Ladies and gentlemen, good day and welcome to the KIMS Hospitals' Q4 FY 2025 Earnings Conference call hosted by IIFL Capital Services Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jeewani from IIFL Capital Services Ltd. Thank you, and over to you, sir.
Yeah, hi, good morning, everyone. This is Rahul from IIFL Capital. I welcome you all to the fourth quarter earnings conference call of KIMS Hospitals. From KIMS, we have with us today Dr. Bhaskar Rao Bollineni, Founder and Managing Director, Dr. Abhinay Bollineni, Executive Director and CEO, and Mr. Sachin Salvi, CFO. Over to you, sir, for your opening comments.
Good morning, everybody. I extend a hearty welcome to you all. Last two weeks, we witnessed spiraling tensions across the country because of the war situation. War is never an option, but at times, it becomes a compulsion, like in this case, wherein India is driven into a war following the Pahalgam massacre by terrorists. Though ceasefire is announced, the situation is still fluid. We salute our brave soldiers, and it is hoped that we will have a normalcy soon. We at KIMS have taken necessary steps required in an emergency situation, like painting our terraces at all units with the Red Cross symbol and beefed up the security measures. Now, I have a pleasure in presenting the financials and operational highlights for the financial year 2025, which is yet another year of growth and success.
It reflects the trust being reposed in us by our growing number of patients on account of our clinical excellence, patient care, and latest equipment and technologies combined with affordability. The financial highlights for financial year 2025, the results are total revenue of INR 3,067 crore, a growth of 22% on year-on-year basis, of which old units contributed INR 3,018 crore, a growth of 19% year-on-year basis, and new units contributed INR 111 crore. EBITDA of INR 815 crore, a growth of 24.7% on year-on-year basis, of which old units contributed INR 871 crore, a growth of 31% year-on-year, and new units contributed EBITDA loss of INR 18 crore, and one-time eliminations of INR 38 crore. EBITDA margins at 26.6% versus 26% in FY 2024, PAT at INR 415 crore in FY 2025, against INR 336 crore in FY 2024.
The results for quarter four, financial year 2025 are total revenue INR 801 crore, a growth of 25.7% year-on-year, and 1.4% on quarter-on-quarter basis, of which old units contributed INR 775 crore, a growth of 20.4% year-on-year, and a 2.4% growth on quarter-on-quarter, and new units contributed INR 76 crores. EBITDA of INR 203 crore, a growth of 24.4% year-on-year, and a decline of 1.2% on a quarter-on-quarter basis, of which old units contributed INR 243 crores, a growth of 46.9% year-on-year, and a 13.6% quarter-on-quarter, and new units contributed EBITDA loss of 18 crores, and one-time eliminations of 25.51%. EBITDA margins at 25.3% versus 25% in quarter four, financial year 2024, and 25.9% in quarter three FY 2025. PAT at INR 106 crores in quarter four, financial year 2025, against 72 crores and INR 93 crores in quarter four FY 2024 and quarter three FY 2025, respectively.
Consolidated EPS for financial year 2025 of INR 9.6, a growth of 24.7% on year-on-year basis. The consolidated results for FY 2025 are consolidated revenue from operations of INR 3,035 crore, a growth of 21.5% on year-on-year basis. The consolidated EBITDA pre-Ind AS of INR 789 crore, a growth of 24% on year-on-year basis. Consolidated EBITDA pre-Ind AS and excluding other income of INR 757 crore, a growth of 22.1% on year-on-year basis. The consolidated results of Q4 financial year 2025 are consolidated revenue from operations of INR 797 crore, a growth of 25.7% on year-on-year and 3.2% on quarter-on-quarter basis. Consolidated EBITDA pre-Ind AS of INR 195 crore, a growth of 24.3% on year-on-year and degrowth of 1.5% on quarter-on-quarter basis. The consolidated EBITDA pre-Ind AS and excluding other income of INR 190 crore, a growth of 24% and 5.7% on year-on-year and quarter-on-quarter basis, respectively.
The consolidated operational highlights for financial year 2025 are the average revenue per operating bed grew by 22.7% on year-on-year basis, and average revenue per patient grew by 9.2% on year-on-year basis. IP and OP volumes grew by 11.6% and 14.1%, respectively, on year-on-year basis. The other developments are year was packed with action as we launched a spate of initiatives, expansion, and equipment, some of the essential scenario. With the addition of two new units in Guntur in Andhra Pradesh, and Sangli, in Maharashtra, we are expecting a direct addition of INR 10 crore for the financial year 2026. We will be very happy to know that during financial year 2025, we have opened our hospital at Nashik and Sangli in Maharashtra, Kannur and Kollam in Kerala, and Guntur in Andhra Pradesh.
