Healthcare Global Enterprises Ltd
NSE:HCG
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Healthcare Global Enterprises Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 and FY '24 Earnings Conference Call of HealthCare Global Enterprises Limited.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements cannot be guarantees of the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Dr. B.S. Ajaikumar, Executive Chairman of HealthCare Global Enterprises Limited. Thank you, and over to you, sir.
Thank you very much, and good morning to everyone, and a warm welcome to the present Q4 and Q [ 2024 ] Earnings Conference Call for HealthCare Global Enterprise. I am joined today by Mr. Raj Gore, our CEO; and Ruby Ritolia, CFO; and our senior management team, along with, our investor relations adviser.
The past year has been another remarkable chapter in our growth [indiscernible]. We are proud to have positively impacted the lives of those [indiscernible] The achievements have been made positive to efforts and tireless dedication of our doctors, nurses, staff and other stakeholders.
Having spent decades in cancer industry, both in U.S. and in India, needless to say there's a contrast, stark contrast between the Western countries and India. In the beginning, we used to see a lot of patients with advanced cases. Today, I'm happy to say in bigger cities, we are seeing patients in early stage, and we are seeing good quality of treatment as well as very good outlook.
Given the population of India and more recognition of cancer and [indiscernible], it is definitely going to be a rising incidence of cancer in the coming decade. With the reported incidence 2.2 million annually, the actual insurance is expected to be much higher, [indiscernible] [ 1.5x ] higher as the statistics are definitely all along.
At CT, we are still be fighting the war against cancer. We were the only alternate cancer in the country with a state-of-the-art operation extending to the PLM and PC cities. Thanks to our state-of-the-art technology, including digital PET scans, digital pathology, precision radiation therapy, cutting-edge robotic surgery system, delivering the highest standard of care to our patients.
We recently added robotics, which will transform the precision medicine in the area of genomics. We believe precision medicine is the future targeted for in the future, and genomic evaluation is going to play a major role. And having done genomic analysis over several thousand patients, we have certainly become leaders to the targeted therapy based on the genomics.
We plan to introduce [indiscernible] at radiation therapy in Bangalore, which will be a notable addition to the last new superior radiation treatment offering at HCG, which will help us revolution like various on therapy in the state. This cutting-edge technology integration magnetic imaging, title accelerator to improve the clinical outcome if it can reduce treatment span.
There are several clinical milestones we have achieved during the year. To mention a few, we have performed a record number of minimal access again [indiscernible] center of excellence in Bangalore. We are listed as one of the rare procedure called safe [indiscernible], we have done globally assisted West [indiscernible], which is the first of this kind in Mumbai. We have also done a significant number of 3D in large tumor resection in a value region with having an engineer department for the same.
We are happy to report that our mortality rate [indiscernible] we are one of the few [indiscernible] has now come under 1% over the years, a feat we are immensely proud of and definitely meeting to get into global standards.
Research and development is an integral part of HCG. Our clinical trials and research initiatives are [indiscernible] day for new and improved treatment modalities. We have established an institutional research committee to fund investigator-initiative clients, which is one of a kind in the Indian private health sector. This commitment to R&D leads to innovation and lead industry leading academic excellence.
We continue to collaborate with large companies on projects like predictive analysis and analytics, computational work and the clinical design support system while leveraging our AI/ML technology. We have the best-in-class medical talent from around the world, ensuring that our patients benefit from the expertise by some of the best minds in oncology.
Our commitment is improving cancer care in India remains steadfast. We are dedicated to raising awareness, enhancing lead detection and providing advanced treatment option to transform the perception and the reality of cancer care and make cancer care chronic disease. Together, we will continue to strive for a better outcome in the brighter future for those affected by this disease.
I may now hand over the call to our CEO, Mr. Raj Gore, for his observations and strategies going forward and also the summary of the operational performance for the quarter gone by. Raj?
Thank you, Dr. Ajay. Good morning, everyone. A very warm welcome to all the participants on the call. We are very proud to report the strong performance during quarter '24 with all-time high annual revenue which grew 12% with EBITDA growth of 21%, translating to 19% EBITDA margin. This exceptional growth serves as a testament to our enduring commitment to excellence in cancer care.
HCG has positioned itself as the destination for cancer care with superior clinical outcomes, underpinned by advanced technology and commanding market-leading positions across 16 of 18 cities. The company has recorded the oncology business model in India with robust performance, both in metros and non-metros. We continue our dominance in 3 existing markets like Bangalore, Ahmedabad and Cuttack, along with turnarounds for centers like Napoli and now Kolkata. Furthermore, there is a massive potential across the key established and emerging centers that still remain untapped with potential to grow faster than the market over the next few years, which would help us to improve our retail metrics going forward.
