Ladies and gentlemen, good day, welcome to the Dr. Lal PathLabs Q4 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, over to you, sir.
Thank you. Good evening, everyone, and welcome to Dr. Lal PathLabs Q4 FY 2026 earnings conference call. Today, we are joined by senior members of the management team, including Mr. Shankha Banerjee, CEO, and Mr. Ved Prakash Goel, Group CFO and CEO, International Business. I would like to share our standard disclaimer. Some of the statements made on today's conference call could be forward-looking in nature, and the actual results could vary from these forward-looking statements.
A detailed statement in this regard is available in the results presentation, which has been circulated to you and also available on stock exchange websites. I would now like to invite Mr. Shankha Banerjee to share his perspectives. Thank you, and over to you, sir.
Thank you, Nishid, and good evening, everyone. I am pleased to join you today to discuss our performance for the fourth quarter and full fiscal 2026. We conclude the year on a strong note, maintaining a steady growth trajectory. Our FY 2026 performance underscores the resilience of our business model and the continued preference of patients towards clinically reliable organized diagnostic providers.
We achieved revenue of INR 703 crores in quarter four FY 2026 with a growth of 16.6% and INR 2,763 crores in FY 2026 with a growth of 12.2%. This performance has been primarily driven by growth in sample volumes. A significant highlight this quarter was the successful hosting of Medllumina 2026, a first of its kind international medical conference from Dr. Lal PathLabs.
This landmark event brought together over 500 clinicians and global thought leaders to deliberate on the new era of diagnostics, specifically focusing on high complexity domains such as oncogenomic, transplant immunology, infertility, autoimmunity, and rare genetic disorders. By creating a platform over two days of scientific dialogue and collaboration, we are not only reinforcing our scientific leadership and brand equity among the clinician community but also accelerating the adoption of high-end specialized testing.
This initiative underscores our position as a vital clinical partner, deeply integrated into the precision medicine ecosystem. To build further on our scientific leadership, we have started a wide-ranging R&D program. It encompasses tie-ups with leading academic institutes with specific research projects, international companies and startup ecosystem collaborations, as well as in-house research projects culminating with publications in reputed medical journals.
On the operational side, we successfully executed our expansion plan for the year, adding 14 new labs and more than 1,100 collection centers. These additions, coupled with the integration of cutting-edge AI diagnostic tools and specialized testing platforms, ensure that we are well-positioned to meet the rising demand for high quality, accessible healthcare across the country.
Our preventive healthcare brand, Swasthfit, contributed 27% to our total revenue in FY 2026, proving to be a critical lever for B2C growth. Sustained growth in Swasthfit continues as we deepen market penetration and offer a wider range of packages. An important milestone of our strategic journey this year has been the launch of Sovaaka in the premium wellness space. Sovaaka is not just an addition to our portfolio, it represents a foray into AI-powered precision health screening.
Unlike traditional diagnostic models, Sovaaka offers a holistic concierge-led experience that bridges the gap between high-end diagnostics and personalized health management. In parallel, the larger healthcare ecosystem is also expanding, with many hospitals adding new infrastructure and capabilities. Thus, it is not surprising that diagnostics are also growing alongside this expansion. This further opens opportunities for better integration, stronger linkages and expansion of super specialized testing over time.
We are entering FY 2027 with strong operational momentum, a strengthened digital infrastructure, and a clear pathway towards sustaining early to mid-teens revenue growth. I will now hand over the call to Ved to discuss the financial metrics in more detail.
Thank you, Shankha. Good evening, everyone, and a warm welcome. Thank you for joining us today. I will take you through the key financial highlights for the quarter and the full year 2026. Revenue for Q4 FY 2026 came in at INR 703 crores compared to INR 603 crores in the same quarter last year, reflecting a growth of 16.6%. Revenue for the full year stands at INR 2,763 crores against INR 2,461 crores in FY 2025, a growth of 12.2%, driven by sample volume growth of 12.9% in Q4 and 10.4% in FY 2026. Revenue per patient for Q4 FY 2026 is INR 956, up by 7.8% compared to INR 887 in Q4 FY 2025.
