Metropolis Healthcare Ltd
NSE:METROPOLIS
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Metropolis Healthcare Ltd
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Ladies and gentlemen, good day, and welcome to the Metropolis Healthcare Limited Q1 FY '22 earnings conference call hosted by Edelweiss Financial. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Sahay from Edelweiss Financial. Thank you, and over to you, sir.
Thank you, Melissa. Good evening, everyone, and thank you for joining to the earning call of Metropolis Healthcare. On behalf of Edelweiss, I would like to welcome management team of Metropolis to discuss the results and outlook.We have with us Ms. Ameera Shah, Managing Director; Mr. Vijender Singh, CEO;: and Mr. Rakesh Agarwal, CFO.I would now request Ms. Shah for her opening remarks, post which we can open the floor for Q&A. Over to you, ma'am.
Thank you, and good evening, everyone. Thank you for joining us on the Q1 FY '22 earnings call. I hope you and everyone around you is safe and healthy. And I'm joined today by Vijender, Rakesh and SGA. The presentation and press release have been issued to the stock exchanges and uploaded on our company's website. I hope everyone had an opportunity to go through the same.But before start by thanking each and every frontline worker, including those at Metropolis who have especially worked around the clock during these past few months to get us past the deadlier second wave of COVID-19.Let me share with you the business highlights for the quarter. I'm very pleased to share that we've continued from last quarter and delivered highest ever quarterly revenue, EBITDA and PAT, during Q1 FY '22. We crossed INR 300 crores quarterly revenue, INR 100 crores EBITDA milestone in this quarter. We also recorded highest ever patient visits of 3.5 million and number of tests at 6.5 million.Strong Q1 performance was partly led by increased COVID revenue due to second wave of COVID-19, which was bigger in magnitude. Accordingly, the COVID PCR test contributed 19% to the total revenue in Q1 as compared to 14% in Q4. Majority of the COVID revenues were recorded in the month of April, which tapered down in the month of May and June, as cases started moderating. This was specifically in the west of India where the COVID wave started in March and ended in April. While in the north of India, it started in April and completed in May, which is why we see an increase in West India for Metropolis, the COVID revenue split between the 2 quarters of Q4 2020/'21 and Q1 '21/'22.Reviewing both quarters together will provide a more balanced insight into performance of diagnostic [ firms ]. If one were to look at the performance of last 2 quarters, Q4 and Q1, Metropolis has fared well on profitability metrics as compared to the industry. However, this time around, the non-COVID business was not impacted to the extent it was impacted during the first wave of COVID-19 as people continue to undertake non-COVID tests with adequate precautions. Non-COVID revenues thereby grew 259% on a year-on-year basis and 5% on quarter-on-quarter basis.COVID or non-COVID, we have seen a strong acceptance to brand Metropolis, which is visible in our growth on all accounts, including patient visits. Even in noncore geographies, we have seen faster growth, and north and east India now contribute 4% extra to total revenue compared to last year same period. And therefore, we strongly believe that we will continue to move ahead and clock better than industry growth in quarters ahead.I'm also happy to share that we've settled the arbitration case with respect to receivables related to Global Hospital, which is now part of the IHH group. We had conservatively written off the dues in Q4 FY '20 and have now written back INR 16 crores after receipt of the said money, which is reflected as exceptional gains in the P&L statement. Accordingly, we have restarted the business with Global Hospital and other hospitals in the IHH group as well. We have signed with them a multiyear contract, which will start giving us revenues from September.Further, there was an arbitration proceeding, which we had with our erstwhile JV partner in Pune for breaching the non-compete provision in the SHA. I'm happy to share that we have won this arbitration, and we have been awarded dues of INR 7.5 crores, which is in escrow until now, which will now get added to our cash reserves with no effect on the P&L. The outcome of these cases truly affect the business ethics we practice while conducting our business as for agreed terms with partners while being on the right side of the law and serving our patients.Let me now highlight a couple of points, which had a minor impact on our profit in Q1 FY '22. You may have noticed that our employee costs and other expenses have risen. With respect to employee expenses, apart from normal increments, it also includes a onetime special incentive to our frontline workers for their [ service ] efforts during the Phase II of the pandemic.Motivating and retaining talent is a critical action at this time, and we are investing in our people financially, and we are learning and development also. Other expenses increased on account of variable pay to third-party centers and investments made in the new network expansion, the result of which will accrue in quarters to come.As the industry is changing with COVID acting as the ultimate catalyst in accelerating the pace of shift from unorganized to organized, there are many opportunities for consolidation via the organic-inorganic route. However, the valuation expectations between public and private companies is reducing, leading to difficulty in closing deals in the sector.We will continue to evaluate all strategically significant deals that help us consolidate market share in focus cities or to build a B2C platform in noncore cities and believe we are best placed to conclude such deals due to our large experience in M&A and integration of such businesses. If the right opportunities arise, we would be comfortable in doing deals using stock, cash and debt as appropriate.Before concluding my part of the speech, I would like to mention that the health care sector, including diagnostics, is at a key inflection point. We believe we are at the start of something transformational, and we at Metropolis are keenly watching and evaluating the changing dynamics and we'll be ready to grab any new opportunity, which can enhance our service offering, adding value to our customers and shareholders.That's all from my side. I'll ask Vijender now to take you through some of the operational parameters.