For the fiscal year '24, ROCE performance for the company has been 10%, whereas our established centers operate at much superior ROCE of 21%. Based on vintages, we see that the metro centers, although have low or negative ROCE currently, they can significantly improve ROCE to operate in line with longer vintage centers.
With the Kolkata center generating positive EBITDA, our conviction on delivering strong returns has only increased. There are multiple levers in place to keep dominating the oncology market in India, which we have captured in the last couple of slides in the first section of our investor presentation.
Now I would like to briefly talk about some of the key strategic initiatives. Over the years, we have taken multiple steps to enhance our operations and improve our profitability. To point out key strategic initiatives during the year, after consistently achieving organic growth for 3, 4 years now, we are now poised to expedite expansion through strategic acquisitions.
In addition to our expansion efforts in Indore, we are committed to further strengthen our presence in Bangalore. We are currently in the process of establishing 2 hospitals with total 125 [ beds ] in North Bangalore and Whitefield area, slated to be operational in the next 12 to 15 months. These state-of-the-art facilities will enhance our capacity to cater to the growing cancer needs of the region.
Furthermore, to enhance the patient experience and streamline access to health care services, we have introduced HCG Care smart app suite, including our patient app, exclusively made for unique needs of cancer patients. This innovative platform provides patients with seamless access to treatment options and their medical records with a click any time from India. In addition, the app would also help us consistently engage with our patients to monitor adherence to treatment plan and post treatment follow-up to improve long-term outcomes. Already, the smart app suite has benefited over 56,000 outpatients with active participation from more than 300 doctors on the -- platform. Our digital revenue has grown 75% year-on-year in FY '24 and will continue to be an important driver of growth in the future.
With this, I hand over to Ms. Ruby, our CFO, for financial highlights.
Good morning, everyone. In the [indiscernible] quarter, I'm pleased to report 12% year-on-year growth, culminating in a top line figure of INR [ 495 ] crores. For the full year of FY '24, the revenue stood at INR 1,912 crores, consisting a growth of 13% year-on-year. Our operating metrics, key indicators of our performance, have shown substantial all-around improvement in this quarter. Chemotherapy sessions increased by [ 18%. ] [indiscernible] grew by 19%, and -- radiation exceeded a healthy growth. The decline in capacity utilization from 55 to 61 is [indiscernible] asset expansion and the incorporation of 4 new LINAC accelerators. ARPOB for the quarter stood at 42,700 as compared to 39,700, registering growth of 8% on a Y-o-Y basis.
The revenue of our established centers experienced an 11% year-on-year growth, and revenue from centers grew by 15% on a Y-o-Y basis, with EBITDA for emerging centers growing at 117% on a Y-o-Y basis.
We are observing a consistent topic in our emerging centers marked by increased footfall across various cancer treatment modalities. Our 2 prominent emerging centers in Mumbai and Kolkata have demonstrated robust performance. Specifically, our -- had an impressive year-on-year growth of 20%, while our -- center achieved 27% growth. Additionally, our center has outperformed expectations, recording a remarkable 48% year-on-year growth.
On the EBITDA front, our EBITDA grew by 21% Y-o-Y and stood at INR 94 crores for the quarter. PAT for this quarter stood at INR 21.3 crores as compared to INR 8 crores in the previous year same quarter. Our CapEx for the 12-month period stood at INR 187 crores. And net debt, excluding EBIT, stood at INR 358 crores as of March 2024. This includes acquisition of [indiscernible] and [ turn as we have spent to towards our growth CapEx winnability and awareness. ] As we speak, Endava construction is always competed, and we will be transitioning anything.
[indiscernible] bifurcation of our EBITDA upclass mature and emerging centers, I would request participants to refer the investor presentation for the further details. With this, I would like to open the floor for question and answers.
[Operator Instructions] First question is from the line of Nishit from Price Capital.
So I just wanted to ask the revenue growth drivers for FY '25 between [indiscernible] and for [indiscernible] end of [indiscernible] Hello?
If I understood your question, you're asking about revenue drivers for next year, right? The current year.
Yes, the revenue as of [indiscernible]
Yes. So look, our volume growth in our revenue growth in last few years is primarily driven by 2/3 by volume growth, and it will continue the same trend going forward. It will be largely driven by volume. While we've seen some value improvement increment in [indiscernible] As you know, during the year, we have deployed better capacity, linear accelerate, OP capacity. We were added clinicians and strengthened our go-to-market efforts. We are also, in this year, we are moving to a larger facility in our center of excellence in [indiscernible]. So we've deployed additional capacity. We have increased our clinical bandwidth. We strengthened our go-to-market which will continue to help us get more patient footfall and therefore grow at a healthy rate, which is better than the market growth rate.