This is mainly due to improvement in test and geographic mix. Test per patient for Q4 FY 2026 stood at 3.21 compared to 3.07 in Q4 last year. EBITDA for Q4 FY 2026 came in at INR 187 crores compared to INR 169 crores in Q4 FY 2025, registering a growth of 10.5% with an EBITDA margin of 26.6%. The full year EBITDA stood at INR 752 crores compared to INR 696 crores in FY 2025, registering a growth of 8.2% with a margin of 27.2%. PBT for Q4 FY 2026 came in at INR 160 crores compared to INR 154 crores in the same period last year with a margin of 22.8%.
Full year PBT stood at INR 669 crores against INR 625 crores in FY 2025 with a margin of 24.2%. PAT for Q4 FY 2026 came in at INR 132 crores compared to last year INR 156 crores in Q4 with a PAT margin of 18.8%. Full year PAT stood at INR 510 crores against INR 492 crores in FY 2025 with a margin of 18.4%. EPS for the full year is INR 30.2 compared to INR 29.2 last year. Please note that the results for this quarter and the full year have some exceptional item. Number 1, one-time cost of INR 30 crores related to the new labor code, which was accounted for in Q3 FY 2026.
Number 2, there was an additional benefit of INR 41 crores in Q4 FY 2025 on account of voluntary liquidation of Suburban Diagnostics. Excluding this one-time and exceptional item , EBITDA margin for FY 2026 is 28.3% with a growth of 12.5%, and PAT margin is 19.3% with a growth of 17.9%. We continue to maintain a strong balance sheet with our net cash and cash equivalents standing at INR 1,526 crores, providing ample liquidity for future growth and M&A. Our commitment to operational excellence is reflected in our lean working capital, which is negative by 26 days.
Further, I am pleased to share that the board of directors have approved the final dividend of 40%, that is INR 4 per share, taking the total dividend for the year to INR 20.5 per share. That is 280% after adjustment of bonus issue of 1:1 in Q3 FY 2026. With this, I conclude my opening remarks and now request the moderator to open the forum for Q&A. Thank you.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 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. Again, you may press star and then one to ask a question. Your first question comes from the line of Tausif from BNP Paribas. Please go ahead.
Good evening and thanks for the opportunity. Couple of question on the recent asset acquisition of Shahbazker's in Mumbai. Just wanted to know, Mis, what is the business mix over there? What's the share of radiology and pathology at 100% of revenue considering walk-in patient, and what has been the rationale of acquiring Dr. Lal acquiring this asset?
Right. I'll take the last part first. The reason we have acquired this asset is this is quite an old operating lab. It has got a legacy of over 45 years in that geography. You know, it's in a micro market in Mumbai where we actually with either Lal PathLabs or Suburban don't really have a significant presence. This is going to add to our, you know, portfolio in that market. Given that, you know, we are looking at really building our presence strongly in Mumbai and the West region. That is the reason why we've acquired this entity.
Yes, it is a business which has radiology as well as pathology, but I think the exact mix is not something which we are readily kind of disclosing.
largely it is a pathology, but having a basic radiology, which is sonography and, you know, X-ray, but not high-end radiology. largely it is a pathology business.
Understood. What would the EBITDA margin profile for this asset?
We have not disclosed the EBITDA margin for as of now. We have disclosed this it's about a INR 6 crore kind of turnover top line. It's a small asset. It's not large.
Okay. Does this asset have scope to further grow in that micro market that Dr. Lal can scale up over there?
Yeah. Idea is it obviously gives us access to that micro market and, you know, over a period of time, you know, as we deploy some of our products and marketing techniques, we would expect this geography to grow.
That's helpful. Any color on this quarter volume growth, it looks better compared to previous quarters.
Yeah. This quarter, volume growth has come at 8.2%. You know, even in the last quarter, I had mentioned that, you know, quarter to quarter even on volume is not really a very, I would say, you know, a robust way to look at it. If you look at the annual progression of the patient volume growth, you know, we have steadily increased over the last three years and we feel that, you know, going forward also we should be able to inch up further in terms of patient volume growth. With our new, you know, access points, labs and collection network that we are increasing, you know, we should see some increase in that number as well.
