Ladies and gentlemen, good day and welcome to Yatharth Hospitals' Q2 FY24 earnings conference call hosted by Prabhudas Lilladher. 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. Param from Prabhudas Lilladher. Thank you, and over to you, Mr. Param.
Yeah, thank you, Malcolm, and good morning, everyone. On behalf of Prabhudas Lilladher, we welcome you to the Q2 FY24 earnings conference call of Yatharth Hospitals & Trauma Care Services Limited. From the management, we have with us today Mr. Yatharth Tyagi, the Whole-time Director, Mr. Amit Singh, Group CEO, Mr. Deepak Tyagi, President, Strategy and Finance, and Mr. Pankaj, CFO. I now hand over the call to Yatharth for his opening comments and to take it forward. Over to Yatharth.
Hi, good morning. This is Yatharth Tyagi, Whole-time Director at Yatharth Hospitals & Trauma Care Services Limited. A very warm welcome to you all for the earnings conference call for the quarter and half-year ended 30th September 2023. I have with me Mr. Amit Kumar Singh, our Group CEO, Mr. Pankaj Prabhakar, our CFO, and Mr. Deepak Kumar Tyagi, our President of Strategy and Finance. Let me draw your attention to the fact that on this call, our discussions will include certain forward-looking statements which are predictions, projections, or other estimates about future events. These estimates reflect management's current expectations about future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied.
We have uploaded our presentation on the exchange and the company website, and I hope you all might have received and had an opportunity to go through it. Since this is our second earnings call post our listing on the stock exchanges, I would like to give a brief background on our company quickly. Yatharth Hospitals operates super-specialty hospitals in the National Capital Region of Delhi and Jhansi-Orchha region of Madhya Pradesh. We are among the top 10 largest private hospitals in the Delhi-NCR region in terms of number of beds. We started our journey in 2008 with the first hospital in Greater Noida, and since then expanded our presence with hospitals in Noida and Noida Extension. In 2022, we acquired a fourth hospital in Jhansi-Orchha in Madhya Pradesh with the aim of expanding into new geographies.
Our total bed capacity presently stands at 1,405 beds, including 394 critical care beds. I am pleased to announce that we have delivered a stellar performance this quarter. Our revenue has experienced a remarkable 34% year-over-year growth, reaching INR 1,713 million, while our profits after tax have surged by an impressive 70% compared to the same period last year and 45% compared to the immediately preceding quarter. We have successfully completed our IPO during the month of August, and subsequently, your company has received the primary proceeds of INR 610 crores, which has boosted our capital base and helped us turn net debt free during the quarter. Our ongoing commitment revolves around diversifying our range of medical specialties and introducing new ones across all our hospitals. Quarter two witnessed a double-digit growth across most of our specialties. Our Nephrology and Urology and Neurosciences departments have grown by 40% to 45% year-on-year.
Orthopedics and Cardiology have grown by 20%-25% year-on-year, while our Gastroenterology, Pulmonology, and Oncology department revenue has more than doubled compared to the last year. Our commitment continues to remain towards enhancing our suite of oncology services and create a comprehensive one-stop destination for all cancer-related treatments. The Radiation Oncology machine has arrived at our Noida Extension Hospital, and we expect it to be commissioned by January 2024, seamlessly integrating the Radiation Oncology line within our Oncology Center. We are in the process of ordering equipment for robotic surgeries, which is expected to arrive in the coming quarter. Thus, we are well on track to offer robotic surgeries by the coming quarter and a comprehensive suite of oncology treatments by the fourth quarter of this fiscal year.
As we are progressing, we have concluded around 100 kidney transplants so far, and we are constantly expanding our organ transplant and medical tourism business, which is poised to drive substantial growth and contribute to an improvement in average revenue per occupied bed in the upcoming quarters. We are continuously evaluating opportunities, both organic, inorganic, and strategic partnerships, and remain committed to expand our bed capacity in the coming years. We aim to double our bed capacity over the next three to four years via a mix of both greenfield and brownfield expansion. We understand that inorganic growth is not merely about expansion but also about identifying synergistic opportunities that amplify our strength, extend our reach, and ultimately enable us to serve more patients with exceptional care.
At our current capacities, we have seen a remarkable improvement in our utilization, with Noida and Greater Noida Hospital reporting highest occupancy levels of 96% and 73%, respectively, during the quarter. Our other hospital at Noida Extension has received an occupancy level of 45% during the quarter compared to 28% in Q2 fiscal year 2023, while our Jhansi Orchha Hospital is now at 20% compared to 5% in Q2 financial year 2023. In line with our Noida and Greater Noida Hospital, we expect our Noida Extension Hospital to reach optimal utilization levels by financial year 2025. Thus, we have already acquired a land parcel adjacent to our Greater Noida Hospital and declared annual bidder for a land adjacent to our Noida Extension Hospital, which should support our organic expansion plans in these hospitals.