Okay. And I just wanted some color on outlook on margins for FY '25 and beyond. Our EBITDA margin, overall, for the company in Q4 is around 19%. The rest for FY '24 is 17.8%. So is [indiscernible] the new normal for margins? And what will drive margin improvement, if at all?
Yes. So if I can just take you back to the first half of the year, we communicated that our margins were subdued because investment in clinical bandwidth and then downtime transition time to add our LINAC facilities. Throughout this year, subsequently, you have seen improvement in our EBITDA margin. The EBITDA margin that we see in Q4 is on account of better service mix and payer mix and operating leverage due to a strong revenue growth. We expect that to continue going forward. And as I mentioned earlier, there are lots of revenue growth levers to drive volume-led revenue growth going forward. Our utilization, as Ruby mentioned in her presentation on beds, it's about 56% on [ LINAC 61%. ] So I think we are very well poised to drive revenue growth, and that will help us to get operating leverage.
The strongest point or one of the strongest performance is our emerging centers. As you heard, Kolkata has started contributing positive EBITDA. It will continue to grow going forward. South Mumbai has reduced their losses and is expected to start breaking even sometime in the middle of the year. These 2 were earlier EBITDA drag due to losses. And now going forward, as they start contributing to the EBITDA margin, we are very confident that we'll continue our EBITDA margin journey in a positive direction going forward.
Understood. So even the emerging EBITDA, which is in Q4 is 14%, you are saying it's sustainable, right? Because FY -- [indiscernible] is somewhere [indiscernible] [ 9%. ]
Yes. So just to recap, we have many centers in this bucket. Most of the centers have been contributing EBITDA and have been growing. The 2 youngest hospitals, the Kolkata and South Mumbai, was a drag on our EBITDA margin in the past. Q4 -- Kolkata, in Q3 and Q4, has started contributing positively, and we'll continue to reduce with South Mumbai and breakeven in the middle of the year. So as a result, emerging center bucket will start moving in the right direction throughout this year.
Okay. And could you share how Indore has panned out for us?
Yes. So look, as we said, Indore was our strategic acquisition in a new market -- Pradesh. Central India has one of the lowest penetration or lowest density comprehensive cancer care center per million population. It's about 45 million, 50 million population -- 45, 50 lakh population, you have 1 cancer care center, versus about 16, 17 lakh population per cancer care center in our southern region.
So we made this acquisition in the second half, starting with the second half. Our first priority was to integrate it on HCG's platform in every possible way and invest in this asset to bring it to HCG quality care. We have upgraded. We had started the construction work or renovation work. We've upgraded IC facilities with upgraded private rooms. We have invested in medical equipment, invested in upgrading OT equipment. We have started [indiscernible]. Our go-to-market initiatives has been stringent. It's on the right track so far as per our integration plan, and we'll continue to share the progress going forward. So far, so good in terms of our progress on integration of this new market.
Got it. And any thoughts on inorganic acquisition?
Yes. So we've been saying that after 3, 4 years of consolidation and a consistent quarterly performance, strong performance, 2 quarters ago, we said that we will look at acquisition as a strategic lever to grow or expand the company. We've already done Indore acquisition. At any point of time, we are evaluating several key assets. And as and when we get to concrete concluding stage, we will be happy to share with everyone.
The next question is from the line of Dhara Patwa from SMIFS Limited.
Congratulations on a good set of numbers. I just have 3 questions. One is, what is your price expansion strategy for the next 2, 3 years? And suppose, if you want to develop a new hospital, so what is your criteria to select this geography for that expansion? Yes, that's my first question.
So thank you for asking that question. See, over the years, we have created a dominating presence in our current 18, 19 locations. Our first priority is to invest in these assets and create capacity in terms of beds open in accelerators. So we'll continue to dominate the presence and continue to grow our market share in our current locations.
We have already announced and shared with you that in Ahmedabad, we are moving from below 100 beds to 200 beds capacity newly built to our specification, very premium advanced cancer care center in next month. So we're doubling that capacity there. We are -- we have added about 20 beds and 2 OPs last year in our center of excellence in Bangalore. We have announced 2 new projects in Bangalore market, 1 in East Bangalore in white field with 25 beds, accompanied to cancer care center and 1 in North Bangalore, about 100 beds comprehensive cancer care center, which will become operational in about 12, 15 months, another 12 to 15 months. So we're doubling down in our both strong markets.
In total, across our current hospitals, we are looking at adding about 350 to 400 beds in our existing hospitals in the next 4 to 5 years. Most of that will get completed in next year. So that's the plan on our current brownfield expansion in our current markets.