The Guntur unit was inaugurated by Honorable Chief Minister of Andhra Pradesh, Sri N. Chandrababu Naidu Garu, who paid handsome compliments to KIMS for its excellent services of its various units across the state. In April 2025, we have opened our second unit in Vizag called KIMS Seethammadhara. We have also started a facility center, a pediatric and a childcare unit under the brand name of KIMS Cuddles, and a specialty center in Vizag. During the year, we opened an exclusive foot care center and also a rehabilitation center in Hyderabad. We did the soft launch of our prestigious Thane, Mumbai unit in April, and it will become full-fledged in the next five to six months. We will also be opening our two hospitals in Bangalore in the current year, which are in the final stage of completion.
These expansions have widened our reach and heightened the potential. Coming to technology and equipment, KIMS is always in the forefront.
I will mention but a few of such latest equipment available with us. A new era is launched in non-invasive neurosurgery with the installation of South India's first Gamma Knife at KIMS Secunderabad. This offers unparalleled precision, safety, and comfort, making it a groundbreaking solution for patients seeking advanced brain care. Next is magnetic resonance-guided focused ultrasound. KIMS Hospitals is the first MRI-guided focused ultrasound with the Hero 3T MRI Neuro Care Center in India, aided by expertise to treat essential tremors and Parkinson's patients with tremors. This response to this unique therapy is quite good. A lot more patients all over India have come and utilized this facility. Again, KIMS is the first and only hospital in India to introduce TULSA-PRO, a revolutionary technology transforming prostate cancer and benign prostate cancer treatment. TULSA-PRO procedure is incision-free, radiation-free, and provides quick recovery and minimal side effects.
We also have other equipment like MR-Linac, Mako Robotics systems for the knee replacements, and extra. The point is, all these are the latest products available only at few centers in our country, and it has been always our endeavor to make the best of healthcare available and accessible. In the light of our facts, I term the year of 2025 and 2026 as years of expansion, equipment, and excellency. KIMS Kurnool recently completed 50 renal transplants, and the occasion was celebrated in a fitting manner since this is quite an achievement in a small town in backward region. The pediatric and nephrology and urology summit was held at KIMS Secunderabad, attracting nearly 300 delegates from across the country. KIMS made a strong presence in the International Abdominal Wall Reconstruction Conference at Chennai with five original research papers presented by KIMS.
KIMS has been playing an active role in creating awareness in breast cancer. Recently, our director, KIMS Ushalakshmi Center for Breast Diseases, Dr. Raghuram, created two Guinness World Records. We achieved the in-person Guinness World Record title, "Largest Breast Cancer Awareness Lesson," where 5,000 members physically participated. It also won the award for most views of the breast cancer lesson on YouTube in 24 hours. Finally, I would like to sum up saying that the year gone by proved to be fulfilling and rewarding. The same tempo will continue, and we will try to reach greater heights. The road ahead is optimistic, and we will reap full benefits by our dedicated services and expertise. Investors are our growth engines, while patients are the very purpose of our growth, and they are our goodwill ambassadors.
Having begun my report about war situation, I would like to conclude on a note of beauty. Presently, Hyderabad is hosting the 72nd Miss World Festival. A galaxy of beauty queens have descended on Hyderabad for this glittering extravaganza. I am sure the event adds further beauty to the beautiful city of Hyderabad. Thank you for your trust and investment in KIMS.
Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Amey Chalke from JM Financial. Please go ahead.
Yeah, thank you so much. And congrats on good set of numbers to the management. I have a first question on the Telangana cluster. So the cluster has helped us to deliver better margin this quarter despite losses in the newer units. So there is a good 200 bps jump Q-o-Q in the Telangana cluster, while the occupied beds are largely the same. Is there any specific reason for this jump, and should we assume 32% margin for the cluster being a new normal?
Yeah, so this is the margin expansion is on account of revenue growth. And revenue growth, there have been some initiatives across all the four hospitals. We've onboarded a lot of new doctors for Kondapur, given that the new hospital is going to get commissioned in the next 12 months.
We onboarded a new liver transplant team in Secunderabad, because of which there has been significant growth. So I think Telangana will continue to grow at similar growth rates for the next few years, given that there is additional capacity in Sunshine and the new Kondapur hospital is going to come. The margin will sustain and further expand.
So basically, the volume from the hires for ARPOB specialty have increased. That's the reason why the margins have increased.
Correct. Sure.
The second question I have is on performance of the Nashik unit during the quarter. Is it as per our expectation, and what losses we have booked during the quarter?
We had indicated for the full financial year for the full 12-month period, Nashik will be around INR 15 crore of losses. I think we are on track for that.