That's helpful. I'll get back in the queue.
Thank you.
Thank you. The next question comes from the line of Amey Chalke from JM Financial. Please go ahead.
Yeah. Thank you for taking my question, and congrats to the nice, good number. One question I have on the margin side. This quarter we have seen a sharp jump in the other expenses. I understand that second half is generally marketing heavy, but even this jump looks much sharper even on Q3. How sustainable it is and if you can also give color on margin for next year in line with that. Thank you.
Amey, in this quarter, we have spent a little bit extra. As we said, we are investing in the business. We have spent extra amount on our infra, uplifting of infra, including Delhi NCR as well. Second is, we are spending more amount on A&P, which is, while we are growing or deeper or spreading across other geographies. Spending on the A&Ps also step up. These are few of the expenses where we have done in this quarter. While for the next year, as we are closing this year, 27.2% even after taking the one-time charge of INR 30 crore on account of new labor code.
We are hopeful, for next, you know, next year also we are looking something similar margin like, between 27%-28%.
Sure. You don't expect margin to expand next year, what you are telling?
Yeah. That's why I'm saying, we are expecting this margin in the range of 27%-28%. The reason because we are investing in the business, be it infra, be it opening new labs. If you see in last two years we have added 32 labs. You know, this year also we have added 14 labs. We'll continue to add few more labs in next year also. Those investments are going in the business, and that's where we are looking to maintain the similar margins.
Sure. I wanted to understand, I believe last few quarters you have also given an indication on the price hike, which we have not taken over last three years. Any thoughts on that? If it is going to come, shouldn't that also help you to improve margins in the coming year?
The price hike, we have said that, you know, we have completed three years since we took our last price increase. We also said that, you know, we will kind of wait and watch, especially because we had taken a decision to pass on the GST-related benefit. You know, a few quarters, we will wait and watch and see how the market is reacting and, you know, what position we are in, how is our business growing, how is the competitive situation looking like. I think basis that, maybe we'll decide whether we need to take a price increase or not. Definitely if it is there, it is a few quarters away. It's not something which is immediately on the cards.
On the margin front, you know, the overall margin that we see, 27%-28%, we feel is a quite a healthy margin. Anything extra that we feel can be generated or if it is available for us, we will invest back into the business for growth.
Sure. Sure. Thank you so much, sir. I will join back.
Thank you.
Thank you. Your next question comes from the line of Anshul Agrawal from Emkay. Please go ahead.
Hi. Thank you for the opportunity. I just wanted to confirm the FY 2027 revenue guidance that you mentioned, sir. Is it early to mid-teens?
Yeah, early to mid-teens.
Great. That suggests that the volume growth that we have delivered in the current quarter seems to be sustainable for the entire year. Is there any particular geography or channel which is sort of disproportionately contributing to this growth? Your thoughts, and some more color on this, you know, I'm guessing you're going faster than industry here.
I think I would not kind of correlate it to a quarter alone because again, if I am talking about, let's say, if you look at the annual trajectory and that's a much better way to judge because between quarters there could be, you know, some movements and, you know, seasonality and other impacts which can happen. Best way to look at is the annual number. If you look at the annual number, the patient volume growth is at a 5.3%, which is better than 4.2%. You know, we have given, let's say 12.2% overall annual revenue growth.
Now, if we move up, obviously there is some part of it will be through the patient volume, but we are also seeing, you know, samples per patient increasing, so the sample volume growth is another factor. You know, because of geography and test mix, we are seeing a revenue per patient also going up. All of these three will finally contribute to the overall revenue delivery. The 8.2% patient volume growth that we see in this quarter is something which I wouldn't so hastily build into the plan for next year.