As we mentioned that we continue to look at M&A opportunities. In the past, we've had a brilliant track record in acquiring cancer care centers and creating value. So we continue to look at it. We started our journey last year with Indore. We are looking at opportunity. We are looking at -- basically, our criteria for that is we're looking at comprehensive cancer care centers in markets which are attractive market in terms of cancer incidents, affordability, household income, density of comprehensive cancer care centers. These assets are [indiscernible] 70 to 80 beds. We are looking at assets which preferably are EBITDA trading from right in the beginning, and we can acquire it at a valuation. So that's the criteria for our M&A.
In markets where we do not see where we do not see M&A opportunities, but we've seen that there are markets of strategic importance, we made with that greenfield, especially in our current states where we dominate like Maharashtra, Gujarat. So as and when we have something concrete plan on that front, we'll share with you.
In addition to [indiscernible] we also have about [indiscernible] additional installed grid capacity, which we have not deployed. So along with adding new capacity, we will also be deploying the existing installed capacity where the CapEx is already spent. Yes. So if you look at our current occupancy is about around 65%, 67% on our operational beds. Our capacity on capacity beds, including the 200-odd beds Ajay mentioned, which we've not made operational, is about 56%. So we have in all capacity parameters, we have enough headroom in our current hospitals to continue to grow for next 5 years.
Sure. This is very insightful. My second question was what is the average life of LINAC machine and the replacement cost for the same?
Sorry, are you asking about average life of a LINAC machine?
Yes. Like how much is the duration that we could use it? It is very hard to [indiscernible] something like that.
The LINAC accelerators are normally safe for about 14 years, 10 to 14 years. Most of the new technology has been in the software upgradation. The basic hardware platform has remained the same in the last 10 years or so. So as the new technology evolves, as you know, we [indiscernible] and high technology, more and more, it will be software update. So the basic unit mainline same with upgradation. So our thinking at this time is it will last anywhere between 12 to 15 years, the average linear accelerator, hardware. Of course, the software involved can even last longer, but we are in the transition process as far as the linear was concerned because we are talking about adaptive therapy, precision therapy, MRA linear, so many new things are happening. So it is undergoing a tremendous change. And I do believe as an oncologist, I do believe this will last for a long time.
Sure, sir. And lastly, on what will be the effective tax rate for FY '25?
Sorry, can you ask that question again?
Effective tax rate for FY '25, [indiscernible]
Somewhere between 35% to 39%.
35%. That's it from my side.
[Operator Instructions] The next question is from the line of Shyam Srinivasan from Goldman Sachs.
Just the first one on the opening remarks around the whole aspiration to grow faster than the industry. So we have done about 12%, 13% this year in terms of top line growth. When I look at some of the large NCR-based players who report oncology separately, they have grown 21% to 25%. I know there may be an outlier, but some of their relative absolute sizes of revenue have now reached almost very close to us. So I just want to understand what's the reason why we may be actually going lower than some of the peers? Is it that [indiscernible] expansion phase and we have not? Or I just want to understand some of the competitive dynamics.
Yes. Thank you for that question. We have grown about 12% year-on-year. However, I want to just point out that last couple of quarters ago, we have announced that we're going to scale down our shop-in-shop -- large shop-in-shop center in North Bangalore and [indiscernible]. So that business has not been with us for the last 6 months. If we adjust for that, we have grown about 14% year-on-year in the [indiscernible] last year. That is above the market growth rate, which is about 12% on an average oncology market.
Now obviously, year-on-year growth rate is also a function of the base that we have. And I think many players, multi-specialty players have started focusing on oncology recently. And therefore, their year-on-year growth is a function of their existing base that they had. We have a large presence. We've been in this business for a long time, and therefore, our base is much higher. Some players have very high concentration in specific markets, right? So there the realization plays a larger volume growth versus volume-related growth. I think as a strategy, we want to continue to focus on volume-related growth, which is a sustainable growth, while continue to improve realization but primarily volume-led growth. So look, a leading oncology player, we have enough levers to [indiscernible]. Our plan is robust to maintain our leadership position, which is volume-led growth, and we will continue on that part. More than that, I mean I can't comment on other players. Yes.
While Shyam, as you mentioned, they having on an expansionary impact. We [indiscernible] consolidation phase. We started deploying additional capacities in some of our key centers, like Ahmedabad. So Ahmedabad Kolkata and other centers, large centers, we have started deploying capital taking the capacity, which has been [indiscernible] And if you start in growth momentum from these centers, which [indiscernible] the overall growth of the company as well.
Yes. Understood. That's helpful. Just a second question, actually, a related question to question number one, in terms of doctor attrition because some of your competitors are expanding. Have you seen accretion or any of those parameters that you look at from an HR or retaining our key talent perspective? Has that seen an uptick or a change? Or what are we doing to retain our top talent?
Shyam, as you know, this is Ajaikumar. As you know, HCG has always been very proud of our doctor group. And our doctor attrition is very low, less than 5%. So we have been very proud. And even today, because of the way we empower the doctors, we're involving academics and research, our attrition has not been a major issue, and we don't expect it to be a major issue at all.
