feel-good now. I think it's really, it's gotten to a point where patients are coming in asking us, for some of the surgeries for specific departments, if a robot is available. There is a preference where patients are leaning towards this as options for specific modalities, for specific procedures. That's why we are seeing increased adoption as well as increasing the installation of robots within our network as well.
It doesn't change the dynamics of the number of doctors we need to run hospitals and run surgeries. It is still supervised. It's just a bit better now.
Yeah, yeah, exactly.
Thank you. All the best.
If I may start, we shall mention. It's a good trend to track and an important one because it actually impacts ALOS, which has already been alluded by Alisha. It actually impacts your realization as well. The consumer is willing to pay more because there is a consumer preference around it. In this market, outcomes also get significantly better with robotics because you're able to get back home faster, the scars lesser. There is a preference that is at play. Most importantly, I think doctors also prefer to have an establishment which can actually bring them all of these tools so that they can enable the level of care that is desired of the brand. That's how we are able to move large teams from hospitals that can't make it to that level of investment to our kind of networks.
That's helpful. Thank you very much.
Thanks, Amaresh. The next question is from Mr. Mohammed Patel. Mr. Mohammed, can you please unmute yourself and ask the question?
Yeah, can you hear me?
Could you please introduce yourself and ask the question?
Yeah. Yeah. I'm Mohammed Patel from Edelweiss Public Alts . I have two questions. We are guiding for 7% - 8% volume and 7%- 8% ARPOB, but currently, volumes are flat and ARPOB is growing at 14%. When do you expect this to transition to equal contribution from volume and ARPOB?
Mohammed, if you recall, you know, you look at the FY 2024 and FY 2025 growth in the first half, right? We are giving more than, and also look at the CAGR of more than five years of Aster. Revenue has been growing at a 20% CAGR for five years. What has happened is that only in the last three to four quarters, or I would say it's very specifically from quarter three of FY 2025, you've seen the, I would say, subdued performance in terms of volumes because of multiple reasons, right? We have, I think, alluded to it very specifically towards the leadership change which has happened. In quarter four, very specifically to the Ramadan impact which has come through. Also, certain very specific, I would say, decisions which were taken in the MVT also.
For example, in Maldives related to payments, we used to get the revenue, but we used to not get the payments, right? We had to ensure that whatever the revenue booking, we need to collect that also. To ensure that our DSO is better, we have taken certain interventions. You can see that from quarter two, 2% growth, we've gone to 8% growth in quarter one, this financial year. I see that in a couple of quarters, we'll start getting back into the double-digit growth, what we're talking about.
Okay. My second question is, what is the CapEx number that we should look at for Aster and QCIL in the next two, three years?
Quickly on the Aster, we know we are adding almost 2,600 beds. That entails approximately INR 2,500 crore of project CapEx, what we require. Out of INR 2,500 crore, around INR 400 crore -INR 500 crore is what we already incurred as of 30 June. The balanced INR 2,000 crore approximately will be spent over the next three to four years.
For QCIL?
Let me add to that, Mr. Patel. Essentially, you look at about 5% of the top line, which is the CapEx required each year. It's got to be no different this year. Outside of that is the project CapEx, which is not in one particular year. It'll get spanned over the beds that we open. It's about INR 1,100 crore. This year, the cumulative CapEx outlay, including the projects that we are coming up with, is about INR 800-INR 900 crore.
Okay. Thank you.
Thank you, Mr. Mohammed. Next question is from Mr. Harsh Bhatia. Harsh, can you please unmute yourself and ask the question?
Thank you. Am I audible?
Yes, you're audible.
Thank you. Good afternoon. Just two quick follow-ups. One on the ARPOB side. You mentioned 4% from the ALOS part. I missed the initial comments. Was there anything linked to the insurance pricing as well? For the entire year as well, for FY 2026, could we see some incremental insurance benefit coming through?