Got it. Clear. What I wanted to probably understand, you know, just a follow-up on this, was whether realization per patients which have improved as well. I understand Ved mentioned that it is because of geographical and test mix. This is despite us increasing contribution from Tier 3 geographies. Well, I'm trying to understand again here whether, you know, Tier 3 geographies are dilutive in nature or accretive in nature to our baseline realizations. Yeah, your thoughts on this.
I think this is a discussion we've been pondering in the last quite a few of these calls. You see close to 39% of our revenues is now coming from Tier 3 plus geographies, and we have a realization which is in front of you. Obviously, it can't be dilutive. I think I've tried to explain it in the past as well. The way we run our pricing is actually in clusters. It's not as if I move from a city like Lucknow to, let's say, a city or a town which is smaller nearby, the pricing is going to change. The pricing in that cluster is actually the same.
It isn't as if I'm going to a Tier 3 market naturally means that pricing is going to be different. The cluster pricing remains the same. Parallelly, even when I'm going into the Tier 3, Tier 4 towns with more access, we will be able to sell our health packages, preventive checkups and all of those, which even at a revenue, on a revenue side, is or a revenue per patient side is slightly higher revenue. I think there are those factors there. As of now, it has not been dilutive, and we don't believe it's going to be dilutive going forward as well.
Great. Clear. Could you help me with the CapEx guidance for FY 2027 and the B2C revenue share in the current year?
Anshul, for CapEx, I think, we are planning to be in the range of INR 100-120 crore, kind of CapEx for the next year.
The B2C contribution this year is about 75%.
Great. If I can squeeze in one more. Viji, this CapEx guidance, I would suspect, there are incremental CapEx, in addition to sort of the lab infrastructure. Could you call out whether, are there any radiology projects planned which are built in this CapEx number?
Yes. We are planning to have, you know, 1 or 2 radiology center. That's includes in there. This INR 120 crore is 1 is maintenance CapEx, obviously. Another is, you know, we are opening, like we opened 14 labs in this year. Next year also we are looking 12-15 labs, another labs. One, you know, another investment we are making in our precision lab. Those are the additional investment in addition to maintenance CapEx.
Great. Many thanks. All the very best.
Thank you.
Thank you.
Thank you. The next question comes from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead.
Yeah. Hi, sir. Hi. Thank you for the opportunity. My first question is with regards to the FY 2027 revenue growth guidance. If you look, post-COVID, our run rate has been around 10%, 12% kind of a growth, and we are guiding for, you know, early to mid-teen. Just wanted to understand, you know, what are the kind of structural tailwinds you are seeing into the business? Secondly, if I look at your FY 2026 performance, it's been, you know, quite broad-based across regions. If you could also highlight, you know, when we talk about Tier 3, Tier 4, which are these geographies exactly, you know, contributing to the growth?
You know, the confidence behind the early to mid-teens is driven by the work which has been happening in the last, you know, two years. I think the continuous, you know, expansion of lab infrastructure and the collection network. If you see over two years, we've added close to about 32 labs and almost close to 2,000 collection centers. We all know that this infrastructure , you know, matures with time. Typically, you know, that is what is going to be building up for us, number one. Number two, you know, we have quite a bit of a focus back on Delhi NCR, you know, which is our stronghold, and we've been able to sustain the double-digit growth in Delhi NCR.
We believe that even going forward, we'll be able to sustain a double-digit growth in Delhi NCR. Our west region, our Suburban business in the last quarter, as we had spoken earlier, has started picking up. We are seeing, you know, better growth trajectory coming back to Suburban. Those are really helping us, you know, project a number that we should be able to do early to mid-teens. That's the place. You had a second part to the question. What was that exactly?
Yes, sir. Second part to the question was, you know, when I look at your FY 2026 growth of 12%, you know, in the PPT when I refer to this revenue split, you know, across the region, it's quite identical.
Right
... to what it was in fiscal 2025. You know, when we talk about the much of the growth coming from Tier 2 and Tier 3 cities, you know, how does that pan across the regions in which you operate in?