And another thing I want to tell you is we are also in training. We have our own training program, simple programs, residencey program. And because of that, we have a significant number of doctors coming out at training, in medical oncology, radiation -- oncology. Because of that, and we are an institution. And I always like to compare it to where I trained MD Anderson. Wherever you went in the U.S., you found doctors staying in MD Anderson. It's a proud thing that doctors are there working in institution claim by that. So similarly, where we go now, we see doctors training there. So we don't have any issues, doctors who want to even say because we have an internal training mechanism. And because we brand HCG more than doctor and we have collaborated with doctors and we don't see that as a foreseeable issue at all. And the people come to for HCG to HCG has a quality institution, as a destination. So that is how we have been able to grow and maintain our status as the leader, and we will continue to do that. And we are very clear that most of the major doctors have been with us for a long time and will continue to be there. And we don't see any issues on that.
Helpful, sir. Just my second question is on, if you could double click on both the -- I think the case studies that you have presented in the investor presentation are very helpful. But I just wanted to go through like South Bombay, what's the -- you now are looking at international medical tourism as an revenue. So I just want to understand what's the size there? What are the plans for further enhancing our offering at South Bombay? What's been the response even from local patients? That is my second question.
Yes. So Shyam, as you know, South Mumbai Hospital is a premium hospital at a very good location. We have a differentiated technology there. It is still the only hospital in Western India with a CyberKnife and TomoTherapy in the one group.
As mentioned earlier, we have invested in our clinical talent. We have medical oncologist who focuses on [indiscernible] to be Director of [indiscernible] Oncology Program in U.K., in Nottingham Hospital. We have a breast surgeon who's come back after getting training in [indiscernible] picking. So we have a very good talent on medical side, surgical side, radiation, they were always strong in that department.
So we have a product now, which is a premium product, a differentiated technology. And clinicians with -- full-time clinicians with a very high category. I think this is a perfect -- and Mumbai is more connected with the rest of the world in most cities in India. So this is a perfect recipe to attract international patients.
And just to explain, CyberKnife gives a lot of advantage in terms of treating cancer patients, which cannot be treated by other [indiscernible] linac machines. But one of the biggest advantage of CyberKnife, when an international patients travel to India, you can keep the patient in with hypofractionation. Generally, LINAC activated, you will go through 25 to 30 fractions. And you have to stay 6 to 8 weeks for that. Whereas, with CyberKnife, can do it in a matter of days, and therefore, the length of stay for international patients in India becomes much better and therefore, out-of-pocket expenses goes down.
So not only you have a superior outcome, but your out-of-pocket expenses go down. So it's well positioned to target international patients. we've been working on our go-to-market efforts in certain markets like Middle East, Oman and East Africa. We have seen currently 30% to 35% of our center revenue coming from international. At the same time, because of the differentiated products, we are targeting a wider geography, not just South Mumbai, but a greater Mumbai, Maharashtra and strategically connected locations to Mumbai, who historically drain into Mumbai, like Northeast is there, some of the cities in Central India. So we continue to spread our net wider in terms of go-to-market to get the right segment or -- for the products that we have in this. If we significantly reduced our losses this year, in this center, and we are expecting it to break even sometime middle of this year.
That's helpful, sir. I have last 2 questions, if I may. Sorry, I'm asking many questions, but similarly, on Borivali, your presentation talks about positive EBITDA in fiscal '24 and revenue growing at a CAGR of 22%. So all the changes regarding , I think we have made management changes as well. So how is this that seen fusion now when I look at Borivali? Any numbers you want to share at this point of time given that we have now reached probably some scale there?
Yes. So look, more has been a well-performing asset. Actually, it is it exactly follows our unit economics. Last year, we have added one more LINAC accelerator to augment our radiation capacity there. We added robotic -- our robot there, surgical robot. We have created a vertical specialization in surgical tree. We have onboarded surgical talent it had shown 20-plus percent growth. It delivers EBITDA margin, and we have enough spare capacity on all modalities there. So I think we are perfectly poised to gain market share from others and continue to grow at a very aggressive growth rate going forward in [indiscernible] in Mumbai.
Got it. My last question is just on the balance sheet. In terms of our debt, I know debt went up year-over-year in fiscal '24, but what are the plans going forward? Will we use this dry powder to kind of do M&A like you may have hinted? But just want to understand how should we look at any plans for debt reduction.
Thanks for that question. So the current levels, we are very comfortable with this with all our banking covenants we have in our segment. We are exploring looking at inorganic growth, and Raj talked about, and we will be looking at those. In terms of funding the findings for that, we will we funding it through both internal approvals as well as external debt only.
[Operator Instructions] The next question is from the line of Ankeet Pandya from InCred Asset Management.