Yeah, Harsh. Broadly, I had put across saying that out of 14%, 4% from ALOS. Price increase from the cash patients and the TPA should be between 2% and up to 3%. Specifically, in case of TPA, across India, our percentage contribution is approximately 31% from the insurance patients. These contracts are basically for each unit, right? We don't have a central contract for these TPAs. Every month, there's one or the other TPA renewals which comes in in one of the other geographies. You'll see that renewal happening across the year. We see that at least in the second half coming in, that's at least in H2, there's a major contract which is going to get renewed. It's very specifically for the GIPSA in Bangalore. That's going to give us a considerable increase.
Overall, as a price increase guidance, what we always give is that, including the cash patients' increase and the TPA renewals, which happens once in two years, we're looking at somewhere between 3% - 3.5% contribution to the ARPOB.
Just one bit in terms of the scheme business, you highlighted the rationalization of some asset in Maharashtra. Some scheme business was discontinued. Going forward for the next few quarters, is there anything incremental in the pipeline? That is something related to the scheme business rationalization?
Nothing very specific, Harsh. It all depends on the dynamics of each unit. What we always put across is that we'll try to ensure that the scheme business is in single digit. Even currently, if you put across both the ESI, ECHS, and the CGHS and the state and central government schemes, we're approximately at 6%. It all depends. Whenever we add the brownfield expansion, the immediate requirement is there to fill in the capacity. We are not opening up all departments in the schemes. We are very much very clear about very specific departments where the yields are better, right? At least at the contribution level, we are not negative. That's a broad understanding here.
Just one last quick. FY 2027, your Aster additions, close to 1,000 beds in Tiruvandrum, Sarjapur, Hyderabad, largely Greenfield. Broader break-even timeline for these assets, or if you will be able to call out the drag for the first 12 months, if possible. I understand it's a little bit more forward-looking, but anything?
What we always say is that, for example, I'm just giving an example here. It all depends on, you know, in the major micro market, you know, this is the first entry or we've already been there and we're, you know, expanding. For example, Aster CMI, when we entered almost eight years back, that was the first hospital and the Aster brand was not known. It took almost 18 months to break even. When it came to Aster RV , which is our second hospital in Bangalore, it happened almost three to four years after the Aster CMI. The brand recall was better. We were able to attract better doctors. That ensured that we were able to break even within 12 months. For example, in Whitefield, which is our third hospital, the ramp-up was so quick, we were able to break even within the third month, right?
It all depends on that. I won't try to give you the exact guidance. It's all about the micro market we get in and the feedback from the doctors and the patients.
Thank you.
Thank you.
Thanks, Harsh. We would like to highlight that we'll be giving preferences to attendees who have not asked a question before. In that line, next question is from Ms. Nancy. Nancy, can you please unmute yourself and ask the question?
Hi. Am I audible?
Yes, you're audible. Can you please introduce yourself and ask the question?
Okay. Hi. I'm Nancy, and I'm from Allegro Advisors. I just wanted to get some color on the EBITDA dip in the Andhra and Telangana cluster in this quarter. There is ALOS optimization. The ARPOB has also improved. Even then, there's a very small increase in the revenue, and there's a dip in the EBITDA. I just wanted to understand the reason for this.
Nancy, it's very much straightforward. Two reasons. One is that because of the case mix changes, we've seen a middle cost going up by at least 1%. That's taken away 100 bps in our EBITDA margin. Second is that both in our Hyderabad and Andhra region, we had certain attrition in the clinical talent. We have brought that new clinical talent into these hospitals. That has ensured that our revenue growth has come in. At the same time, the cost has been initially at a higher stage. As we always see in Andhra and Telangana cluster, two, three years back, it was 8%. We have slowly, you know, I would say, optimized it to more than 12% - 13%. We expect it to go back to the similar numbers in the coming quarters.
Sure. That was helpful. Thank you.
Thank you, Nancy. If there is anyone, any other attendees who would like to ask a question, please take and raise your hands. Okay. There is no more question to the management. 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 have any further questions and queries, please do get in touch with us. Thank you.
Thank you. Thanks, everyone.