Thank you, Ameera, and good evening, everyone. Now let me come to key performance metrics, which we track for our progress. First, on revenue share of B2C business. Our revenue share of B2C business in focus cities for non-COVID business increased by 500 bps from 54% in Q1 FY '21 to 59% in Q1 FY '22. It has also increased by 100 bps as compared to FY '21. We are swiftly progressing towards our near-term target of reaching 65% with customer-centric approach, focused marketing and branding initiatives and ramping up home testing offerings.Increasing share of B2C business improves customer stickiness, enhances brand equity and is margin accretive for the company. We will continue to focus on B2C business, especially in our focus and seeding cities via organic and inorganic route.On specialty test contribution, volume contribution from specialized tests for noncore business has increased from 11% in Q1 FY '21 to 16% in Q1 FY '22, while its revenue contribution has increased from 34% in Q1 FY '21 to 41% in Q1 FY '22. Our continued focus on research and development has led us to offer a differentiated set of tests, which has enhanced our relationship with doctors as well as customers, improving the stickiness of the business. Improving share of specialized tests also leads to higher revenue per patient and revenue per test leading to better profitability for the company. On home testing business, home testing business, as we have started earlier, is one of the most important focus area for us.Revenue from home visit business, including COVID, increased by 70% year-on-year to INR 37 crores in Q1 FY '22. If we consider only the noncore business, it grew even faster by 130% year-on-year to INR 24 crores in Q1 FY '22. We are witnessing a shift in preference to home visits even for non-COVID tests on the back of convenience and safety factor. Our home visits coverage has now been extended to 64 locations, and we plan to further extend the coverage to 100 locations by end of FY '22 and cover 200 locations by end of FY '23.On digital initiatives, we believe that digitization in health care is inevitable. Accessing our digital customer experience on Metropolis corporate portal is now live, and the new app will be launched soon. Our smart report feature, which provides an enhanced report experience and the sample tracking feature, which provides assurance and certainty consumers are also live. By digitizing logistics pickup and travel, real-time home collection scheduling and implementing a CRM to get one view of customer will play a plan to continue to make the consumer experience more seamless.For our B2B and third-party partners, we have recently rolled out a partner portal platform to get ready digital access to services from Metropolis and with improved engagement potentially led to higher revenues per partner and more stickiness. We are also working to revamp the platform to make it mobile friendly and add more features as we get feedback from our users.For our doctors, making it simple for them to interact with Metropolis to prescribe tests for patients is our key focus. And as the health tech ecosystem expands, we are actively looking to increase our participation in this area with leading platforms and aggregators. We believe these initiatives will drive more customers to metropolis and coupled with science-first [ approach ], strengthen our brand equity.With portal, digital and marketing initiatives, we have witnessed [ 8x ] increase in our website traffic on year-on-year basis, 3x increase in call volumes due to digital campaigns and faster ramp-up in home visit testing business. As a result of these efforts, about INR 29 crores of revenue came through lease generated via digital mediums, which is about 9% of Q1 FY '22 top line. Our target is to reach 15% revenue contribution to digital leads by end of FY '22 and increase it to 1/3 of revenue over the next 3 years.In the last quarter meeting, we spoke about expanding our physical infrastructure in terms of level service network to enter into new geographies and strengthen existing ones where we want to increase market share. We've added 4 labs and 161 service network centers during Q1 FY '22, taking the total number of labs 129 and service network to more than 2,700 centers. Most of these new service network comprises of third-party patient service centers, which helps us to expand our network coverage totally in an asset-light manner. As stated earlier, our plan is to add 90 labs and about 1,800 service centers in next 3 years, giving us entry into 100 to 150 new cities. This expansion will also enable us to penetrate into the deeper parts of the country where we do not have the presence currently. It will also facilitate us to widen our coverage for home testing business and in turn, increase the B2C component of the business. For Q1 FY '22, we recorded highest ever patient visits at 3.5 million and number of tests at 6.5 million in a quarter. That is patient visits grew by 158% and number of tests grew by 147% on year-on-year basis. Even on a quarter-on-quarter basis, patient visits grew by 11% and number of tests grew by 1%.For Q1 FY '22, revenue per patient for noncore business increased by 26% year-on-year and 11% quarter-on-quarter to INR 1,028 on the back of improved volume contribution from specialized non-core tests. Including COVID, revenue per patient had decreased by 11% year-on-year basis as COVID test prices were at its highest levels in Q1 FY '21, which were capped downwards during the year. However, in spite of that, overall revenue per patient increased on a quarter-on-quarter basis. For Q1 FY '22, revenue per test for noncore business increased by 17% year-on-year and 13% quarter-on-quarter to INR 473. Including COVID, revenue per test has reduced by 7% year-on-year due to the same reason mentioned earlier, which is lowering of COVID price [ tests ]. However, on quarter-on-quarter basis, revenue per test still grew by 11%.Our revenue profile among focused seeding and other cities stood as follows: focus cities, 5 cities including the city and peripheral area around metropolitan region, contributed 58% to the total revenue in Q1 FY '22; seeding cities, 8 cities including the city and peripheral area around the region, contributed 22% to the total revenue in Q1 FY '22; rest of the other cities contributed 20% of the revenue in Q1 FY '22.Our revenue share of B2C business in focus cities for noncore business has increased by 500 bps from 54% in Q1 FY '21 to 59% in Q1 FY '22. With the increasing marketing initiatives towards the B2C side of the business, we are confident to reach our target of 65% soon. With respect to geographical distribution, revenue contribution from West region was 56%. South contributed 24%. North contributed to 10%, while rest was contributed from eastern international locations. With respect to test mix on volume and value basis, during Q1 FY '22 for non-COVID business, the volume contribution from specialized has increased to [ 16% ] as compared to 11% in Q1 FY '21. Revenue contribution from the sale increased to 41% in Q1 FY '22 as compared to 34% in Q1 FY '21, in line with our strategy. The volume and value mix overall continues to see improvement.To conclude from my end, our focus going ahead will continue on ramping up the non-COVID business, improve B2C contribution of the business and expanding the service network, ramping up the home visit business with focused marketing initiatives and complete digitization. Higher share of specialized non-COVID tests, automation and cost efficiency initiatives, along with the other factors at play will lead to improvement in profitability with higher scale of business. This will lead to significant improvement in our customer experience in the long run and in turn, will enhance the brand equity of Metropolis.That's all from my side. I will now ask Rakesh to take you through the financials.
Thank you, Vijender. Good evening to everyone on the call. Let me give you a snapshot of our financial performance. Q1 financial year '22 revenue stood at INR 327 crores as compared to INR 143 crores in Q1 financial year '21, up by 128% Y-on-Y. On Q-on-Q basis, it grew by 12%. Non-COVID business contributed 81% of the revenue, while COVID RT-PCR contributed the rest 19% of the revenue during Q1. Non-COVID revenue stood at INR 264 crores in Q1 financial year '22 as compared to [ INR 102 crores, ] Q1 financial year '21, up by 159% Y-on-Y; on quarter-on-quarter basis, grew by 5%.COVID RT-PCR revenue stood at [ INR 63 crores ] in Q1 financial year '22, up by 53% on Y-o-Y as well as Q-o-Q basis on account of second wave of COVID-19. EBITDA before CSR & ESOP stood at INR 105.6 crores in Q1 financial '22 as compared to INR 13.1 crore in Q1 financial year '21, more than [ 8x ] on Y-o-Y basis; on Q-on-Q basis, it increased by 2%.EBITDA margin before CSR and ESOP expanded by more than 2,300 basis points Y-o-Y to 32.3%. Reported PAT stood at INR 74.9 crores in Q1 financial year '22, more than 26x on Y-o-Y basis and up by 22% on Q-on-Q basis. PAT is positively impacted by gain on account of write-back of past due Global Hospitals. Coming to our working capital ratios. Our [ better days sales ] has improved further from 44 days in March '21 to 36 days in June '21. So as on June '21, it still -- our DSO stands at 36 days. Overall working capital days has increased from 4 days in March '21 to 12 days in June 2021 partly on account of improved trade days and because of higher inventory. Our liquidity positions remained very strong, cash and cash equivalent of INR 461 crores as on June '21. OCF EBITDA stood at 71% for Q1 financial year '22.That is all from our side. We now leave the floor open for Q&A. Thank you.