There has been slightly delayed ramp-up on account of insurance empanelment, which we are expected to complete in the next two months. Once those insurance empanelment happens, we are pretty confident we should break even within three months after the empanelment. And there has been slight delay on account of negotiating and getting a good price. But otherwise, doctor traction is very promising. Most of the doctors have joined, but it's just that we have only cash business happening today in Nashik. In full capacity, a city like Nashik will have 30% cash, 30% insurance, and 40% corporate public sector companies. Today, we don't have insurance empanelment, and we don't have public sector. In spite of it, the ramp-up has been quite heavy.
Sure. And the last question I have is of the Thane unit.
If you can update on the enrollment of doctors for the unit, and is there any notable hiring you would like to mention?
So, Thane hiring, most of the doctors have been completed. We will have close to 50 full-time doctors joining us from the 1st of June till the end of July. There are different timelines in which they are joining. Some of the doctors have already started. We have started the soft launch of the hospital. There is an OP of almost 60-70, and we are hoping that this week it will pick up to almost 100 OPD per day. There has been very good traction among the doctor community in Thane, and we are planning to commence IPD services from end of this week, sorry, end of this month, and full-fledged services from the beginning of next month.
But it will take us a good one to two months before all doctors will be onboard and we get full insurance empanelment. Up until then, a lot of the business will be driven by cash as a payer.
Sure. And considering the three units, including Thane, are getting commissioned during next year, and there is a slight delay in commissioning like one or two months, would we increase the losses to be booked next year to be higher on account of these three units?
I think that we should be able to stick to what we had earlier guided. Both Thane and Nashik were seeing very good traction. We don't see the losses to extend beyond what we had indicated.
Sure. Thank you so much. I will join the queue .
Thank you. The next question comes from the line of Nikhil Mathur from HDFC Mutual Fund. Please go ahead.
Yeah. Hi, sir. Good morning. I have two questions. My first question is on your O&M projects. So I believe that Guntur 150 beds, Sangli 350 -odd beds, and Splendid in Hyderabad 150 -odd beds, they are yet to be part of your cluster financials yet, right?
So Guntur and Sangli in Q4 have accounted for very insignificant income, and that's why it's not reflecting. But between both the assets, Guntur and Sangli, if you look at the month of April, we have done close to INR 14 crores of revenue in the month of April. A good part is Guntur broke even in the first three months of operations, and Sangli will also break even in the next one or two months. Kompally is yet to get commissioned, which is Splendid, which will get commissioned towards Q3 of this financial year.
But how will you report this?
I mean, would you add the full bed count to your cluster operating bed number, or you are just taking in the revenues here? So how is accounting split into clusters for these projects?
So as far as accounting is concerned, the income, the 9% which we are getting as an operations and management fees, we'll be reporting as other operating income.
Okay. So they won't be part of the cluster financials bed count and all?
They will not be. Okay. Understood. And second question is, sorry.
Yeah, go ahead, Nikhil.
Yeah, yeah. And my second question is that there is a reasonable reduction in lease payments in FY 2025 versus FY 2025. I'm just looking at your cash flow statement. It has gone down from INR 55 crores to INR 40 crores. So anything to read here?
Nothing as such. So some of the lease adjustments which were accounted for were readjusted.
That is the only thing. There is nothing to read in between. Nothing has been terminated as such.
Okay. So any guidance for FY 2026 on this?
It will remain the same because most of the contracts which we are doing are in the similar line. The Kerala cluster, we are doing a business combination. So that would be adding. But as I have said, Kannur and Kollam we have already accounted. So nothing new is coming as of now on the books.
Okay. Okay. Got it. Thank you so much.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Damayanti Kerai from HSBC Bank. Please go ahead.
Hi, this is Damayanti. Thank you for giving me the opportunity. My first question is on your new unit's performance. I just missed the number.
If you can detail us the performance of each new unit in terms of revenue and EBITDA, that will be helpful. And how you're looking at the ramp-up for those new units, Nashik, Kollam, or maybe even QNRI?
So Queen's NRI is running currently at around INR 85 crores revenue with very little EBITDA contribution. By the end of the year, we're expecting it to close to at least INR 11-12 crores of revenue per month. So the annualized share should be around INR 150 crores. As far as Kollam, we've already broken even in Kannur. But because of the drag from Kollam, there is a drag in the overall cluster. But I think given how Kannur has performed, we are pretty confident that Kollam also in the next two quarters will become EBITDA positive, and the cluster will turn to be more positive.