Ladies and gentlemen, regarding the recent income tax search operation at our company from 19th to 22nd October 2023, I would like to assure you that the search operation yielded no significant preliminary findings of unaccounted cash or incriminating transactions. The company is duly replying to the queries of the tax authorities and does not foresee any impact on the operating and financial performance of the company in the coming quarters. I would like to now hand over the call to our Chief Financial Officer, Mr. Pankaj Prabhakar, for the financial updates for the quarter.
Good morning, everyone. I am happy to announce that your company has reported another quarter of strong performance. We have recorded our highest-ever quarterly revenue at INR 1,713 million, reporting a robust growth of 34% year-over-year and 11% quarter-over-quarter, with growth across specialties and improvement in occupancy across our hospitals. Our in-patient revenue has grown by 37% year-over-year during the quarter. Our EBITDA for the quarter was INR 456 million, up by 36% year-over-year and 10% quarter-over-quarter. Our EBITDA margins for the quarter expanded by 40 basis points to 26.6%, with improved operating leverage and efficiencies across all our hospitals. A significant development in this quarter is that Yatharth Hospital has become net debt free as of September 2023, and by utilizing around INR 2,450 million proceeds raised during the IPO to repay a majority of our existing debt burdens.
For our company, maintaining a debt-free status is not just a goal. It is a core part of our financial strategy and philosophy. Operating without the burden of debt will allow us to focus on sustainable growth, innovation, and long-term success. In line with our debt reduction, our finance cost has reduced by 42% year-over-year and by 50% quarter-over-quarter to INR 29 million during the quarter. Full impact of debt reduction on finance cost will be further visible during quarter three. Consequently, we have been able to grow our profits considerably by 70% year-over-year and 45% quarter-over-quarter to INR 276 million during the quarter. As far as advanced performance is considered, our revenue has grown by 36% year-over-year to INR 3,258 million. Our EBITDA for the half-year was INR 870 million, up by 47% year-over-year, while our EBITDA margin for the half-year expanded by 192 basis points to 26.7%.
Our profits after tax for the half-year were up by 71% YOY to INR 466 million. Our balance sheet has strengthened significantly during the quarter, with primarily capital infusion of INR 6,100 million from the IPO. Our net worth has increased by INR 8,065 million by September end compared to INR 1,830 million as of March 2023. As of September end, your company stands net debt free with net cash position of INR 3,109 million, which we strive to invest towards our ongoing and planned organic and inorganic expansion as stipulated in our IPO objectives. Overall, our recent quarter's performance is a testament to our balanced growth approach.
I would like to emphasize the fact that while our focus remains to multifold our revenue and EBITDA in the coming quarters of the year, with the leveraging of our balance sheet, our net profitability, and our overall balance sheet will continue to emerge significantly strong in the upcoming quarters. With this, I would like to hand over to Moderator for questions and answers. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press Star and 2. 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 is from the line of Amit Thawani, who's an individual investor. Please go ahead.
Hi everybody, and congratulations on a fantastic set of numbers. My first question is, last year, the past full year, the government business was 37% of our total revenue. Can you tell me what that number is for H1 and for Q2?
Amit, thanks for the question. Government business is significant to us, and it is in the range of around 36%- 37%, still going. So we are maintaining the same thing. Good part is that the growth is coming from all the sectors, be it from the corporate sector or be it from the insurance or the government business. But the best part is that, as Mr. CFO has mentioned, that we are going for a balanced growth. So our revenue is coming from all the quarters of the company.
Okay. Okay. Thank you. Coming back to this same question, can you divide the government business just broad percentages as to how much is coming from CGHS, how much is coming from PM Jan Arogya, and how much is maybe coming from ESIC? Is there some broad numbers there?
No, we don't have any business coming from PM Jan. Very small amount, it comes at Jhansi, but that's very, very negligible when it comes under the percentage terms. Frankly speaking, I haven't distinguished that, what is coming from CGHS, ECHS, or ESI. If it is so important, we'll get back to you.
Okay. Just a quick, sorry, I'm a little bit of an amateur in this, so I'm just going to ask a very basic question. So the budget that the government allocates for CGHS and ESIC, are they one combined budget, or is it a separate budget for the three? And can you give us some broad, not broad, what has been the growth in the allocation of these expenses over last year by the budget? Do you have those numbers, by any chance?
If we look at the ECHS, CGHS, and ESI, all those have separate budgets. So however, these are all controlled by the government authority. So all three have a separate entity who takes care of it. So I think that's a large number of payers as there are no issues in terms of releasing the funds. So the frequency they are maintaining, that's good.
Okay. Secondly, in the last, I mean, we were in the process of getting approvals or empanelment, rather, of our Jhansi Hospital. Can you give us the progress there? What is the status of empanelment there?
See, Jhansi, if you look at it, the team is working very hard in terms of getting the empanelment. First is that the insurance sector. So I think whatever the insurance and TP and operating in India as of now, I think 60%, 70% have already got empaneled now. The focus is to a couple of PSUs, like BHCL, Railways, and others, which are very heavy, significant number of populations residing over there. So already, I mean, we have reached within the last leg of the confirmations from those authorities. I think next quarter, you will see that those numbers start coming this time. Rest of those, the corporates, whichever the corporates are available, the entity is working there. I think a couple of them have already got it, and it's in the process of next month or something. I think we'll have a significant number of those empanelments.