[Operator Instructions] We have the first question from the line of Pooja Bhatia from Morgan Stanley.
Ameera, since COVID contribution has moderated in May, June and would continue subject to the third wave, I guess, what would be normalized EBITDA margins be like when things normalize? Right now, we are still 30% plus this quarter. I understand there will be several moving parts, I guess, the business mix, channel mix, the cost. So just roughly, would it be higher, lower than the pre-COVID level?
So in the last quarter, actually, we had shared that we would hope and expect EBITDA margin for the whole year of '21/'22 to be higher than the entire year of '20/'21. And that would be a blended average of some quarters where, obviously, it might be higher due to certain reasons, and there would be some seasonality effect. But on the overall year basis, it should be higher.
Okay. So would be -- with robust expansion plans underway, would this dilute your margins in the longer term over a 3-year period?
So when we actually looked at the expansion, the network expansion, it dilutes our EBITDA in the short term in the first 2, 3 years by about 0.75% to 1%. And what we have done is that, to compensate for that dilution, we have started cost efficiency projects at the back end and to neutralize the impact of the dilution because of expansion. And therefore, we are saying that keeping the cost efficiency benefits and the expansion, overall, we believe that we should still be higher than all of last year.
Understood. So 2 decades ago when the company was in the initial phase, the idea was to grow in home market, focused cities. Now that we have a sizable presence here wanting to expand in more geographies, I guess, pretty much similar to what other regional players are doing, I believe there will be a considerable overlap in certain markets. Also, how would your value proposition be different versus the others?The reason why I ask is all companies are following the digital route. I guess this is the need of the building own online app, investing in logistics, et cetera. So how would a patient really choose between 2 service providers, which tend to have a strong brands, as we say, in the same vicinity?
I think let's just take a step back. I mean when we talk about the industry, we still talk about 90% unorganized. And the unorganized industry is not even fully using computers today. Forget about having apps and building digital platforms. So really, we've always maintained that the larger story here is the move from unorganized to organized and not really the competition between the organized players. That's not really the story here.But to answer your question on how patients would make a decision, we have to remember that ours is not a simple consumer service. It is a medical health care consumer service, which means you're finally -- while your technology may be great, your features may be great, your service may be great, finally, what people are buying from you is an accurate test report. And your brand and credibility of being able to deliver that is the most critical thing that you actually bring to the table.But today, also the way patients make decisions is along with their doctors and choosing the right diagnostic brand, which is based on quality and then service and experience and other factors. And I don't believe -- we don't believe that that's going to change because as much as technology comes into play, you still need an accurate diagnostic report. So that will continue being the most important thing.I think, frankly, what we are hearing in the industry is very, very limited number of players. Maybe 2, 3, 4 players are talking about even building a digital engagement with their consumers, and so it's a very limited number actually that we are actually seeing. Majority of the industry is still very much steeped in the more traditional model or brick and mortar.
Understood. Very helpful. One more if I may. So there's been a lot of interest of late in the sector. We are seeing new regional companies tapping the capital markets, and online aggregators are scaling up. Hospitals are expanding their presence. How would this impact the pricing? Would there be a pressure on pricing in the near term?
Again, I mean, I think we have to separate the signs of diagnostics that we are talking about. The companies that you're talking about that are looking at a public issue, I don't think they're looking at a public issue to raise money and then bring the prices down. I mean that has been done even without raising money from the public market. So I think if they had to create competitive intensity, that happened already. In fact, most going public, I think there will be probably more pressure on profitability and margins, so I don't necessarily see that happening.As far as hospitals and other people coming to the sector, again, this is a very old story. Many people have already come into the sector over many years and already brought that competitive intensity in. Overall, I mean, I think there is -- if you break up the basket, you'll see there is wellness. There is chronic and acute testing. Acute testing is when the patient gets sick. You have a fever. You go to a doctor. A doctor says, "Hey, you need to get some tests done for me to find out what's causing the fever." And the doctor needs an accident report and therefore, guides you to a lab that they trust. That may be Metropolis. It may be somebody else in a different core geography.But in the - and patient is not the only decision maker there, is with the doctor. So we believe that decision-making will continue the same way as it is happening today.You then have the second bucket. It is the chronic bucket where you have patients who are diabetic and who today are mostly above a certain age of 50, 55. There will be a percentage of those who are tech friendly and who may want to experiment with new bundling of services and opportunities they get. But there will be also a large number of that bucket who will prefer to continue with their lab that they have been going to because the data will be standardized. Their data record will be with the lab. They are comfortable with the phlebotomist, et cetera, et cetera. They're not necessarily the most -- they're not tech evangelists, right? They're a little older age group. So we don't expect that the entire chronic base is just going to shift over onto digital platforms.And then you have wellness. And again, you have multiple categories of customers. There are customers who are saying, look, I want to buy a wellness for INR 3,000 or INR 5,000, which is premium wellness, and I want to do it from a credible brand. And then there is value wellness, which is probably less than INR 1,000 where they're looking at promos and discounts and commercial benefits. And that is now a growing market. And obviously, in that area, I think you would probably see more price competition because price will be one of the key factors in which consumers may call. But in chronic and in acute, I don't think price will be the most important factor.
[Operator Instructions] We have the next question from the line of Anubhav Aggarwal from Crédit Suisse.
One question was on the -- when you talk about increasing the home collection network for you as well as increasing the patient service center, I just wanted to understand how do you take a call, let's say, in a certain area, whether to increase the home collection versus increasing more number of patient service center?The context of the question which I'm asking this is, in my view, it's more profitable for you to go for the home collection. So why such a strong target that you have for the patient service center versus home collection?
So largely, I think home collection is more of a behavioral change, which has come due to COVID. So largely almost all the cities, you take any city, especially in India, people -- preference would be more towards home visit. So hence, we said in our speech also that we want to expand our home visit services from current 64 to 100 cities and then from there, so on, so forth.But definitely, there is an opportunity in many of the cities where we do not have a lab or home collection facility. So in those markets, we are looking at opening collection centers first. So the first level of entry point in certain markets would be through collection centers. And there will be certain markets, which are strong markets in our geography in the ecosystem of West India, South India and a couple of North India also, where we want to start a lab also with -- coupled with collection centers. So I think it's a mixed strategy, but largely, I think the entry point in any new city would be through collection center.