As far as Nashik is concerned, we are currently each month we should be doing around INR 8 crores of revenue on both the units, INR 5 crores from the KIMS Manavata unit, INR 5-INR 6 crores. There will still be a drag of INR 1.5-INR 2 crores in the month of May. But once the insurance empanelment gets completed in the next few months, we should then see a much faster ramp-up.
Okay. So all these new units, maybe next two quarters down the line, they should be EBITDA positive, and then profitability should pick up from their own ones.
Nashik and Kerala both will turn EBITDA positive in two quarters.
Okay. And for the quarter, did you mention INR 18 crore of total loss from the new units, right?
Correct.
Okay. My second question is on Telangana cluster ARPOB.
So you mentioned you have new transplant unit, etc., which has helped your margins notably during the quarter. Then my question is, how do you see ARPOB going for this cluster, given we are already at, say, one of the best in industry there, and you have capability on transplant? But if you can elaborate on what kind of capability you have on the transplant side and what kind of volumes you expect to continue on that segment specifically?
So I think we have a pretty mature transplant program both in the heart, lung, and liver and kidney side. But we are still adding a new hospital like in Kondapur. We will start a new transplant program, so that will add some incremental volumes. But there is a lot of work to be done on the broad specialties still in Telangana cluster.
We're still at 50% occupancy, and we're adding more bed capacity with Kondapur . So this will continue to put a heavy growth rate both in the revenue and EBITDA side. There is ample growth for us still in Sunshine, which has grown pretty well, but I think there is more opportunity for growth there.
So you can sustain similar growth trajectory for the cluster, given you have added beds to be ramped up, and then you have capability on the specialty side?
Yeah. Up to 20% kind of a growth rate we should be sustaining with Telangana cluster, given there is new bed capacity existing and additional new hospitals.
Okay. And my last question is, if you can update us on how your mother and childcare offering is scaling up across hospitals. I remember a few quarters back you had a lot of focus on this segment.
Mother and child is doing well. So for us, it will make any other one other specialty with our hospital. We are expecting across the group, it will contribute 10% of the group's revenue when we retrofit it in most hospitals. Currently, also, it is around 10%. It can further expand. We have commissioned. We currently have eight subunits among all our hospitals. They will. For bed capacity addition in a few of our hospitals to start as a service.
Okay. That's helpful. Thank you. I'll get back in the queue .
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. So my first question is with regards to your O&M beds.
So by FY 2027, when we complete the majority of our bed addition program, what percentage of your overall bed capacity would be towards O&M?
I think between the three hospitals, we'll have close to 1,200 beds coming from sorry, 1,000 beds coming from O&M. 250 beds in Kompally, 200 beds in Guntur, 450, and 350 beds in Sangli, 800 beds.
Okay. Understood. And next is on Telangana cluster. So if you look at the occupancy, which you now report on the operational bed, it's close to 50%, and you're already clocking over 30% kind of an EBITDA margin. So for this particular cluster, where should we see the occupancy moving in the next two, three years, kind of a timeframe, and a sustainable EBITDA margin level for the next two, three years' perspective, if you could share?
I think as the revenue grows, we will continue the EBITDA margin will continue to expand. Given we're adding close to 500 incremental beds in Telangana cluster to O&M and to the new Kondapur hospitals. Occupancy we're hoping that over the next four, five years, we'll get to a healthier occupancy where at 50%, we should get to probably 65-70 bed.
Got it. Thank you. I'll get back in queue .
Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Aman Goyal from Axis Securities. Please go ahead.
Good morning, sir. Congratulations for a great set of numbers. So my question is related to if we see on sequential basis, there is a flattish on IP volumes and OP volumes, but there is a great ARPOB growth of almost 8%.
Could you throw some light on this? Is it a specialty mix or improvement in payer mix?
It's a function of both. I think we have mentioned in the past that GIPSA, we had a price renewal that happened in the Telangana cluster. That is one. And a lot of the incremental business that came in from cash and insurance as a payer.
Okay. And could you please give the outlook for the ARPOB growth, especially for Telangana and Andhra Pradesh cluster for next two years?
Like I said, we continue to grow at 10%-15% both in Telangana and Andhra. It will be a mix of both volume and revenue growth. Sorry, 15%-20% both in Telangana and Andhra from revenue and EBITDA perspective. It will be a mix of both revenue growth, ARPOB growth, and volume growth.
Okay. Thank you, sir.
Thank you. Participants, please press star and one to ask a question. The next question comes from the line of Rahul Jeewani from IIFL Capital Services. Please go ahead.
Yeah. Hi, sir. Sir, just a clarification. The new units you said had an INR 18 crore EBITDA loss. That, I think, is the number for the full year and not the quarter.
It's almost yeah. Full year, it is INR 18.31 crores. For the quarter, it is INR 17.89 crores. Majority of it is in quarter, so.