Look, most of our tiers, Tier 3 plus, towns are in our stronger brand markets in north and east. That is where, you know, the most of them are. But there are Tier 3 towns that we operate in west and south as well. All of them are showing growth. Like I said, you know, some of the metro areas like, you know, Suburban Diagnostics business is also showing a perk up and Delhi NCR also is doing well for us. It is quite broad-based.
Understood. Just one last one, if I may. Yeah. I mean, if you could also highlight on the Sovaaka centers, you know, how many centers we have and, you know, when we talked about next year, CapEx guidance, you know, what are we factoring and, you know, what is the revenue run rate across those centers now?
Sovaaka, we've launched one center, which was launched in January. It's a new concept, and even in the last call, we had highlighted this, that, you know, we would first like to stabilize the center before we work out the expansion plan. Immediately in the next financial year, we aren't really looking at more centers which are like Sovaaka. There are other integrated, you know, high-end radiology centers that we've opened in Delhi NCR. We may open in Delhi NCR. We may also try and see if, you know, the same model can be operated in maybe a Tier 2 town in north. You know, those are some of the things we will try.
Sovaaka is one center and there is no plan to add centers in the next financial year. Next financial is more about building that center up and be, you know, being very sure about the expansion plan after that.
Very clear, sir. Thank you.
Thank you.
Thank you. Your next question comes from the line of Bino Pathiparampil from Elara Capital. Please go ahead.
Hi. Good afternoon. Congrats on a good set of numbers. Just a question on the Middle East war and the raw material price inflation. Do these things have any impact on our operations in terms of availability or cost of reagents, et cetera?
Bino, as of now, no, because we are, you know, obviously we have ample sufficient inventory for the next three, four months, and we have long-term contracts as well. Having said that, I can't comment on what happened after three, four months. If this war continues, obviously there will be some impact may come on our, you know, supply chain. I mean, because we import most of our reagents and consumables also. There are linkages with oil and all that stuff. As of now, we are able to maintain. Yes, in future, I, I don't have visibility right now.
Got it.
Got it.
Just a couple of bookkeeping questions. One, this entity you have acquired, does that have just one lab or is it a few labs?
No, see, this Shahbazkers is one lab. It's a single lab.
Okay. The tax rate, consolidated tax rate for the year is a bit lower than previous years. This 2021, 2022, here looking at or will it swing back to 25% tax rate?
No, tax rate is similar because, as I explained in my opening remarks, last year we got.
You know, some additional benefit due to, you know, Suburban liquidation and that's why INR 41 crore was the exceptional benefit which was there last year. Tax rates are same.
The current year rate will stay for next year as well because the current year.
Yeah
is a bit little below 25, 23 range. Yeah.
Yes. It is in the same range, which is around 25%.
Oh, thank you.
Thank you.
Thank you. Your next question comes from the line of Rajat Baldewa from Kizuna Wealth. Please go ahead.
Hi, sir. Thank you for giving me the opportunity. My first question is on the acquisition side, which you have acquired in Mumbai named Shahbazkers Diagnostic Centre of up to INR 20 crore, about 3.3x estimated revenue of INR 6.11 crore for establishing presence in Mumbai. Given that crowd, Mumbai's crowded lab market like Micro Labs, Easy Lab, and there are many standalone labs. What was the competition intensity there, and is this a merely two-whole acquisition or the first of multiple bolt-ons in Maharashtra?
I think like I was explaining to one of the questions earlier. Within Mumbai, there is a micro market where, you know, we don't have a presence either through the Suburban Diagnostics or through Lalpath Labs. This acquisition kind of fills that gap for us. You know, every large market has a lot of opportunity, and not only is the opportunity because of, you know, there will be large labs present, but there are lot of unorganized labs also in those markets. Plus, the overall demand in these markets are also growing. The opportunity for growth is available in these markets. We definitely want to participate and grow our business in Mumbai city as well. That's really the rationale behind the acquisition.
Great, sir. Sir, is there any plan on radiology side during next three, four-year growth plan, specifically on radiology?