And in established markets, Vijender bhai, you would -- I really want to have more number of home collection points incrementally, right? Because that gives you the chance of converting the B2B business also into B2C, right?
See, there is no end to building capacity on home visit. So you have to have a hybrid model where you give both choices to the patients because we've seen in last 3 quarters, there has been good traction on home visit. And of course, the traction on footfall has also started going up because with the expansion of collection center, you are going much closer to the patients.
So just my clarity on this and this is my last question on this home collection, so from a customer perspective, what have you seen? Yes, last 2 quarters have been different. But what's your sense? If you -- let's say, if you were not to charge anything on the home collection and then it's the same price whether he walks into lab or you come to the home and collect the sample, what do you think is the customer's first preference?
Customer first preference, of course, would be home services, but there are a set of customers who prefer going to a nearest collection center. Earlier, what used to happen is that the patient used to travel to farther distance in order to give the samples. Now he has got 2 choices. One is home visit and second is the collection center, which is close to his place. And that is what we mean by expansion, going closer to patient.
We have the next question from the line of Neha Manpuria from JPMorgan.
One question on the non-COVID trend in the quarter. First, if I look at the volumes, the revenue through the month, even though there wasn't that much of a disruption, we haven't really seen the pickup that we would see as unlocking happened, let's say, in May and June. So have we normalized fully? Or do you think there is further normalization in the non-COVID business?And second, on the ASP trend of the non-COVID business, the quarter-on-quarter improvement due to the specialty test, is that related to the surge in COVID? Or do you think this is more sustainable given our focus on increasing the specialty mix? Just trying to understand if this is a one-off and you should see that ASP normalize again going forward.
Sure, Neha. Look, I think on the first part of our non-COVID business, see, we have to remember that the government unlocking in June is not necessarily -- it is not a consumer service where suddenly you unlock and everybody goes to a market and sort of buy testing, right, unlike a consumer good. It depends a lot on mindset. And I think how badly people were tormented with health in April and May, I think there continue to be a hangover of being afraid of necessarily going out and interacting, especially with necessary health care if it was not needed.So I think usually, I have seen the gap between a wave and normalization of non-COVID will take a few months and not happen instantly. And I think that will get reflected, in my mind, in July, August, September more likely than it will in immediately in June.The second question about specialized tests, I mean, as we've always maintained, our focus on specialized tests and generating it and going to doctors and making sure that we are building sticky business continue, and we are seeing a nice uptick in that business, and that's what is being reflected in the revenue per patient, which we have given to you with COVID and without COVID. And you will see an uptick in both and especially in the one without COVID, that is a reflection of these efforts.
Okay. So there is a fair bit of stickiness in the specialty contribution. You wouldn't say it's linked to the, let's say, comorbidities issue arising out of the pandemic or the surge in COVID cases.
No, because the some of the tests, which are what you call the COVID rub-off or COVID allied tests, are not necessarily what you consider as super specialized or specialized. A lot of them would actually fall in the semi-specialized bucket.
Okay. Okay. So yes. Okay. That helps. And a second [ is like in terms ], Vijender, Rakesh, the variable pay to third party, and I understand the impact from an expansion of network point of view. But this variable pay to third party, is that because of the higher COVID volumes that we saw in the quarter? Because even as a percentage of revenue, it does seem high in this quarter.
Yes. So there's a combination of both things that one is that, this quarter, we have seen the revenue going up and particularly on these third-party centers. So because of the COVID scenario, we have a lot of testing also happening. So that is one reason why this revenue share has gone up a bit.And secondly, because we are expanding our network on A-PSCs and third-party network very aggressively. So this is something which is going to happen a bit. But that is something part of our strategy, so it's not that this is something which has come out of the blue moon. So we understood that once we go aggressively in our third-party network, there will be some revenue share, which will go up on this. And that is what has been factored in, and that is something which we are already aware of.So that's the reason why there is a bit of a decrease in EBITDA margin. That's the only thing which we have mentioned. But otherwise, it is a part of our strategy to really go aggressively in third party and increase revenue on a B2C share.
We have the next question from the line of Shyam Srinivasan from Goldman Sachs.
Just first one on the non-COVID revenues. If I just look at it on a 2-year CAGR basis, so 1Q '22 versus on 1Q '20, just to try and understand how that splits out. It's about 13% CAGR on the non-COVID revenues, and it splits out at 9% on realization and 3% on volume. So just turning back to some of the previous questions. It looks like 3% and when I look at your historical run rate, that volume growth typically has been higher. That has been maybe 7%, 8%. So is part of the solution to get volumes up? Is that network expansion led, you think? Or given where we are in terms of our core market, is that how we should read it? Or do you think the 3% is a function of the lockdowns and the points that you've just made and 3% should ideally go back to 6% or 7%?
No, I think 3% is very much an outcome of the lockdowns and the fact that COVID has overwhelmed everybody's life, right? I mean I think when we have to realize that this is happening to patients, right, so it is about what makes them sick.Now when everybody is not traveling, everybody is at home, nobody is eating out, automatically, the wellness and health fees actually go higher because people are taking extra care of themselves, so they avoid getting COVID and which also means they avoid getting other diseases. So it's very natural that less people are falling sick. Less people are going to doctors. Less people are getting tests and which is why the main infection that's spreading is COVID.Now if we choose to separate the main infection, which is COVID, from all the others, it will not necessarily give us a fair picture because the patient is the same. They happen to have COVID today, and they may or may not have some other infection in the future.So I think the way we are looking at it is you have -- when you're looking at volumes of patients, you have to look at them combined because this is another illness or a sickness happening to a patient. And the patient, like I said, today, may come to us for testing for COVID and tomorrow, the experience is they would come for some other infection or disease. So to us, it's an outcome of that, and nothing else has really changed in the equation to change the historical volume growth rates at all.
Got it. That's very helpful. So if I now look ahead and just look at the expansion that you're talking about, the numbers that you have put out, are these new numbers relative to the previous? Or you've just articulated what some of these specific numbers are, the 90-odd labs that you're adding. And just want -- trying to add, is there a larger goal in terms of where we want to be from a longer-term revenue target perspective? Is that something that is driving these network expansion parameters?