Okay. Basically, we have received 70% of the empanelments that we had intended to take.
Approximately, I would say that insurance side of it, it's whatever around 30%-32% insurance companies, private, and GICs working operational. So I think more than 50%-60% we have received, and in the coming months, I think more are going to come.
Okay. Got it. Our RBOP is roughly 28,000. Can you divide that RBOP into how much is government RBOP and how much is non-government RBOP?
Amit Thawani, huh?
So far, we have not distinguished. I told you that we are putting up the system in the last call. Also, you were there. I distinctly remember, and I had mentioned that we are putting up the system where we will be putting up RBOP not only from the business segment, but by the specialties also. But at this point in time, because this is the middle of the year, so this will take some time. I am sure that by Q4 kind of thing. Q4 or Q3, again, I'll not be promising that we will be publishing RBOP from different segments and specialties. But definitely, by Q4, we will be having this kind of information.
Yeah. Amit, just to add on there, if we talk about broad figures, so roughly, I would say the RBOP in, let's say, from a cash patient to an insurance patient, for us, an insurance patient would be roughly around 15% lesser than the cash patient. And similarly, the government patients are usually 10%-15% lesser than the insurance business. So that's, I think you can drive it in overall roughly RBOP from there.
Excellent. Excellent. I was just looking for that. Thank you. Thank you so much.
Thank you. The next question is from the line of Dhara Patwa from SMIFS Limited. Please go ahead.
Good morning, sir. Congratulations on a good set of numbers. So first question is, we will be starting oncology-related robotic services in our Noida Extension Hospital. So how much difference is there in the prices of traditional surgeries and the robotic ones? And do we have a pay-per-use model for this robotic equipment, or we will be buying it fully and capitalizing it?
So if you look at robotic surgery, it comes as a premium because overall industry, if you see whichever the center has got a robotic surgery. So I think that's a. I won't say it as a specific number because it is very. I mean, the disease to disease, I mean, the treatment to treatment, what percentage is to which. But I think roughly it's close to INR 50,000-INR 1 lakh rupees, depends on what surgery is being performed on the robot surgery, be it a transplant surgery or a general surgery. So this is the range and the premium every hospital charges. So I think it's guaranteed the same. And.
As far as your question on the pay-per-use model. We're paying upfront. So we would be paying upfront for the robot because it's also included in our CAPEX plan for the medical equipment that we have raised from the proceeds of the primary IPO. Actually, that will also help us to negotiate better on the consumables that we have to get from them on the price of the consumables per surgery. So we will be paying upfront for the robot, and we will be negotiating on the pay-per-surgery consumables.
Okay. Thank you. Second question was, cost of consumables have increased considerably in this quarter, by 56% and 28% sequentially. So what was the reason for that?
So as we mentioned in the overall strategy, we are doing much more super specialties now. And treatments like, let's say, cancer. So Oncology has a lot of chemotherapy procedures, which includes high-end consumables and drugs as well as expensive medicines. So this is why when we are moving towards super specialized treatments, it's where the cost of these consumables, especially medicines, increased in those treatments.
Okay. So in.
Just to add this to Dhara, what happens is it depends on what kind of specialties do we undertake. Now, for consumables, for the quarter, it is around 21%. Yesterday, it was 18%, but that's the range it moves. Anywhere between 17% to 21%. So it's nothing alarming. We noticed, as Mr. Yatharth just mentioned, that oncology is picking up, so the cost of those consumables has gone up. So this is the reason, but there is nothing to worry about this cost coming in.
The next question is from the line of Pranav Amana from PNARS Partnership. Please go ahead.
Yeah. Hi, sir. Congratulations on a good set of numbers. So my first question is, why has the receivable increased drastically? Hello?
Yes. I heard it clearly. See, Pranav, thanks to this observation, see, a good part of our business comes from the government segment, 37%, 38% kind of thing. And of late, what is happening that the government is trying to shift from the system. It's a UTI system, right?
Yes.
Yes, it's a UTI system. So because of this changeover, there is some confusion at their end, some processing challenges there. So that's why there is a payment delay. And this is the major reason why the receivables have gone up. We have pretty much control on the insurance and the public side. But since our government sector is a significant business, so that's why the receivables have gone up. We expect that this dust should settle down anytime soon. And I'm expecting that by Q4, we should settle it down?
Yeah. It's a very temporary thing. Government, earlier, the payments were being managed by the UPI. Now, it's moving towards the NHS. So I think that's the reason it's probably, but this is just a temporary for the last quarter. And that is across, wherever whichever hospital is doing its government business, facing this. So there's nothing to worry about it.
Okay. Okay, sir. Also, my next question is a bit lengthy. So first, I wanted to understand why are we having a huge payer mix coming from government? If I have to compare it to any other hospitals, that is one. The second is, are we going to see this payer mix change in the coming years, moving more towards the insurance and the self-payers since the revenue coming from there will be a bit higher, right? And it can improve our ARPOP also. And since we are having this 37% coming from government, how is the pay cycle here, right? Because if, let's say, a self-payer is paying, you will get the money, whatever the treatment money is, before he is discharged from the hospital. So what is the pay cycle here and how it affects our working capital? And the last is on the price hike.