Okay. Sure, sure, Dr. Abhinay. And Dr. Abhinay, how do you look at this drag from the new units going into FY 2026? So obviously, Thane and the two Bangalore hospitals would increase the drag here. So do you think that this INR 18 crore kind of a loss which we booked this year can inch up to a INR 40 crore-INR 50 crore kind of a number going into 2026?
And then if you can also comment on the trajectory of these new hospitals by FY 2027.
So all of both Thane and Bangalore should be operational in Q1, by end of Q1. So Thane will be June 1st, and Bangalore should be July 1st. One on July 1st, one on August 1st. I think 12 months from when they commission, we're pretty confident all three hospitals will be EBITDA neutral, if not EBITDA positive. But there will be a drag for the nine months in FY 2026. So it will continue. I think this INR 18 crore drag will expand a little further given the size of the three new hospitals that are getting commissioned. But by end of Q1 next financial year, FY 2026, I think we should be done with all the negative EBITDA.
Okay. So you mean by financial yeah, Q1 to Q2.
Yeah.
12 months of commissioning these hospitals, we should be EBITDA positive in most of these months.
Sure, Dr. Abhinay. And you highlighted that the doctor you have, let's say, are in the process of onboarding 50 new doctors at Thane. Can you also comment in terms of what are your preparations for the two Bangalore hospitals for the commissioning expected ahead?
Very similar, Rahul. I think we have good traction for both the hospitals in Bangalore. Most of the specialists have been identified, and most of the specialties have been identified. After we commission, which is on July 1st and August 1st tentatively, within two-three months, most of the doctors should get onboarded. And a similar number of 40-50 doctors we will have in the first few months after the soft launch.
For each of the Bangalore hospitals?
Yeah. Sure.
Sachin, can you please comment on the debt number at the end of the year? Given that large part of capacity expansion, let's say, is coming to an end, how do you look at the debt and debt to EBITDA going forward?
The debt position, as of 31st March 2025, net debt of INR 1,805 crore. As I said, most of our CapEx on Bangalore and Thane, we have already incurred. These being large units, I think in the coming year, that is, in the financial year 2025-2026, we'll be adding another 300, 400 crore, not beyond that. At the most, this INR 1,800 crore is anticipated to reach to about some INR 2,100 -odd crore at the end of this current financial year.
Yeah. Sure. In terms of CapEx spend, how do you expect the CapEx to be over the next two to three year period?
As far as the CapEx is concerned, again, as Bangalore and Thane is almost done, most of the CapEx which is coming in the coming years will be towards maintenance CapEx. The newer units, newer expansion which we have done and which we have already announced, like Srikakulam, Ongole or Anantapur. Additionally, in Kondapur, we are building a new hospital. The medical equipment spending, which we'll be doing in Kondapur, that will be a newer CapEx. At the most, the total CapEx spend in the next two financial years will be to the tune of totally will be to the tune of about some INR 600-700 crore.
Rahul, just to add to what Sachin said, I think we'll continue to maintain the net debt to EBITDA at 1:2.
We are very cognizant, maybe one or two quarters it will go higher, but overall, we'll try to maintain that number. As the net debt tapers down, we have identified more projects. We will continue to add more capacity for long-term growth.
Okay. And so, Dr. Abhinay, apart from Bangalore and Kerala, so where are you then thinking about capacity expansion going forward, let's say, once the current round of capacity expansion is done with?
So I think Andhra, we're looking at more bed capacity addition. We're looking at something in Vijayawada. We're looking at one more facility in Vizag to consolidate the market. So that is in Andhra. In Hyderabad, we are looking at one more geography, one more micro market other than Kompally. And obviously, Kerala and Karnataka, we have a lot to add.
Yeah. Sure. I will join the queue . Thank you.
And one more on the debt, Rahul. See, basically, over a period of time, everybody was concerned about debt, debt, and one is to instead of and I went back and looked into the things and seen the research. As long as we are payout for a year, less than 20% of our EBITDA, then the concerns what everyone has about this 1:2, 1:2.1, 1:1.5 may not be a thing which needs to look into that. That's what my personal feeling of research.
Sure, sir. Sure. Sure, Dr. Bhaskar. Thank you.
Thank you. The next question comes from the line of Anshul Agrawal from Emkay Global Financial Services. Please go ahead.
Hi. Thank you for the opportunity. Am I audible?
Yes, please go ahead. Yeah, you're audible.
Great. Great. Thanks. So my question is on the AP cluster.
So while we have reported good growth in the top line as well as EBITDA, OBDs or the occupied beds number has sort of trended downwards for the full year as well as in the quarter as well, despite bed additions. So why have volumes been tapered in this cluster?