I think the revenue target is the outcome of the efforts we put in, right? So the network expansion is one of the key growth drivers that will help us reach those outcomes. And there are basically 3 sort of main levers -- 4. One is obviously geographical expansion, which is to go closer to the patient in the cities we are already present in; and second, to go closer to the patient in new cities where we never had labs before. And that's the geographical expansion that we are doing. The second one is to take existing products and tests to the geographies or to the doctors or to the patients, which earlier were not using them. So how do you really get more tests prescribed to patients where they need it? And how do you get patients to move up the value chain to more specialized tests? That's part of the second sort of key strategy.The third one is about channel movement that with now patients are also wanting to use home services or digitally coming and becoming aware, how can you use these new channels of awareness, brand building and acquisition, to further our growth. And obviously, the fourth one is inorganic.So I think we would continue using all 4 key growth drivers, and the network expansion is only 1 of them. And hopefully, obviously, all these combined together would lead to the kind of revenue growth that we hope to achieve.
Got it. And last question just on an update. You've put a release on high tech that you're probably not able to reach out to the group. So what are the next steps? What could likely happen?And the related question is we have about INR 450 crores of cash and cash equivalents. So how should we look at inorganic play and the [ problems ] you made at the start about valuation being a hurdle? So just your qualitative color there.
Sure. I mean I think on the first question, if there's anything material, we'll obviously come back and update shareholders. We are exploring all options at this point to bring that deal to some sort of a closure 1 way or the other. And of course, if there's anything material, we will come back and inform shareholders as soon as possible.On the second side, which is on the cash on book and what is the thought, we continue to be very optimistic and excited about all the opportunities in the market. And as we said, we are continuously watching and looking out for inorganic opportunities. We are also looking and exploring digital and health tech avenues. There are a bunch of things that we are exploring at this point; and therefore, we do believe that, over the next year or 2, there will be significant opportunities to potentially invest in.While things are getting more expensive, we would like to continue to remain prudent and disciplined about the kind of investments we make. But at the same time, we always want to be ready to make sure that we are able to jump on any opportunity that we think is a strategically good fit for us.
We have next question from the line of Krishnendu Saha from Quantum Asset Management.
Just one simple. Could you call out the number of patients you service for COVID and non-COVID for this quarter and also for the full year FY '21?
Sorry, I can't hear you clearly. Can you -- your voice is very muffled.
Can you hear me now? Hello? Can you hear me?
Yes.
Hello? Can you hear me?
Please go ahead.
Yes.
Yes. Just could you comment on the number of patients for COVID and non-COVID separately for this quarter and for the full year FY '21?
Yes. So this year, we have a total of 35 lakh customer visiting us in this quarter, out of which 10 lakhs customer visited us for COVID and 26 lakh customers visited us for non-COVID. For the financial year '21, we have 98 lakh customers visiting us, out of which 14 lakhs were COVID and 85 lakhs were non-COVID.
We have the next question from the line of Rajesh Kothari from AlfAccurate Advisors.
My first question is with reference to this resolution of raising money. Can you give a little bit more color on that?
I think the idea of the resolution is only an enabling resolution. I mean, as a public company, obviously, one of the privileges and benefits is to be able to go to public shareholders and be able to raise that money at the -- as and when required.As we mentioned in the last call, we are exploring several opportunities on all sides. And we just wanted to make sure that we are ready from a regulatory perspective in terms of getting a board resolution that as and when, if any such opportunities arise, we are able to sort of seize the opportunity and come to our shareholders. So at this point, nothing specific to it. It is just an enabling resolution.
So when you're writing preference shares and/or public issue, does it include QIB or that close also includes [ QIP ]?
It's actually a very general resolution like it is just enabling. It just includes all the opportunities for [ organizing ]. There's nothing -- like I said, there's no specific thought at this point of time.
Understood. And my second question is, as you rightly mentioned that in last probably 6, 7 months, the kind of valuations, which has gone up, making it a little bit difficult to acquire the companies. But -- so in terms of your capital allocation policy and the decision-making process, which was there about 7 months back, should we assume to remain the same? Or you are changing your internal targets also in terms of the payback period of such acquisitions, considering that recent valuations have inched up.
I think we would like to continue to be obviously prudent and look at things from a sustainability perspective. And while there has been a recent jump up in valuations, I think if you will look at it from a sustainability basis, I think we just want to make disciplined calls. At this point of time, I don't think our policy has changed radically as far as capital allocation or any of that. But of course, we are, like I said, exploring opportunity to really see if they fit. Sometimes it might be possible, obviously, that we look at an opportunity, which may or may not pay off handsomely in the short term but strategically is good for us in the long term. And there might be different lens to look at that through. And of course, if such an opportunity does arise, then we would be happy to share sort of the thought and strategy behind it. But at this point of time, obviously, there is nothing on the anvil to share.
Okay. My only limited concern was I hope that you continue to maintain your prudent capital efficiency policy, which has been there throughout last so many years because recent euphoria of such kind of IPOs and equity markets is making at times the deals a little bit more, what I would say, instead of 3, 4 years payback, it becomes 8, 9, 10 years payback. And then ultimately, basically, it bleeds the balance sheet. So my suggestion was only that kindly be -- remain prudent in capital allocation.In terms of this -- the digital initiatives, what you are taking, are you putting anything into a separate subsidiary and then suppose you get an opportunity, which is more like a digital link opportunity? Are you exploring such option whereby you can get the right technology partner, so your pharmacy domain and the technology domain and that can grow on its own in a bigger way?
There are obviously lots of ideas and exploratory thoughts at this point. And I think it's too early to be able to sort of have any specific comments. But I mean, in short, I think we are exploring all opportunities to see really what makes sense for us. I think we should be in a better position to be able to give more specific comments, I think hopefully sooner than future.
We have the next question from the line of Surajit Pal from Prabhudas Lilladher.
I have one question. In terms of CapEx or in terms of mixed set of investments, are you guys going to -- going for any kind of setup or acquisition of any kind of digital marketing going forward?
Nothing specific that we have identified at this point of time that we can comment on. Of course, if anything, something specific does come up, we will obviously come back to shareholders. But we are exploring, like I said, all opportunities to see if there's anything that really fits with us.And finally, whether you do anything on the digital or the offline side, there has to be synergy creation, whether it's on the cost side or the revenue side. We do believe that the way health care is moving, there is a place for an offline and an online model and to become omnichannel. And if there are partners who could create synergy with us, we would explore. I think a little bit early to comment on any specific opportunities.
Okay. And the second question is that you might have seen that some of the activities going on by hospitals by integrated service providing opportunities. So this is the kind of a trend -- new trend has come where people are getting more and more into integrated service providing the market space, where both OPD as well as dispensing of medicine as well as diagnostic, [ both these ] spaces are there. So being a dominant player in diagnostic space with so much of cash, is there any possibility going forward with the backing of [ you guys are also ] getting into that mode where you will be leading and getting into offering integrated service from this existing conventional model of diagnostic business?