Our, our plan is a very slow and calibrated, as of now on radiology because we are still working on, you know, that, how we will be able to replicate 1 center success to more and, you know, we need to work that out on a very organic basis. It will be very slow and calibrated. We have not set any ambitious targets for us on radiology growth, in the next four or five years, the way you are suggesting.
Okay, great. Thank you very much.
Thank you.
Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. Our next question comes from the line of Hrishikesh Tule from Tokai Investors. Please go ahead.
Hi. Good evening. Could you please share how you are prioritizing your investments in new labs versus the old collection centers? Also, what kind of ROI thresholds and the payback periods that you typically look at when you are trying to expand in these?
I didn't get your question. Investment in lab versus collection center?
Yes.
What was the question?
Okay, let me step back. Let's talk about CapEx, right? You talked about how you're, there is maintenance CapEx and growth CapEx. Could you please elaborate on your growth CapEx, how you're going to spend it?
I think, we've talked about it. There are new satellite labs that we are going to open up, right? Then there is, you know, maybe a few high-end radiology setups that we will do. Plus, we have acquired, you know, an asset to set up a precision diagnostic lab so that, you know, which has kind of high-end complex testing and those kind of machines, equipments, et cetera, will be there. All of these are part of our CapEx plan for next year.
All right. Great. Thank you.
Thank you.
Thank you. Once again, to ask a question, please press star and one. Our next question comes from the line of Prakash Kapadia from Kapadia Financial Services. Please go ahead.
Yeah. Thanks for the opportunity. Congrats to the team. You know, after a long time we've seen, you know, growth being broad-based across most of our geographies on an annual basis. The good sign is Delhi NCR has really done well this year. That's good. If you could give some insights, is it, you know, focusing on existing customers, some quicker turnaround, high-end test? What is, you know, leading to Delhi NCR growth? You know, if I look at the quarter, growth has finally, you know, come above 15%. Now channel check suggests, you know, it is lesser competitive intensity across the board. There are selective price hikes in some of the packages, which is also, you know, leading to this growth.
You know, you mentioned in your remarks, Shankha, that you are pretty confident of, you know, growth being mid-teen, so we should expect higher growth in Suburban and, you know, some of the other geographies which has just started to continue, which will give us, you know, steady state 14%-15% growth in the coming quarters. Is that the aspiration we are working?
Thank you, Prakash, for the question. I think firstly on Delhi NCR, I think it's a lot to do with maybe all the things that you said because, you know, we've got a very strong brand equity and presence. We have just tried to activate all our channels, including our own own infrastructure, our partners, as well as, you know, improved our service levels. I think I had mentioned in one of the previous calls, we've also added, you know, a few testing locations in Delhi NCR to improve the turnaround time. Yeah, a lot of work is happening on the specialized portfolio as well. You know, it's an all-round effort which is carrying on.
We are seeing results and that's how our Delhi NCR growth at double digits is getting sustained. Going to the other question about guidance for next year. When we say early to mid-teens, I am talking about a range which could be between 13 to 15. Basically, you know, annually we have already seen that we've been able to deliver 12.2-
Two, yeah.
One quarter which is quite good, the last quarter. Like I said, one quarter is not the way we kind of judge the business. Like, you know, there are a few things which are working for us. Our lab and network expansion that we have been able to deliver, you know, that's going to accumulate each year as we move forward. You know that cumulative benefit will flow through. Delhi NCR growth is sustained, and we also are seeing Suburban Diagnostics business now picking up in terms of growth rates. All of these are going to be contributing and helping us, you know, add a few percentage points to our growth rate.
Great. Suburban, any sense if you could give, is it going to be package driven? Is it going to be individualized driven? You know, when we talk of the overall 28% revenue coming from packages, is Suburban also included in this or it is just the test mix of Dr. Lal which comes under this in terms of the contributions?
No, no, even Suburban packages are included in that.
Okay. Okay. Suburban also has, you know, some of these packages and that's a decent portion of Suburban revenues. Is that right understanding?
Yeah, it is, it is a decent portion of Suburban revenues as well.
Okay. Okay. Fine. Thank you. All the best. I will join back if I have more questions. Thank you.
Thank you. Thank you.