The seasonal impact, Q3 versus Q4, across all clusters, there is an IP volume dip. And also, in this case, there's an ALOS dip in case of Andhra. So that's why the occupied numbers are low. Usually, Q2 to Q4.
I think for the full year, I wanted to yeah.
Yeah. For the full year, there has been growth, right?
No, full year occupied beds, I think, have gone down by about 8%.
ALOS coming down by almost 15%. If you look at the IP volumes, the volumes have gone up by almost 6%.
Okay. Got it.
And the reason why this trend, is it efficiency driven? Because I believe if your ARPOBs are improving because of pacemakers, etc., those specialties would ideally be taking more time for patients to recover, etc. Any reason why this ALOS has sharply corrected at a group level as well?
In Andhra, there has been a lot of efficiency from the scheme, state government scheme. And that is why there has been a good decline in the length of stay. Because if you look at most of our clusters, it's in the range of 3 to 3.5. But Andhra is slightly higher. So because of a higher component of the scheme, given that the scheme efficiency is improving, the overall length of stay is also improving.
The other important factor in the healthcare is when the organizations keep growing and getting a good brand name and good consultants.
And a lot of complex cases will try to reach the most efficient organizations from all over the country. With that, when there is a complex case coming, the financial ARPOBs also will increase because of the complexity of things, what we need to use, and the materials, and everything. That is the other reason. Even though if it is coming down, the number, when the seasonal and ALOS, apart from that, we do get, because of our brand name and the outcomes of the patient care, a lot more patients we are attracting throughout the country.
Got it, sir. Thank you so much. That's it from my end.
Thank you. The next question comes from the line of Gagan Thareja from ASK Investment Managers. Please go ahead.
Yeah. Good morning, sir.
The first question is on the ARPOB growth that you have registered for the year, very strong number of 20% plus. If you can explain how much of that ARPOB growth is coming from pacemakers, payer mix, and simply a revision in insurance rates and increase in tariffs?
Yeah. I think there has been a good 20% plus growth in ARPOB. The key contributors, one, there has been price revision in the Telangana cluster. The length of stay has come down by almost 15%, which also contributed to this, and given the payer mix, we are more focused on cash and insurance, and in the newer markets like Nashik, Sangli, Guntur, where entitlements are not yet through, most of the business is cash business. So that is one of the reasons why we've seen a higher ARPOB.
Is it possible to enumerate the increase in tariffs and also the proportion of scheme patients down substantially year on year?
Scheme patients are down by 2%, by 2%, both the public sector scheme and state government scheme. Okay. Right. In absolute number, in absolute number, it remains the same. But given the growth in the other years, as a percentage, it has come.
But for the coming two, three years, how should we model or think about ARPOB growth? Because typically, hospitals tend to report a mid to high single-digit ARPOB increase on an annual basis. This has moved up substantially last year for you, and I think in the last three, four years post-COVID for most hospitals. But from here on, how should ARPOB growth look like?
Given that we are adding a lot of three new hospitals in two large cities, Bangalore and Thane, it will further improve the overall ARPOB. It's better to read it on a cluster basis. I think on a cluster basis, Andhra and Telangana, pure ARPOB growth should be 4%-5%. The rest of it will be driven because of reduction in ALOS, better payer mix, and better case rates. Maharashtra and Kerala, Karnataka, given that they're all in growth phases, it will be difficult to kind of predict the ARPOB growth at this point in time. Because all these clusters are very new, there's no price hike that we plan to do in these clusters.
To add that, there are certain things what we have done, as I was mentioning, that we have been introducing the new technology when compared to in India.
We are the first movers, like this magnetic resonance focused ultrasound, which can be able to generate around INR 25-30 crores a year, which doesn't require any admission. Similarly, TULSA-PRO. And we're also adding a lot more technology in the radiation oncology. And these are all the things which doesn't require any admissions. They're all OP-based. That way, there is operational cost also very, very minimal. So with that, the ARPOB growth should be we can expect a good growth moving forward.
Okay. Right. And I mean, if I simply look at your available beds today at 5,100 with an occupancy of 48%, and another 1,500 beds coming over the next one year, if I understand it correctly, between Bengaluru, Thane, and Srikakulam and Ongole, and then another and Anantapur, and then 800 more thereafter.
If one were to take a five-year view, is it reasonable to assume that all of this bed capacity, 5,000 beds odd, going to 7,500 odd, can be optimally utilized in a five-year time frame? And if so, is it therefore reasonable to assume that between ARPOB increases and occupancy increases on a higher bed count, a 20% plus sort of or at least a 20% corridor sort of revenue CAGR is a very achievable number for a five-year time frame?