I mean I think it's definitely worth exploring to really see whether there is merit and really looking at an expanded integrated health offering. There are obviously some significant strengths that we have. We do have a large number of consumers and customers who trust us and believe in us. We obviously have data, and we obviously have relationships not only on the consumer side but also on the provider side.So there are some strengths. And I think the core goal is to figure out whether these enable for an integrated health ecosystem expansion. And those are all some of the conversations and exploration that we would do.
I think that is going to be a trend for next 2 years in this sector, and we could be seeing many deals into that space.
We have the next question from the line of Rahul Agarwal from Incred Capital.
Am I audible?
Yes. Go ahead.
Okay. So Ameera, a related question, what generally the discussion has been around M&A, but very specific to what has recently happened with the PharmEasy-Thyrocare deal and more so for the metro and the Tier 1 markets? What change would you expect once they are settled down and absorbed Thyrocare fully? As I said, especially for metro and Tier markets, do you think this combined services and impact on the chronic side -- you explained that you're not expecting donorship there, but my sense is, given next 12 to 24 months, there might be some kind of chronic illness pressure -- pricing pressure here. Any sense on this specifically?
No. Like I said, I mean, I think you have to look at the buckets separately. And I think while on the wellness side, I do believe that there will be some price competition. we have been actually quite aware of and conscious of this, and therefore, you will see the wellness business that Metropolis does is actually not a value business, which is based on pricing, but it is wellness, which is more based on quality and service. And the customer that comes to us is more premium in segment. And therefore, I don't see too much overlap at least in that part for us in the short term.On the chronic side, look, there will be an attempt, obviously, to try to bundle many things together. And like in every category and every industry, there will be some consumers who find value in that. But I think it would be incorrect to assume that every customer will -- for pricing, especially in health care, take a call to move away from their comfort zone.It's a simple point, I think, to myself that if I'm going to a particular doctor and a particular lab and I'm comfortable with results, I'm comfortable with the blood collection, I'm comfortable it's close to my house, et cetera and if somebody gave me INR 50 cheaper, would I shift? Most logically, I think the answer would be unlikely to be yes. So it would be no.So I think the average consumer, what we've seen from market research, but when it comes to health, pricing is not their top most concern. Their top most concern is acceptance of the brand by the doctor; and number two, their own service experience and comfort.
Got it. Related question to the fundraising question with earlier participant asked. So obviously, at this point, we don't have anything specific to share. But going forward, given the promoter holding right now in the company is about 50%, just shared around that. In terms of if any fund raising really happens over next 12 months, this would actually dilute you down. So any thoughts in terms of owning majority control in the company?
Yes. I think majority is, I would say, more a state of mind than anything else. I think we're already the largest shareholder in the company and driving the management. I think dilution of a few percentage points, if it's helping the company move forward in a significant way and leaping forward, then to us, it makes sense to do. And obviously, this is, like I said, at this point, just an enabling resolution. We are not looking to raise funds immediately. So I think the idea will be just to be ready if opportunities do come up that are exciting that our mind is clear, and we're able to seize the opportunity quickly.
And lastly, just a short one. On the profitability for non-COVID versus COVID, so it seems like earlier there were differences, but right now it looks like, given the numbers, there is no difference between what we're making on COVID, non-COVID. Any thoughts on gross margin or EBITDA? That's my last question.
We're not really monitoring profitability separately for both at this time because the infrastructure at the back end is common. So it's quite difficult to actually separate the 2. As we've been maintaining, COVID has definitely been adding to the group profit, and that continues to be the case. Of course, if pricing moves down further, then of course, there is a chance the margins may change. But so far, we've managed to manage our costs well even when prices have come down. And let's hope that continues to be the case.
We have the next question from the line of Kumar Gaurav from Kotak.
I have only one. So on the digital online trend, we have been investing a lot of late to improve our offerings, and you have also highlighted the importance of having an app and spoken about your digital ambitions. However, when I see the Google Play Store, for example, the app has a rating of 1.5, which is significantly lower than all other diagnostics as well as eHealth players. The reviews are also super poor. Is there any specific reason why we are lacking on this front? And are we taking any steps to improve user experience?
We're absolutely taking [indiscernible] steps. In fact, the current app is on one that we believe that we want to push, which is why we are not promoting it heavily. We believe that we can do -- we come up with a much better experience and app than we currently have, which is actually under development as we speak.Our corporate portal actually offers now a digital experience, which -- where you can make a booking, where you can schedule, you can pay. So we are almost very on the portal side of it, and I think the app will come soon as well. I think it's a matter of 1 more quarter where we should be able to be in a much better place as far as the digital experience goals from start to finish, but pieces of that has already come into play this month. So I think we are very cognizant of it and very much working towards it. So it's not far away [ from the matter if you want ].
We have the next question from the line of [ Bhavya Doshi ] from [ CRIS Portfolio ].
Am I audible?
Yes. Please go ahead.
I had just one question. Pardon me like if it is a repeat because I missed the initial commentary. On the non-COVID part, that is INR 63 crores -- sorry, the COVID part, that is INR 63 crores. Just wanted to understand that includes only RT-PCR, right?
Yes.
Okay. Okay. So like there can be some of the tests, like LDH, ferritin, which were like due to the COVID, we have included in the non-COVID I think -- non-COVID revenues.
So that's how we are showing the numbers since beginning. So all the other tests, which are peripheral, comes under non-COVID, and COVID includes only RT-PCR.
Okay. Okay. And second thing, sir, we did mention that we wish to expand our networks. So what proportion going forward would be the owned and the third party? Can you share some color on that? Or will it be more on basis of what we have been doing in the past?
So 90 labs would be company owned; and out of 1,800 collection centers, 90% to 95% would be third party.
Got it. And going forward -- okay. Okay. Got it. Got it, sir. That's it from my side.
We have the next question from the line of Prakash Kapadia from Anived Portfolio Managers.
Thanks for the support in these testing times. A couple of questions from my side. Now post-COVID, any changes in consumer behavior you think are happening? Are they preferring more branded and larger players as compared to smaller players? Is that a trigger for higher and faster growth in the near term?Why I'm trying to understand it, this is -- Ameera, you did mention about the fact that elevated valuations are there, so M&A could be slightly difficult to do as a measure of prudence. And given that high-tech deal, you announced, there seems to be no communication or interest from their end. So what is the game plan for south of India? Because apart from Chennai, they had decent presence in Karnataka, Kerala, AP, so if you could give some color on that also.