I believe when you talk about the self-payer, you can take a price hike, again, increasing our ARPOP. Similarly, even with insurance, I believe every hospital has different contracts, and according to the contract gets revised. The price hike is better there too, so what is the price hike here in the government? Were you able to take any price hike, let's say, in this year, in this H1, and if you have taken, what is the difference in price hike between all the three segments?
So, I think coming back to your first half of the question is, see, first of all, it's important to understand that we do government business on our own decision and on our own voluntary will. We are not bound by the government to do these government decisions because the land that we have subsidiary hospitals, it's something that we have purchased ourselves. It's not provided by the government on any subsidized rate. So we don't have to reserve any beds for the EWS patients for the government. So the government business that we do is basically broadly divided into categories like CGHS, ECHS, and ESI. And our Greater Noida hospital is just adjacent to one of Asia's largest ECHS polyclinics. ECHS for ex-servicemen, retired people. They have this ECHS card. So these are the people that come to our hospital.
These are the people that are living in our community. Just because they have a government card doesn't mean that these patients are sent to us directly by the government. These patients are living across near our hospitals, and they voluntarily choose us. Similarly, CGHS, Noida is full of a lot of bureaucratic population who are living in our western NCR. So that's why it's there, and on the question front that going forward, yes, right now, we have capacity to utilize. So we don't want to stop this business because overall, it's adding to our overall good business. So I think going forward, yes, let's say when we have a capacity where we'll have to pick and choose which category to choose, then we do see cash and insurance segment increasing, and also, with the coming years, I think already our health insurance segment is increasing already.
So I think going forward, that's what I see the trend there is. As far as the second half of the question, I think for the price revision of the government, I think Mr. Amit Singh can take that question. Just to go to the first part, we don't see such a problem with taking the government business as long as it's not impacting it as well. But coming back to your second question about the insurance, yes. Year on year, like CGHS, which we negotiate with the government every two years, even this year, we have negotiated, and the impact has started coming. Very recently, our Noida Hospital is due for a rate revision. I think already process done very soon. We're going to have that probably by end of this month. We'll have that rate revision.
So yes, slowly, slowly, the gaps are bridging whatever we have. We have whatever the need to 15%-20% gap from the NCR hospital. So this is going to be year on year. You see the way coming year will be much better off in terms of the rates.
Okay. Sir, could you put a number as to what has been the price hike, let's say, for the cash segment, that is, the self-payer segment versus insurance versus that? I mean, could you put an exact number? Is it positive?
No. So it's difficult to remember because the negotiations, as far as the negotiations happen on the, it's not only as in a blanket percentage, right? It happens with the specialties, procedures, everything. So it's not only easy process. It's a very lengthy process where we see what all the surgeries and procedures are happening there. And accordingly, that percentage varies. So it's very difficult to tell you that one percentage number, but yes, it's a good percentage double-digit increase in terms of the SOCs.
Okay, sir. Thank you so much for the detailed explanation. I really appreciate it. My last question is, could you provide us with the guidance for H2 FY24, H2 of this year or FY24, FY25, where do you see the top line and the revenue guidance, basically? And now that we are moving more towards specialty segments, and also, we are increasing our oncology. Oncology, I believe, has gone from 1% to 3%. And even the organ transplant, also the number of organ transplants that we are doing, the surgeries also has increased. So do we see a margin expansion happening from here? I believe right now, our margin expansion is 26%. Do we see a further expansion happening because of more specialty? And internationally, the medical tourism also, I believe we are about to start. So because of that, are we going to see any changes?
So as far as your forward-looking guidance, so I mean, I wouldn't put an exact number, but yes, we do see quarter-on-quarter growth as far as top line is concerned for the coming quarters and the years. Now, moving towards your second question on the expected increase in the margins due to the increase in the super specialties, yes, we do expect when our super specialty increases, not just the margins, but also the RPOP. So we are expecting good RPOP increase from super specialties, and especially the transplant programs and the international patients. Our margins, we expect growth in that because of the existing facilities, the organic growth we are doing because there's still capacity utilization left in all our except for Noida Hospital, which is running quite high on utilization. Both Greater Noida and Noida Extension and Jhansi still have capacity to utilize.
So that's where we feel margins could increase. And lastly, your question on the international business, I think Mr. Amit Kumar Singh can take that. If you look at it, in the last quarter, if you remember when we were discussing and also, we had started and then a good number of patients from Bangladesh and the SAR countries were coming. This quarter also, we have made a significant improvement as patients started coming from Fiji, Cambodia, other SAR countries. In fact, to be very honest, we have taken the initiatives for reverse medical tourism where we are signing agreement with a couple of these countries' hospitals where our doctors will go over there and we'll work on their capability and capacity increase, and certain surgeries can be performed over there. And those complicated surgeries, which cannot be done over there, can be done in our place.