Congratulations on the numbers. Sir, I have a few questions. So starting with -- on the CapEx front. Also, what will be the organic CapEx for the next 1 to 2 years?
So on CapEx, I mean, as far as the maintenance CapEx is concerned, we have always guided that our maintenance capacity is around INR 65 crores to INR 70 crores, and INR 70 crores is the number which we saw for the first -- FY '24 as well. [indiscernible] have largely -- any new projects which is coming up, we have been presenting it before you. So other than what we have laid out in Ahmedabad and [indiscernible] in Bangalore, we are also -- we also announced North Bangalore center and North Bangalore capacity similar is around INR 90 crores. This largely will be spent in the current year and upon the next financial year.
Okay. And sir, you have even mentioned that in some of the centers, you'll be doing -- adding more capacity over there. So in FY '25 and '26, how much -- how many brownfield capacity expansion can we expect apart from that the Ahmedabad and the Bangalore that has been already been announced?
I think other than Ahmedabad, I mean that's primarily the brownfield capacity increase that will come this year. Rest will probably follow in the year after that. Majority, I mean. We have seen some beds and route expansion in our existing centers. So for example, a center in [indiscernible] expansion in Cuttack. So there are bids or associated infrastructure addition which is happening in a couple of centers, and large one would probably have a mix in Cuttack.
Okay. So that will be roughly how many beds that will be increasing?
Sorry?
How many beds capacity will be increasing in the brownfield.
In whitefield, in whitefield, I mean, Bangalore, we are adding about 125 beds. But that won't come this year, that will be next financial year. So in both projects, between both projects, not Bangalore and [indiscernible] will be added about 125 beds, which will get commissioned in the following financial year, FY '26. .
Can you just talk about your inorganic CapEx also -- inorganic acquisition that you'll be doing? So which region and how much you'll be willing to invest in inorganic opportunities?
Yes, so look, I mean, I think they are uniquely poised to be a consolidator in the state. There are some still comprehensive cancer care centers across the country. While from a management bandwidth, we would prefer them in existing markets or adjacent to our markets. We will be opportunistic if we get a good acquisition target in a newer state. So with M&A, you have to be opportunistic. I can't tell you our investment in these assets will be proportionate to the size of the asset. So we'll be able to tell you as and when we have something concrete. So it's difficult to comment on the size of that acquisition. Just it will depend on, obviously, the [indiscernible] of the [indiscernible] the debt level, which can be which we can sustain. And we have our internal guidance on the debt level, we will be leading that.
Sir, I have a question on the tax rate. If I look at your cash tax, the tax that you pay on -- and it is delivered on the cash flow statement. Last year, on a PBT of [ 40 ] PBT of INR 45 crores, we paid INR 22 crores tax, INR 23 crores tax. That's 50% of PBT. And this year, on a PBT of INR 68 crores, we have paid INR 47 crores of tax. That's like 70% of our PBT. And then on the [indiscernible], we are [ waiting ] for effective tax rate of 35% to 39%. I thought the corporate India tax rate is [ 425% ] a few years back. So what is it that is keeping our cash tax and our P&L tax so high? I mean 70% tax rate on a cash tax basis seems undue. So can someone explain to us why our cash tax tends to be like 60%, 70%?
Yes. Yes. So we have various entities and under which our businesses are there. There are entities separately where we incur losses. And since they are separate entities, we don't get that benefit at a consolidating. And we don't recognize deferred tax asset on. And that is the reason why our effective tax rate is higher. You're absolutely right that we are [indiscernible] 25% at the corporate level. However, there will be a journey once the entities become profitable, we will start seeing a reduction in our effective tax rate.
I get it. So if I -- so on the entities which are profitable, are we paying exactly 25% tax?
Yes, that is right. We are paying 25% tax. So we have about INR 47 crores of losses that is letting off our overall profitability.
So in other terms, if I...
[indiscernible]
Yes, yes. So what I was asking was that if I take the INR 47 crores of tax paid in FY '24, and I multiply it by 4, that gives me almost INR 180 crores of profit before tax on our [indiscernible] entity. Would that be correct?
So we have for the year entities [indiscernible] INR 115 crores of profit. On which, we approach sales of INR 22 crores [indiscernible] profit. And we have INR 47 crores of cost, making that [indiscernible] low tax credit status. So if we adjust for the [indiscernible] growth, you'd be at 26%, 27%. Right now, we are at 29% because we are not taking the tax rate of INR 47 crores [indiscernible]
No, no. So I'm not following the math here. I'm sorry, I'll have to drill a bit more on this. So INR 67 crores, INR 68 crores of consol profit, right? Add that INR 47 crores of losses that we are paying included in this profit. So that gives me INR 120-odd crores of profit. Even on INR 120-odd crores of profit-making entities, we are paying INR 48 crores of tax. That's 40% tax. Is that correct?