Sure. I'll take your question about the South India first, and we'll come to consumer behavior. So currently, we are already leaders in many of the markets in South India without this acquisition. So this was only a consolidation acquisition. It was not an entry acquisition. So at this point, in Chennai, we are the leading players. In Bangalore, we are #2. And in many markets of South India, including Kerala and including in Andhra, we have a relevant -- rural Kerala, I think also we are #2. In many markets of Andhra and rest of Tamil Nadu, we have a good growing business. So South India is already a very major area for us. And if you look at our presentation, you will get some of the data on how South India contributes to our total revenue share as well.As far as the point on consumer behavior, and I'll come back to the acquisition pieces then, see, I think, firstly, obviously, COVID is not over yet. I mean we are still in the middle of a second wave in rural India, and there is obviously an expectation of a third wave as well. So we believe that most of this year is probably going to have a large amount of COVID as a big part of it for all of our citizens. And consumer behavior, while it's changing, there is so much of volatility in terms of opening lockdown, what can happen, cannot happen. It's quite difficult to gauge exactly where this is going to land up.While there is a lot of excitement around digital ecosystem, we have to realize that, today, 100% of the profit pool comes from offline brick-and-mortar health care. And I would say 98% of the revenue pool comes from brick-and-mortar health care.Digital is definitely going to play a very important tool in the future; but today, at this point of time, it doesn't play a huge role at least as far as diagnostics goes. What we are talking about is preparing ourselves for the future and making sure that we are being very proactive about it. The 2 things that we have definitely seen from consumers, which we are quite sure about, is that out of 100,000 to 150,000 labs in the industry, about 2,000 have been approved for COVID testing. So during this past 18 months, customers have largely, for COVID testing, had to go to these 2,000 labs, which meant that there has been definitely a consolidation and concentration of patients in these 2,000 labs out of the 100,000 to 150,000.So definitely, the brand name and visibility of these 2,000 labs has gone up, which makes you believe that there will be consumers potentially wanting to go back to these 2,000 labs since they have experienced branded services maybe compared to what they had experienced in the unorganized sector.Now we have to remember that while consumers may have had this experience, when they finally get sick, they will still go back to the doctor, and the doctor and the patient together will make the decision as to where the patient goes. So you may not see a 100% conversion of a patient who came to your lab for COVID is now coming to you for everything else. But if you are able to work with the doctors and with the patients and drive engagement, then hopefully, there should be a reasonable conversion. But that will not play out in 6 months. It will play out in the next few years because people will finally come to you when they need testing when they fall sick, not just on their own. So that's definitely one change in consumer behavior.I think the second expectation that happened is that people with digital adoption in every other industry, I think consumers are now saying that, look, I want to interact with you through the portal, through an app, through digital, et cetera. And they are saying that, look, why can't I have an Amazon/Uber experience in diagnostics. So I think the expectation of what kind of experience they want is now changing. And I think over the next few years, we will see that this will become an important part of at least the very digitally ahead customers as far as all parts of health care goes. And that's where we are preparing ourselves, for that opportunity and for that time to come. And we would rather be a first mover rather than a laggard in that space. Just on the last piece of valuations and acquisitions, while, yes, acquisitions are becoming more expensive, and we are seeing public markets reward even regional players probably quite disproportionately, we have to remember there are other reasons also why people exit businesses or they look at doing sales. Not every company wants to go public.So I think there will still be opportunities. I think the important thing will be likely said to be prudent but more importantly, do things that are strategically aligned to the focus of the company and to combine those 2 in -- when deciding capital allocation.
Understood. That's very clear. And just one data keeping point. Over a period of time, we've seen the data day improvement continue a bit. So for the next medium term, next 2 years or so, what should this in terms of number of days look like?
So yes, you're right that, in the last 1.5 years, yes, we have been able to really reduce the number quite significantly. And obviously, the alignment and whatever automation visibility, which we have brought in and the [ research ] which we have brought in has helped us. Right now we are sitting at 36 days. Obviously, the target is that we can bring it down to 30 days. That's something which we are looking at. I think that will be more to, say, sustainable for future. What can we do next? I think we will check once we reach there. But right now, we're...
So the midterm looks like 30 days kind of [ number ].
We have the next question from the line of Shanti Patel from Shanti Patel Investment Advisors.
Congratulations for the dynamic leadership, Ameera Shah and team, for achieving good results year after year and a special congratulations for getting the Mumbai Ratna Award to her. Now let us come to the question. I have been told that government is considering to put a cap on the charges for various tests that we conduct. What is truth in that? And secondly, the organized sector constitutes approximately, I think, 80% in our industry. So why the organized people represent the government to do something about that?
Thank you for your kind words, firstly. We are trying our best in these very challenging times. On your point about price capping or government initiating anything of the sort, frankly, we have not had any such fashion, dialogue initiation from the government at all in -- towards the lab players. While they have used the Essential Services Act and the Emergency Act to cap COVID testing in different states, this has not populated to a vast number of other diagnostic tests. There is, I think, one state in which they have done something for some of the other COVID rub-off test. I think, if I'm not mistaken, it's MP, but I could be mistaken there. I'm not sure of the state.But we have not seen that proliferate across the different states. But on other non-COVID tests, we have not seen any such initiative at all.I am currently the secretary of NATHEALTH, which is the premier health association, which works on policy advocacy with the government, and we are continuously engaging with the central government on representing the industry. So that is a continuous process.
We have the next question from the line of Pooja Bhatia from Morgan Stanley.
Just one from my side. Is it possible to quantify the value of COVID allied tests this quarter?
At this point of time, I think we have not taken out that cut of data. We have not been providing it quarter by quarter. So we won't be able to answer your question right away, but maybe we can come back to you.
We have the next question from the line of Mr. Praveen Sahay.
One query related to the non-COVID business. As the monthly run rate you had provided for the last quarter, April, May and June, so there, we had seen some decline from April is a peak of 99.6% and then decline and so as for the COVID as well. So how is the trend right now going for a non-COVID? And why the non-COVID peaked out in the April along with the COVID revenue?
So as Rakesh was explaining earlier, the COVID rub-off test is part of non-COVID in our categorization; and therefore, that also peaks usually when COVID PCR tests peak. And then when COVID settles down, the COVID rub-off test also settled down, and that's the impact that you are seeing in April, May, June that as COVID came down, the COVID rub-off test, which are part of non-COVID also came down in May and June. We believe that Q2 will be a stronger quarter in terms of non-COVID because, obviously, there would be more movement of people, unlocking happening. So on the non-COVID side, we believe that it should be higher than Q1.
And is it possible to give the COVID test volume for the last quarter?
I don't think we have it as of now. Maybe we can send it to you later if you could make a note.