I totally agree with that. It's a very good. Yeah. I'm not sure to believe it.
Right. And I also would like your opinions on the margin profile. I understand that the bed additions initially kick in with full costs, and the revenue benefits accrue over a period of time.
So therefore, is it reasonable to assume that perhaps in 2026, because of the fixed costs, the operating margins might take a bit of a hit and then ramp up again, and then in a 3-4-year time frame, you can achieve your optimal margins of 27%-28%?
I think it's always one level certainly be a hit at a group EBITDA margin for this financial year. And given the course at which we are adding beds in different clusters, there will always be a significant number of beds that will be in their growth phase. Maybe 30%-40% of the beds, they will always be in their growth phase. So it is always better to look at it more from a cluster point of view than to look at it at a group level.
I think mature clusters that we define as mature should be at a 27%-30% kind of a margin. And the newer clusters should see consistent growth on a quarter-on-quarter basis. I mean, you're on your way.
Okay. All right. And in terms of depreciation expense, as in when new beds get commissioned, I mean, should one see a proportional increase in that line item of the P&L for next two years?
Yes. You're right. So as soon as the hospital gets commissioned, the depreciation for that hospital asset gets kicked into the profit and loss account. So yes.
All right. Thank you, sir. Thanks for taking my questions. I'll get back in the queue. Thanks.
Thank you. The next question comes from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Hi. Good morning, everyone. Another question on ARPOB, sir.
With ALOS now already down to 3.6 days, should we expect ARPOB growth and ARPP growth to be more aligned going forward?
Yeah. At the group level, yeah.
Got it. Secondly, Abhinay, can you comment on the performance of Nagpur and Sunshine individually in this quarter, as well as maybe some comments on the performance for FY 2025 would also be helpful?
So on Sunshine, we have reported an EBITDA of close to INR 47 -odd crores and a revenue of 55 sorry, INR 155 crores and an EBITDA of INR 49 crores, INR 47 crores. So there has been very good growth on a quarter-on-quarter basis, both in Sunshine as well as in Nagpur. In Nagpur, we've made a revenue of close to INR 18 crores and an EBITDA of INR 12 crores.
Sorry, did I hear that correctly? INR 18 crores of sales and INR 12 crores of EBITDA in Nagpur?
INR 56 crores of sales and INR 12 crores of EBITDA in Nagpur.
Okay. Okay. And if you can comment for the year as well, sir, would be helpful.
For the full year, for the full year, Sunshine did around INR 600 crores of revenue and INR 170 crores of EBITDA. And Nagpur did INR 1 00 crore of revenue and INR 40 crores of EBITDA, INR 37 crores of revenue.
So qualitatively, would it be fair to say that, I mean, both these networks, Sunshine as a network and Nagpur, the hospital are pretty much on track? And if I look at Maharashtra cluster, the way we have reported it this quarter, and maybe how we'll report it once Thane comes in, it's safer to assume that Nagpur will remain steady, and then we'll see that gradual ramp-up in Nashik, as you mentioned, and Thane going forward, and maybe Sangli also once it comes in.
So is that the right way to look at it? Sunshine, Nagpur, healthy and improving going forward, and then, of course, the newer hospitals contributing gradually going forward?
Correct. So even though Secunderabad and Kondapur, there is a lot of room for growth, given that we are adding capacity in both these hospitals. And Sunshine, anyways, they've added capacity, and they're waiting for more ramp-up to happen. So in fact, Telangana cluster and Nagpur will continue to grow at a steady growth rate. And then newer hospitals will add over the next few years.
Got it. And just one last bookkeeping question. What is the nature of the non-recurring expenses of INR 67 million in Kerala?
So this is the stamp duty which we have paid. This is basically the stamp duty which we have paid on the registration of amenities at Kannur and Kollam.
So since we have accounted it under Ind AS 109 business combination, the accounting standard requires us to expense these expenses to the profit and loss account rather than capitalizing it. Since this hospital unit has commenced operation in the current quarter, we have expensed it to the current financial quarter. It is INR 6.75 crore.
Got it, sir. That's it from my side. Thank you and all the best.
Thank you. The next question comes from the line of Vihang Subramanian from Zaaba Capital. Please go ahead.
Yeah. Hi. Can you hear me? Can I be audible?
Please be a little louder, Vihang. Thank you.
Yeah. Great. Yeah. Just another question on ARPOB. Probably you've answered this in some shape or form. But when you look at your ARPOB versus some of the other listed peers, I think at an overall company level, we are still trending much below.