Thank you. Your next question comes from the line of Aniket from SMIFS . Please go ahead.
Thank you for the opportunity. I guess in starting you mentioned the acquisition cost of Shahbazkers. Can you please repeat that?
What of Shahbazkers?
Acquisition.
The acquisition cost. Okay.
Total deal size is about INR 20 crore for this asset.
Okay. What would be the overall CapEx for FY 2027 and 2028?
As I said, INR 100 crore-INR 120 crore for next year.
Okay. Okay. Yeah, that's it.
Thank you.
Thank you.
Our next question comes from the line of Rishi Mody from RDM Advisory LLP. Please go ahead.
Hi, Shankha. Can you hear me?
Yes, please.
Yeah, Shankha. Just wanted to get your understanding on Suburban Diagnostics. You mentioned that a large part of the growth contributor has been Suburban Diagnostics. I understand one would be that operations normalize after that software update that you all were talking about. There would be a portion of lost revenue which is still normal. Beyond that also, is there growth which has come from either market share gains or like what has led to that, if there is significant growth from that piece as well?
I don't think I mentioned it's a significant growth from suburban. I think what I'm saying is that the growth has been very broad-based and which includes, you know, suburban business had not been really doing very well for one or two, you know, about three odd quarters. I think that's something which we are now seeing in the last quarter coming back and therefore, you know, that momentum we will be able to carry forward into our next year, you know, business as well.
All right. Could you just help me with the numbers for Suburban revenue, like this quarter versus Q3 and, say, last year Q4, so I just get an idea of what runway to expect for FY 2027 from Suburban.
Rishi, we are not now reporting separately these numbers. These are our part of our West number, which has been given in the split geographical split because now Suburban is no more a separate entity. It is merged with main parent company.
Okay. All right. I'll pick it up from the Western region numbers. All right. Thank you.
Yeah.
Thank you. Your next question comes from the line of Rahul Salvi from Franklin Templeton. Please go ahead.
Yeah, thanks for the opportunity. I had a question on improvement in volumes, if any, are we seeing because of, say, the GLP-1 launch in the last 40 days. Is there any patient volume accretion happening on that front? Which are the tests basically which are these patients are choosing? Any insights on that will be helpful.
The patient volume growth, to a certain extent, is also a factor of the improved collection network and the lab network that has been put into place. It is definitely not driven through GLP and, like I said that, you know, this is just one quarter performance because there are sometimes you know, the base numbers can be slightly different in different quarters. The best way to look at the patient volume growth is at an annualized level, which is better than last year. We believe that, you know, going forward, we should be able to do slightly better on the patient volume number as well in the next financial year.
As I understand, you will not attribute the FY 2027 growth even to a slightest extent to patients, who are opting, say, for GLP and the doctors prescribing them those tests, right?
I would not ascribe any differential impact due to GLP.
Thank you. That is helpful.
Thank you. Your next question comes from the line of Gaurav T from Ambit. Please go ahead.
Hi, good evening, and thank you. Question is on the incorporation of the subsidiary in Dubai, UAE. Can you share what are your plans from a, you know, build-out, business build-out in these geographies and what, you know, percentage of capital or CapEx of INR 120 crores, if any, is allocated to this geography as well in FY 2027?
Thanks, Gaurav, for asking this. I mean, this is in line with our, you know, as I mentioned in on the last call as well, that we are making inroads to our international expansion. It's not something immediate, but over a period of, let's say, next three, two years, three to five years, we are looking to expand few of the geography. Right now, we have on-ground presence in Nepal and Bangladesh, but we are looking some of the geography or new geography on-ground operations, including Middle East. This incorporation is in line with that expansion plan.
Thank you for that. Would, you know, the strategy be open to, you know, you have, you know, significant cash on balance sheet. Would, you know, inorganic opportunities be also explored in, you know, the Middle East or Dubai, U.A.E. markets over the next, you know, two to three years? Would you be open to that?