So, I think that strategies are in place. Very soon, you will see a good number. We are significantly growing in this. I think last year, we had a couple of growths in the last quarter. I think this is an example.
This is the operational part, which Mr. Amit Kumar Singh is just on. The beginning has been made. In the last quarter, it was a beginning. We did the number. It's around two growths of business we have done from international. The prospects are looking good because now the brachytherapy is there, the team of doctors, and every infrastructure is available. The world has shifted in the community. So we expect this number will grow significantly in Q3 and Q4, and going forward, it would be a good contribution to our overall business.
Okay, sir. Okay. And sir, you had that I remember in the last con call, you were planning to construct a hospital near some Jewar Airport, mainly for this only, so you can attract even more medical tourism. Any update on that?
What you're talking about is the expansion planned in an already existing hospital in Greater Noida. Greater Noida Hospital is currently 400 beds. We have acquired these adjacent land parcels thereto and to expand it to 600 beds. And that is the existing hospital of ours, which is quite close to the Jewar Airport. Going forward, that's what those beds would add on those international tourism and medical tourism lines.
Okay, sir. Okay. Thank you very much. I really appreciate you all answering my questions detailed. Thank you very much, and all the best for the coming quarters.
Thanks.
Thank you. The next question is from the line of Prashant Nair from Ambit Capital. Please go ahead.
Yeah. Hi, good afternoon. Just can you give a ballpark sense of the profitability at your individual hospitals, especially in Noida Extension and Jhansi Orchha, which are relatively new?
Individual.
Prashant? This is again profitability, if you ask me. I had mentioned earlier, and it would be a ballpark kind of thing. I'll not be going very specific to the things, but if you ask me, it would be in the range of around 28%-29% at Noida, so in the range of Greater Noida and a little bit lesser in Noida Extension, so it would be around 25%-26% at Noida Extension. Jhansi is marginally profitable. On EBITDA side, I'm talking about. It did INR 90 lakh of EBITDA at a turnover of around INR 8 crore, so this is how overall things are coming up. This is again a plan that this is in line with that where we have to publish the information on the segment RPOP and the individual hospital profitability, so that's been the bigger plan. I owe this to my investors.
Let's hope that by Q4, we will be having these better numbers for our study.
Sure, and secondly, I have a follow-up question on the working capital. So receivables, you mentioned there is some transition at the government level, which has led to this increase. Where do you expect the receivables base to stabilize at? What level, approximately, once we are past this transition?
So because things are still in place, and yes, Dr. Ajay and Amit Singh are trying the best and pushing it to have this figure come down in Q3 itself. I am very hopeful that if not in Q3, then by Q4, it would be coming down gradually. I expect that our DSO should be in the range of around 85-95 million in between by the end of this year.
Okay. Thank you. That's it from me.
Thank you. The next question is from the line of Sagar Doshi from Intuit Investments. Please go ahead.
Hello. So basically, I just wanted to ask regarding the occupancy level. We are at 57% currently, and we are targeted for around 60% by Q4. So any changes in that, and what can I expect in the next financial year? Just a rough growth and/or the ramp-up in the Jhansi Hospital. So some of the occupancy part.
So I think we are well on track to the expected occupancy that we have forecasted for the coming quarters. And I don't see any change to those forecasts. And yes, I mean, this quarter did have a significant rise in occupancy due to also a lot of dengue patients that was spread across Delhi and NCR. But I feel also going forward in the quarters, we are well on track to our forecast for the expected occupancies. And as far as Jhansi is concerned, already it is ramping up. And as we mentioned earlier in the Q&A, that a lot of empanelments, including the healthcare insurance and government panels, are well on track. So I think that will be a key contributor to that occupancy ramping up in the coming quarters.
Okay. So any number that you would give for next financial year?
No. I think not an exact number on that, but we do expect an increase in occupancy quarter-on-quarter basis.
Okay. Also, one more thing is the average revenue per bed decreased marginally quarter-on-quarter. So any specific reason for it, or how should we look into it?
Can you repeat that question, please?
Oh, sure. So our average revenue on operating beds decreased marginally quarter-on-quarter. So any specific reason for it?
Yeah. I mean, RPOP is increasing because of a change in the case mix, as we were mentioning, that we are moving towards a hospital which is doing high on super specialties. So as we see a rise in oncology treatments and transplant programs, so that's the reason why this increase is there on Q1. And I do expect this RPOP increase to continue much further in the coming quarters.
Just to add this too, and important would be to see the Q4 movements when we start this oncology treatment. So what I expect with this PET line and radiation line tends to come up. Revenue will go up to that extent. Our loss would come down, and RPOP would increase. And that would give the impetus for profitability improvements. But I'm not giving any future numbers, so allow me for that. But this is the general trend. And this is a fair math on how it would function. That's highly good.
Okay. Okay. Got it. Last one. In the quarters, you said that we are looking at doubling the bed capacity in three to four years. So when can we expect commissioning of the first phase or the first increase of beds, let's say first 100, 200 beds, etc.? So when can that commissioning be? A rough idea of the timeline?