So it could be due to regional exposure, patient-level mixes. But given that you're moving outside your core region now incrementally, as well as improving patient-level mix, from a two-to-three-year perspective, do you think that this gap closes now?
I don't think the right way to look at it would be at a group level. So we should look at it from a cluster level, given we operate in different geographies. Even within geographies, we operate in larger cities and tier two, tier three towns. So it may not give us the right indicator. If you look at the Telangana cluster, we're at 65,000. Andhra, given that the market is around 23, 24, we are in that range. Maharashtra, we have a mix of now with Thane and tier two, we'll have a mix of both markets.
I think it may not be fair to compare it with peers at a group level. It may not give the right picture.
Understood. That's fair. Any guidance you would like to share, though, for group-level ARPOB? Because you're already at 40,000, right? And incrementally, most of your regions or your expansion seem to be in higher ARPOB micro markets. So do you think that this 40 could potentially trend harder towards 50, 55 over the next two to three years?
Yeah. It should definitely scale to that number. Because given three big assets are getting added in larger cities, and there is a lot of growth left in Telangana cluster, it will go in that direction.
Understood. That's very clear. That's it from my side. Thank you and good luck.
Thank you. The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services.
Please go ahead.
Thanks for the opportunity. So specifically on Telangana front, just would like to understand, given the kind of profitability at which we are currently, but occupancy is still sort of at 50% primarily because of addition of beds. So here, what would be key drivers to drive both occupancy as well as profitability over the next one to two years, either in terms of case mix, payer mix, if you could elaborate?
Yeah. I think in Sunshine, there is a lot of scope to add new specialties, especially in the Begumpet facility. We are now looking to start an oncology hospital within Sunshine, within the new Begumpet facility. There are a lot of specialties that we invested in the last one year, which have still not grown to the speed that we wanted to grow.
So given all of those initiatives, we're pretty confident that the occupancy will grow. And as far as Kondapur is concerned, we're getting a new facility. Right now, we're running at a very high occupancy, limited space. With new space, we will add a lot of new specialties that we have not been focusing on today currently, like oncology, transplant, and Kondapur. So a lot of these initiatives will help us continue to scale at Telangana.
Got it, sir. And likewise for Andhra Pradesh, the ARPOB has been sort of at least sub 20,000. So any chance there to scale up or get further better on as far as ARPOB is concerned?
It will be a steady growth in Andhra. We are now doing a lot of transplant work. We will start oncology pretty soon in most of our hospitals. So it will definitely improve.
We are pretty confident we'll get to a 30,000 kind of mark over the next few years with a mix of both payer mix and case mixes. But it also is what the market can offer.
So when you say 30,000 ARPOB, so effectively, so what timeline are we targeting?
Because a lot of the capacity is coming in 2027. So we should take a good three-four-year period before we scale up both the ARPOB and revenue.
Got it. That's it from my side. Thank you.
Thank you. The next question comes from the line of Damayanti Kerai from HSBC Bank. Please go ahead.
Hi. Thank you for the opportunity. I just had one last question. So if you can update us on the Thrissur unit, and then how is the payer mix in Kerala cluster looks like. Thank you.
Currently, we are operating in two places, Kannur and Kollam.
Both these markets, a significant contribution is just cash as a payer. Also because some empanelments are still yet to be done for insurance. But both these markets, we don't see beyond 80% being cash and 20% being insurance. Thrissur, we should commission by next financial year.
Next financial year? 2026, right? This year or next year?
2027.
2027. Okay. Okay. Thank you.
Thank you. A reminder to all participants, you may press star and one to ask a question. Participants, please press star and one to ask a question. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management to give their closing comments.
I think thank you very much for all your questions, and some more knowledge has come. We have seen last year, 2025, as a very good year.
Moving forward, being in healthcare, there are a few important things which we need to be able to address. We need to provide healthcare to all the people, whether it is a type one, type two, type three cities, with an affordable cost. That's why in Andhra clusters, we have been in the same population. We have been put in 10 places, whereas in Hyderabad, it is only in the four, five places. The ARPOB growth and the quality care we need to provide for even the middle, lower middle-class people. Everywhere we go in all the clusters, we are doing the same thing. And at the same time, we will see that the growth, I will keep on telling, in the past few years.
And the growth in the next few years, we have been planned in such a way that it will continue whatever we have been showcased in the last few years. It will continue to grow for the next decade. That was our aim. And I believe that we can be able to execute that plan also. I thank you very much for your trust on us. And we are always with the quality care to provide to the patients and also see that our investors should also get the benefit out of your investments with us. Thank you.
Thank you so much, sir. Ladies and gentlemen, on behalf of IIFL Capital Services Ltd, that concludes this conference. You may now disconnect your lines.