27% of tax -- you see the net tax. .
Yes, that [indiscernible] also.
[indiscernible]
No. Net of refunds, the tax is INR 47 crores on your consolidated cash flow. I'm talking about cash tax.
No. Please, that includes the [indiscernible] also, which is [indiscernible] That is not the tax charge. You should look at the P&L because the balance sheet improves 2 things. One is the cash tax as far as the [indiscernible] which gets deducted from the payments that [indiscernible], it does not include tax.
So what is this [indiscernible] can you again...
Includes [indiscernible] tax sourced under section 194J, whenever we bill our credit players, while taking the payment, they give us tax of 10% because taking the payment. Or in some places, we have got lower periods, which will be [indiscernible] to 4.5%, but still that's the tax reduction, which normally will get [indiscernible] in a cycle of 2 to 3 years. So those are not the cash taxes, that cost impact we see then that is only a cash flow is, which is with the government, the Indian tax department, which gets repeated after 2 to 3 years.
Okay. Okay. I get it. But this has been going on for the last 2, 3 years, right? So this INR 22 crores that we paid last year.
[indiscernible] Yes. So it is there because we have it business, it is both cars or total revenue. So if you keep going on like that. So once we -- once our PAT is 10% of the revenue, you'll see that part. But right now, we are at 2% to 3%. So we have way to go there.
I get it. No, I understand it. Last question on the multispecialty hospitals that we have, Raj, this questions for you on the 3 multi-specialty hospitals that we have, what's the strategy now going forward? And what are the current sort of margins that those facilities are doing for us?
So I've answered that question. We have been pretty clear on our communication on this front. We have -- we've had 4 multi-specialty hospitals. About that -- [indiscernible] is now oncology is a dominant specialty. We add a linear accelerator 3 years ago. We are looking at adding another linear accelerator there. So it will continue to -- oncology will continue to contribute more and more in the there. [indiscernible], again, we are currently -- we -- last year, we started surgical oncology and medical oncology. Currently, we are in process of building the bunker. So Rajkot will also have a comprehensive cancer care facility, and oncology will become a dominant specialty going forward.
In [indiscernible], we are -- again, we have a very strong market share there. It's a very good referral center for [indiscernible]. We are currently building in bunker for linear accelerator as well as PET scan next to the CCI hospital. Eventually, we have an opportunity. We have another comprehensive cancer care center in [indiscernible]. Eventually, when we need to add more capacity, we cannot add that capacity in our existing cancer care center. However, this is a planned road map for going forward. Since we are adding linear accelerator PET scan next to [indiscernible], we have a growth headwind whenever we need additional capacity. And then oncology will start becoming a dominant specialty within [indiscernible].
The last multi-specialty hospital is in Ahmedabad, which will continue to be a multi-specialty hospital. There is no space there to add oncology in that hospital.
The next question is from the line of Vinod Patia from Elara Capital.
Couple of questions just following up on earlier questions. In Ahmedabad where we are adding beds, what is the existing capacity utilization there or occupancy there? And what's your expectation regarding the new [indiscernible] So is it going to get ready in 6 months?
Yes. So I wish I can fill 100 beds in 6 months in any market. But yes, look, Ahmedabad again, it's a hospital that we started more than 12, 13 years ago. It has less than 100 beds. The capacity contains more than beds. It was ICU beds and OT. We have had 5 OT. As you know, this is a surgery-dominant cancer center. We have a very strong team of more than 20 surgical oncologists there with vertical specialization and a very high volume, strong robotic surgery center.
Since it is a surgery-dominant center, capacities and post-op IC beds became a problem for us or capacity constraint for us, and that's when we decided to invest in new hospitals, which is a 200 beds. There, we have -- we'll be moving next -- sometime next month. We have to start with -- we are doubling the OT capacity from 5 to 10 OTs, and we have a further headroom to add OTs whenever we [indiscernible]. Same for IC.
So we are very excited. This is a center that is built to our specification very premium center. And because we have all the clinical bandwidth and are currently the #1 market share, I think we are best poised to ramp it up quickly. How fast can we ramp it? Well, we are -- as fast as we can. But as stated earlier, we've always said that we will grow at higher than market growth rate in every micro market. Here, we have an opportunity now to increase our market share. We are already #1 market share with 30-plus percent market share. So we have an opportunity. So we'll go all out and see. It's difficult to predict how fast we can pull that. At this stage...
They give us historical base around that. In FY '23, [indiscernible] [ 20%. ] In FY '24, in spite of all the capacity challenges, we grew by [ 7%. ] We do expect the growth momentum to continue. And I mean, this growth probably gets accelerated once we've given to the new centers, we were capacity challenged. And you can see the guidance from here of the growth rate, I mean, make a sense of how faster we in those [indiscernible].