Yeah. So when we see doubling, that also includes the expansion of our existing facilities. That's the Noida Extension, the Greater Noida Hospital. So that construction would still take two to three years. But before that, also, we do expect beds to add up. That will be through the mode of acquisitions of new hospitals that we are looking to do. And I think as far as the plan is concerned, for the remaining two quarters, we would be looking to complete a brownfield acquisition of a hospital. So I think before the end of this fiscal year, we do expect our first increase in capacity to come up through the means of an acquisition of a hospital in the North India region.
Okay, so any organic expansion would take around two to three years?
Yes. If we are constructing, that's what it takes, usually, to a bed capacity of 200-250 beds.
Okay.
Sagar, it's basically because it's a greenfield. It would be what Mr. Yatharth was alluding to, that the brownfield or greenfield will take that much of time. But if it comes by the O&M route, or if we take over any existing hospital, that would be quicker. So if you see brownfield would be coming in the two to three years' time. So that's around 450 beds we are talking about. The 950 beds would be coming the other way, and it can happen quickly.
Okay. Okay. That's fantastic. Thank you.
Thank you. The next question is from the line of Vivek Gautam from GS Investments. Please go ahead. Hello, Vivek.
Yeah. Am I audible?
You are audible right now. Go ahead, sir.
Yeah. Any concern from the occupancy trends in units and receivables from our side, and any plans of reducing dependency on government business? Number one. Number two, any acquisition plan, and how is Jhansi Orchha Hospital, and how is that performing? Thank you.
As far as the government business and that is concerned, the receivables, we have already addressed that in our previous questions. Now we come to your second question on the acquisition front. Yes, as I was mentioning, the plan is that before the end of this fiscal year, to complete one acquisition for hospital, we are looking for acquisition which is roughly in the tune of around 150 beds at least, somewhere around that range, from 150 beds to 250 beds. That is what we're looking for right now. We're looking in territories of Delhi, NCR, Haryana, Uttar Pradesh, Madhya Pradesh. That is the plan on the acquisition part is concerned. We are open for both O&M model as well as equity purchase. Your question on Jhansi Orchha is concerned, I think yes, that hospital is ramping up quite well.
As mentioned, we are getting the establishment done there, and the occupancy has also increased on not just year-on-year basis, but also quarter-on-quarter basis. So I think the Jhansi Orchha Hospital is well on track.
And how is our catchment area in terms of the location of our hospital, especially Noida Extension? And how is the population growth, and what is the occupancy level? How much can it go up to?
If you look at it specifically coming to the Noida Extension area, which is then adjacent to the Ghaziabad region. And then it's an excellent connectivity through the Meerut-Delhi highway. This goes to the Meerut, Modinagar, Hapur, those regions to entire Ghaziabad. That is our good catchment area. And Noida Extension itself is now getting intensely populated because there's lots of the builders' sites are coming up. So this is, in a way, if you look at it, Gautam Buddha Nagar, if you have any idea about this region, this is the area where it's coming up very, very fast. So I think the coming years, you will see a good number of people moving from those areas, Delhi and other places, to this side of it. So that is the Noida Extension. And then I think earlier also, we have spoken about our advantage as far as geography is concerned.
Greater Noida has an excellent connectivity towards still Agra, Mathura, those regions. That's a good region because of the Yamuna Expressway. And Noida is in the edge of the Delhi and the Faridabad region. I think that we are placed. We have a geographical advantage and a good catchment area.
What about competition intensity with coming of the new Yashoda Hospitals and big units coming up and Max Healthcare, Fortis Healthcare, and other things? And how are we planning to cope up with that? Thank you.
If you look at it, I think the competition is about any area which is growing and having a potential. Competition is about to come, but I think that we are not scared of those things. In fact, that could be a good that this area will become a hub for healthcare. All right, so we have our own advantages. We have our own strengths. And being the oldest and having the range of services what we are providing is, I think, as of now, those who will come will take some time. Till that time, we'll be very much entrenched as the biggest in this region, so I think that is not our concern. We are focusing on our own strengths, the specialty, the super specialty, which we are still not having. We are focusing on to have those things, so nothing to worry about it as such.
Sir, how is the opportunity size and due to the increased usage of the medical insurance, is ARPOB for us versus the self-paying patients, sir?
Yes. Can you repeat that question? Your voice is messy.
One second, sir. My question was about the opportunity size for us, sir, in terms of basically due to the COVID and the lack of medical insurance, people were suffering a lot. And as we say that between basically 15 lakh for 15-20 days, you can go from middle class to the lower class if you don't have the insurance. So how is the insurance penetration level happening as per your experience, and how does that augur for our future, sir? Thank you.
If you look at it, a good part about the COVID is, yes, people got the private sector for their healthcare. And that's what, if you see, the data shows that the last two, three years, if you see, the kind of the insurance penetration has grown. The insurance company is growing very fast. And more and more, even in two- and tier-three cities, people are having that insurance. So I think that by increasing this percentage, any healthcare facility will benefit because people will demand the quality healthcare. And that is, they will move from those regions to whichever is providing the quality healthcare. And so we are on the same line. And I'm sure that not only we, other healthcare services are also going to benefit out of it.