Right now, I think the idea is to incorporate a holding company kind of, or a company in Dubai, which can also maybe operate as a holding company for the region. Now, you know, in terms of our expansion plan, M&A opportunity can also be evaluated. That is always on the cards. Yeah, I think both organic and inorganic can be looked at.
Got it. Some accounting questions. I think you have kind of, you know, reallocated some costs from, I think, these collection centers or employed to other expenses this quarter. What was the primary reason for that?
This cost was in the nature of, you know, courier and transportation costs, which was grouped under employee benefit, which has been regrouped as per the nature of the expenses. This is the cost which has been regrouped from employee benefit to other expenses.
If you look at the reclassified employee expense, you know, for Q, we are seeing a jump of almost 19%. Is that, you know, some part allocated to, you know, the revision in the labor code and, you know, restructuring of, you know, the compensation structures?
Yeah. Regrouping is nothing to do with this new labor code. Having said that, as I mentioned, INR 30 crore is the additional cost which is reflected in this year on account of new labor code.
That was in Q3. If I just look at employee expenses in Q4 this year, which was, you know, close to INR 129 crores versus INR 108 crores in Q4 last year. That's almost a growth of 19%.
This is because, you know, as we mentioned that, we have added infra, which is 14 labs, and this is more towards the, you know, end of, I mean, Q3 and Q4 mostly. Plus, we have started operations in Sovaaka. Those are the, you know, expenses which is also factored in here in Q4.
Sure. Sorry, last question. You know, just a previous, you know, colleague or peer had also asked this. This quarter, you know, tax expense or tax rate is closer to 17%. Any benefit that we realized this quarter on the effective tax rate?
There is a reversal of deferred tax in this quarter on account of, you know, on account of some income tax assessment has been done, which has been, you know, we got the refund and accordingly we have reversed. As I mentioned, tax rate is same, which is around 25%. Nothing changed.
No, thank you. All the best. I will join back again.
Thanks.
Thank you. Your next question comes from the line of Hafeez Patel from ASK Investment Managers. Please go ahead.
Hi, sir. Congratulations on the good set of numbers. My first question is around the ongoing transition of Suburban connection centers from in-house to a franchisee-led model. To what extent has that been completed? Secondly, in terms of the EBITDA margin profile of Suburban, I think the last quoted figure was somewhere around the high teens range. Has that kind of, you know, is that kind of improving towards the upward trajectory and kind of reaching the company level margin or is there further scope of improvement there?
On the collection network now, I think the transitions that were to be made have mostly been done. Now the Suburban expansion is also happening mostly through a franchised setup. However, there will be certain geographies where there will be company owned collection network also that we will consider. But primarily that whole transition towards having more centers through franchisees is already kind of underway and mostly done. So, that's one. I think on the margin, maybe Ved can answer.
On margin, as I mentioned, we are not, you know, tracking separately as a, you know, because this is not no more separate entity. You know, margins obviously for different geography, different margin structure. Even, let's suppose, West as a whole, if we compare Delhi NCR versus West, obviously margins are different. In spite of that, we are looking margins on overall basis as a company is in between of, you know, whatever, 27%-28% margin.
Understood, sir. Just a small clarification there. I mean, while you may not disclose the specific, you know, number there, but the margin that you kind of have on the West, geography, has Suburban reached up to that scale or is there further scope for improvement? If you could just guide on that.
No. As I said, margins for West, including Suburban, there are still rooms to improve because obviously it's not a one-time activity. It's an ongoing where we continuously have some levers where we can optimize our cost. That's why improvement in margins for few geographies are possible.
Understood, sir. Thank you and all the best.
Thank you.
Thank you.
Thank you. As there are no further questions, I now hand the conference over to the management for closing comments.
Thank you all for your participation today and for your continued trust in our vision. We trust we have addressed all your questions comprehensively. If you require further clarification or have additional queries, please do not hesitate to reach out to us. We look forward to engaging with you again next quarter. Thank you once again and have a good evening. Thank you.
Thank you. On behalf of Dr. Lal PathLabs, that concludes this conference. Thank you for everyone for joining us, and you may now disconnect your lines. Thank you.