Understood. And typically, it takes at least 3 years from plan to operationalizing a new facility or new bed. After this Bangalore 125-bed addition in FY '26, it looks like you don't have a plan to grow further our capacity. Do you have anything in mind even in earlier stages where you'll be doing something significant downtrend for [indiscernible] beyond the FY '26?
It's difficult to hear you. Is this a question about Bangalore?
No. Overall, your bed growth plan because you don't have a plan in place beyond FY '26. Next year, you have 125 bed addition in Bangalore. Beyond that, you don't have a plan in place for [indiscernible]
Yes. So we have a plan. We just spoke about it a little while ago. So let me start from the current date. Today, we have 56% utilization on our capacity beds. So we have about 44% beds unoccupied right now in our existing hospitals. So that's number one, first headwind. Then in our strategic markets, like Bangalore, we've added 20 beds last year. We have ability to add -- we have a plan to add another 25, 30 beds in our existing center in the next 2 years. We are also adding 2 more hospitals in Bangalore, 1 in White and 1 in North Bangalore with total 125 beds that will get commissioned in FY '26. Now that's enough bed capacity for Bangalore to continue to grow for the next 5 years.
I would like to point out that we also have 3 daycare centers in this market, which have done very well, and we'll continue to add a couple of more daycare centers in the next 12, 18 months in Bangalore so that we penetrate -- we have a deeper penetration in greater Bangalore market and grab higher market share.
The second key market is Ahmedabad. We just spoke about it, where we are doubling our capacity. So we have a headroom and a runway to continue to grow for the next few years. Similarly, market by market, we have added 35 beds in Baroda. We have added -- we are adding another 25, 30 beds in [indiscernible] in next year. And then we have a plan to add another 25, 30 beds in [indiscernible] in 2 to 3 years. Cuttack, we'll be adding about 60 to 70 beds.
The remaining, all our hospitals, we have enough current capacity, which is [ unmuted, ] which will continue to fuel the growth for next 5 years. We have -- we don't see any capacity constraint in our hospitals with this plan baked into our 5-year plan, we don't see any capacity consent for at least next 5 years. And as we ramp up, we will continue to monitor utilization and sit it out if we need to add subsequent capacity in any of these markets.
So to summarize, today, we have enough capacity to grow. We are clearing the capacity bottleneck, and we'll have a runway to grow for next 5 years. And if we feel that in next 2, 3 years, we'll continue to monitor it and continue to deploy more capacity in our established centers. These are the centers we are -- we have a dominant market share, and we will not let the capacity come between our future growth in the future.
[indiscernible] mentioned plus 200 beds additional which we have. So we do have visiting next year. We [indiscernible] 500. We also have done an assessment of each of the centers, which probably will go out of capacity after 3 years. That would also need an addition of about another 200 beds. So in 5 years' time, you have a visibility of adding about 800 to 900 beds.
Sorry, 800 to 900 beds in 5 years. Okay. So these are multi brownfield or so.
Yes, I just want to add one thing here. See oncology, you should never focus only on beds. As we go forward, oncology is more outpatient or triangulated treatment. And also, we should look at the growth in oncology, not clearly just measured by the best one. The best will be needed, but the proportionate growth of oncology will be more without even considering the best. Today, it has been in the last few decades, and we continue -- because our average length of stay, as you can see, has come down significantly. More targeted surgeries, more targeted treatment. So all of this we'll have more footfall is what we have to look at are in the best trend. But as you explained, beds tends will increase, but one should not measure only by the beds trend. Because, for example, if you have a bespoke model, you have more clinics like what Raj mentioned in operation clinics and are there little no beds, but it will be still infusion centers, which are contributing to the revenue and the growth. So it has still looked at in a more analytical way in oncology rather than just the beds.
Thank you, Dr. Ajay, for pointing that out. And as you know, we have added we have added 3 linear accelerator in the last 3 years. Today, we have 36 linear accelerators. On that, our utilization is about 61%, 62%. So there also, we have enough headroom to keep growing going forward.
Thank you. Ladies and gentlemen, as that was the last question, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
So once again, thank you so much for your interest in HCG. We've had, as I mentioned in my opening remarks, we've had a fantastic performance in quarter 4 with about 12% year-on-year growth, 21% -- 12% year-on-year growth in revenue, 21% on EBITDA. Our margins [indiscernible] 19%. We have worked very -- the team has worked very hard to add clinical bandwidth, cleared capacity constraints, drive our go-to-market. We are very optimistic in driving our growth in the current quarter and in the current year. Looking forward to see you next quarter on this call. Thank you.
Thank you. On behalf of HealthCare Global Enterprises Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you, everyone. Good morning, and...