Thank you, sir.
Thank you. The next question is from the line of Naman Bhansali from Perpetuity Ventures LLP. Please go ahead.
Thank you for the opportunity, sir. First question is in Noida Hospital. So their occupancies are at 96% this quarter. So is it on the 450 bed capacity which we have, or is it on some census number? Because we haven't heard such a level of occupancy in any other hospitals phase at least.
Yeah. So I think you got that point correct, that occupancy is not on 450, but on smaller range of 250 beds. So that's why we are able to maintain an occupancy of 90% above in that hospital. And for a hospital of, let's say, 450 beds or beyond that, it will be difficult to reach that occupancy. So yes, not all hospitals are around 250 beds.
Got it. And optimally, any hospital can do at a max of what range?
So I think it depends hospital to hospital. But let's say for our hospitals of, let's say, around 400 beds or 450 beds, that is Greater Noida Extension. So Greater Noida is doing touching around 70% now there. We do feel that we can still cater to a much more occupancy to around, I would say, somewhere between 75%-80%. We would consider booked optimum utilization there.
Got it. Thank you. And the second question is, you had mentioned that brownfield takes around two years to build and greenfield around three to four years. So how is the break-even time period in such functions? So in a brownfield versus a greenfield?
The break-even for the brownfield would not be an issue because, first of all, the setup cost of these hospitals, that kind of thing, so the base of the cost would be less, so the break-even should come. I'm talking about the overall facilities. If we talk about overall facility because we are still having a margin of around 28%-29% coming in from Greater Noida, so there would not be a performance down for the hospital per se. But when it comes on to the setup being created, that the 200 or 250 beds which are coming, because most of the, a good lot of its cost, the fixed cost, would be shared by, so I expect that on an individual basis, the payback should be anywhere between two to three and kind of thing.
Okay. I understand. And lastly, you had mentioned that your gross margin has fallen due to the increase in consumer expenses for new high-end specialties which you are doing. So I just want to understand that in terms of ARPO, why is it not reflecting that if you are doing some high-end specialties in the particular quarter? The ARPO would have moved up from the QOQ versus Q rate. So from marginally, the ARPO is declined by 2% on QOQ versus. So can you just help me understand that when does the ARPO actually fade out in terms of the high-end specialties?
So first of all, there is a slight increase in the percentage term. The consumables cost is around 21%, which is around 18%-19% in the last quarter. But important is that it has not dented the EBITDA. In fact, EBITDA on a QOQ basis has gone up. The numbers are not shown there, but it has gone up from Q1 to Q2. So this is there. So first of all, I want to dispel that the EBITDA has come down because of the increase in the cost. Now, what was your second question? Sorry, I didn't write it.
So you're coming to your question on the part that even the high-end specialties where we are moving, Jhansi is having a lower ARPO even with those high-end specialties. That is because in a Jhansi Orchha Hospital, the prices are also significantly lesser compared to Delhi NCR. So yes, we are moving towards basic specialties there, but then also the ARPO will be always lesser in that territory due to the pricing strategy that we have placed in a Jhansi Orchha Hospital.
Got it. I understand. And on a big picture basis, over the next three to five years, the ARPO can grow at what range?
We do expect ARPO to quarter on quarter. I wouldn't put an exact figure on that, and we are well on track for that.
Oh, good. Thanks, sir.
Thank you. The next question is from the line of Prashant Nair from Ambit Capital. Please go ahead.
Hello. My question has been answered. Thanks.
Thank you. The next question is from the line of Amit Thawani, who's an individual investor. Please go ahead.
Hi. Yeah, just a follow-up question. We are almost halfway through the December quarter. Can you give us the occupancy of Jhansi and Noida Extension for the half quarter?
For the half quarter, yes. I think that's what we have included in our earnings presentation. But as far as the quarter occupancy is there, it is available there.
No, no. This quarter, December quarter.
Amit, taking occupancy, see, first of all, yes, we are publishing and we will continue to publish occupancy on a quarterly basis. But the occupancy is to be seen on a longer term. Now, we are almost a month down into this quarter. First of all, the occupancy levels are almost same as it was in the month of September. So this is one thing. But giving a number specific that what the occupancy would be, it would be too early to know. I request if we can wait for the quarter to end for this matter.
But just to get a directional sense, we will be higher.
We are pretty much there. The occupancy levels continue to be good. So that's the subjective answer I can give.
Yeah. And also, just to add on there, so traditionally, but we do expect occupancy to remain in the positive direction. But traditionally, in Q3, usually in Delhi NCR, occupancies tend to be always lesser due to the winters coming up and due to the fog increasing. So both at OPD level and both at IPD level, there is usually this is considered in Delhi NCR the coolest period. But we should be on our track even after that.
Exactly. That's why I was asking because Q2 and Q4 are generally the best quarters, and Q3 is not really the best quarter, so that's why I was asking: can we still expect improved occupancy?
So I mean, let's say I would say for things like, let's say, OPD or elective surgeries, these tend to be lesser in Q3, and as far as the occupancy is concerned, I think overall, we should be on the similar track.
Okay. Okay. Thank you, sir. Thank you.
Thank you. The next question is from the line of Sumit Gupta from Motilal Oswal. Please go ahead.
Hey, hi. I'm audible?
Yes.
Hello.
Yeah. You are loud and clear, Sumit.
Yeah. So sir, I have two questions. So first, on the margin trend, so if it is possible, can you quantify how much margin do we expect over the next three-to-four years? And second point is the incremental growth in the overall EBITDA, which hospitals or which facilities would likely contribute more from here on? And the third question is regarding how much CapEx do we plan to deploy over the next three years? Thank you.
Okay. So first of all, I would discuss that what kind of margins would we be having in the years to come. I'm not giving any futuristic direction. Very subjective answer we can give. We are at 26% plus EBITDA, and these EBITDA margins are expected to grow, with initiatives Mr. Yatharth and Mr. Amit just mentioned. It's basically the induction of international business coming in, oncology coming in. More and more higher specialties are coming. So these would add to two things. The ARPO would increase, and the ARPO would significantly then drive it for the margins to increase, but if you ask me, yes, we have our internal plans, but I'm not supposed to divulge at this point of time to the investor community. Sorry for that, so this is one thing. Now, second question was about our CAPEX plan.
For the next three years, we have a CapEx plan of around INR 800 crore coming in, which is basically for the addition of these 1,400-1,450 beds coming in. This plan may go here and there depending on that if more beds come on the brownfield side, then the CapEx would be lesser, but if it goes more on a greenfield side, it would be higher, but at this point of time, we have this kind of thing. So that is the case, and we are sufficiently funded for this expansion. We don't expect that on a long-term basis, we would need any loan capital to fund these projects.
Okay, sir. Sir, the follow-up question was on the incremental growth of the EBITDA. So which facility would contribute more towards it?
All the facilities are contributing, but if you see the ARPO, if ARPO is the setup, then I would say that Noida Extension is to be seen. Did it answer you?
Okay, sir. Okay. Thank you.
Thank you. The next question is from the line of Prashant Nair from Ambit Capital. Please go ahead, sir.
Yeah. I had a question on the tax rate, so in the first half, the tax rate is higher than what it was in fiscal 2023, so is this the level we should look at for the full year and going forward, or will it settle down as we got it?
No. Tax should moderate. What happens is that midway because auditors generally tend to be a little conservative. I would say that because we will be in the best of the tax position coming in from our two main companies, Yatharth Hospital having Noida Hospital and AKS, which is basically operating the Noida Extension Hospital there. The tax rate because the MAT and everything has been utilized. So it would be better than the last year. I expect that the tax rate would be in the range of around 25% for these two hospitals. As far as Jhansi is concerned, Jhansi is because it is having accumulated losses, so we will go for the traditional tax percentage. Overall, this is basically because by March 2024, the position would be clear. I expect that the overall tax burden should come down in the percentage terms.
Around 30%, if I'm not mistaken, for the first half. Just a minute. I can check the numbers. It's around 33%, yeah, 30% plus kind of thing at this point of time. I expect that it would be in the range of around 26%-28% anywhere in between.
So yeah. Thank you. That's all.
Thank you. The next question is from the line of Tanmay from Mirae Asset. Please go ahead.
Yeah. I just have one question on the Noida Extension Hospital. If I look at the average revenue per patient, I'm just dividing the overall top line. Might not be the right calculation, but just dividing the overall top line by the inpatient revenue that we have. It has gone up significantly, let's say, from H1FY23 to H1FY24. What could be the reason? Is it purely case mix or any particular reason that you would want to highlight? I think it's lower than the other hospitals in the Noida Extension part.
Yeah. Yeah. So the reason for increase is case mix is there. And it is also not just the case mix. There's a lot of new treatments that we have started here which are high-end value, which we were not doing earlier. So procedures like kidney transplant and bone marrow transplant, we recently started around a year back. So this is why the sharp increase is there. And as far as other specialties are concerned, these are also growing much more in proportion to specialties which are at a lower end of the ARPO spectrum. So that is why it's there. And also, this is the hospital where we are getting the oncology machine. This is already reached and will start functioning transition from January onwards. And robots are also being planned in this hospital. So this is the reason why the ARPO has increased. We do expect a much more increase quarter on quarter at the ARPO of this hospital.
So the specialty also increasing. I mean, the ALOS number looks lower than the other hospitals that we have. So that is the right trend to look at, or how should we look at it? I mean.
No. So I think, actually lower ALOS sort of represents a higher share of super specialties. So let's say three to four days of ALOS is there for super specialties. And if there are more patients of general specialties, let's say for internal medicine or other procedures, that's where the ALOS tends to be higher.
Sure. Thank you.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand over the call to the management for the closing comments. Please go ahead, sir.
Yeah. I think I would just like to thank all the participants who attended our earnings call. And we look forward to delivering on the numbers and the promises that we have kept. And we are well on track to do that in the coming quarters. Thank you, everybody, again for participating.
Thank you. On behalf of Prabhudas Lilladher, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.