Yes, sure. So the last question is related to the NACO contract. How much is that contributing nowadays to our revenue? And is there any plan for such type of contracts, government contracts for the future?
The government projects continue to contribute a small amount of the revenue, single digit of revenue. It is not a very large component of it. We are -- while we look at PPP, we see that usually in the state PPPs, we don't find full comfort in terms of bidding for them because sometimes we find the practices to be quite challenging in terms of quality practices and operational practices.But sometimes the central government contracts, like the one we have done for NACO, can tend to be sort of more fair and more based on quality parameters. So if there are such other opportunities that come about, which we feel are giving fair value to our expertise, we would be obviously happy and excited to bid for those.
We have the next question from the line of Ashish Kacholia from Lucky Investment.
Ameera, I have a basic capital allocation question for you. When you have done all these acquisitions, they look very, very expensive on the face of it. So can you share with us some financial target that you set out, may not be immediately but, say, 3 years out, what is the kind of return on capital that you are seeing from our allocation on these kind of acquisitions?
Yes. I think if you look at all the acquisitions, all the acquisitions we have done in the past 20-odd years, at the time that we have done them, they may appear at the time when we did acquisitions in early 2000s, and we paid sort of 7x multiple, 8x multiple of EBITDA, at the time, those would have looked expensive. But as we have seen in the market, finally, these acquisitions are not just adding revenue. These were entry points for us in those times, new markets where we did not have a brand. And therefore, we were able to really grow those acquisitions, integrate them and get great value from them over time.The strategy today, obviously, after already being a brand player, may be slightly different. We will still get into some markets from an entry point, and therefore, the brand value would be significant and valuable. But there is also another strategy, which is to consolidate market share in existing cities because, in health care, we do believe that having a large market share in a single city contributes significantly -- can contribute significantly to the bottom line and also from a strategic nature as well.So I think the way we are looking at capital allocation is really more from a strategic and a prudence point of view. But if you look at anything from a pure financial metrics at this point of time, they may not always make sense only from a numerical point of view, but you have to look at it as a combination of value creation that they are creating over a long period.
See, while I take your point about the strategic angle of this acquisition, I'm not denying that or questioning that. My thought is that, ultimately, companies are valued based on the kind of return on capital that they generate. And if we allocate large chunks of capital into these kind of acquisitions, which are accretive to ROC or they come up to the base level of company ROC after 10 years, then our stock price will suffer in the short term. So like what we are seeing right now is that there is a very visible divergence that has happened between Dr Lal's stock price and our stock price.So I'm not saying that your strategy -- I'm not questioning your strategy. I'm just trying to understand from investors' point of view, whether we are going to see significant ROC dilution over the next 3 years. I'm saying -- I'm not saying 1 quarter, 3 quarter. I'm saying next 3 years, at the end of 3 years, are we going to see a substantial dilution in our ROC? Because now you're going to raise further capital and if this capital also gets allocated into these kind of acquisitions, which are strategic but ROC dilutive. So we have seen only that the PE multiple gets [ derated ] in a very substantial manner. So just wanted your thoughts on this on this point.
Yes. Ashish, I think if you look at the ROC today, ROCE, we are talking about sort of a 35% kind of number, right, which is obviously exceptionally high in any industry. Now if we want to maintain and if we use this as a benchmark going forward, then frankly, our shareholders and as this we have to continue to be then happy with the pace of growth that we have been seeing and look at it more as a consistent cash flow business but not so much as a growth business, one of the very high-growth business. So of course, even a 16%, 17% CAGR that we've delivered is a very healthy growth even compared to most industries.But I'm saying if we want to look at this as a higher growth business, then somewhere we will also may have to consciously take a call of saying that, look, let's not kill ROCE, but is it worth diluting for a bit to be able to be moved to a faster growth. And I think these are not, I think, easy questions for sure. These are tough choices. And today, I don't think we have a simple, clear answer for you.But I think we are very cognizant and cautious of making sure that we are not killing financial ratios in an attempt only for growth. But we will balance a lot of these thoughts and KPIs before we make whatever decision we do. And I think it's difficult to give a straight guidance at this point of time because the industry is also moving and changing very quickly. And if we continue to only look at ROCE as the main KPI, we may land up losing many larger or bigger, exciting opportunities for the company from a strategic long-term perspective. So I think we'll have to have more facets to that lens than only one.
So in that case, what my thought would be that then you set out these kind of parameters so investors can expect -- know what to expect. You said that, okay, fine, 35% is high. Then you say what am I going to target and then what corresponding growth am I going to target corresponding to that. So that is a very clear signal to the market because we always have options of growing organically as well these kind of valuations that you are paying, the latest acquisition was you've not given us the numbers of the payout or the payback or you've not given us any indication of that. So then we have seen -- in the market, we have seen many, many companies, which have mal-allocated capital because the capital was freely available. And then the financial ratios of the company deviated over a period of time, and so did the stock price. And then -- so ultimately, it's articulation of the strategy, so then the investors know what to expect as opposed you say, okay, only 20%, I'm going to do ROC, but I'm going to grow at 35%. But then we know what to expect. As of now, everything is in a very nebulous area. So we have no idea on what the management is really kind of trying to achieve in the longer term.
No, I think it's a very fair point, and I think we've been very transparent and communicative, I think, about all parts of our strategy. We'd be happy to give you guys the guidance on the capital allocation strategy in more detail. So I think we'll come back to you on that with a very specific guidance that you're asking for. But I think you will see...
Now your market cap is no longer -- it's no longer in the -- you're not playing in the baby leagues here. We are in a $2.5 billion kind of market cap range now, right? And we want to go into the bigger leagues as time goes by. So then automatically, the communication and the articulation of the strategy has to be very pinpointed. We cannot then kind of -- everything is hanging around in the cloud. Now the cloud is a very fashionable term, but as far as investors are concerned, cloud becomes very, very cloudy, and we want the sunlight. So that's the kind of thought process that maybe you can evaluate.
Yes, sure.
Ladies and gentlemen, that was the last question. We will now close the question queue. I would like to hand the floor back to Ms. Ameera. Please go ahead.
Thanks, everyone, for joining us today. I think, as I mentioned earlier, we are very much at an inflection point, and there are a lot of big questions coming up. As mentioned, there are going to be a lot of choices to be made. I think history has shown that we've been quite careful when we make our choices and conscious, and we will continue to do the same as we move into the future. While things may not be apparently completely pinpointed to be clear in the short term, we believe that we will get there in the next 2 months and be able to share with you a lot more in detail our thoughts and plans, some of which we may or may not be able to share at this point. But we do believe that there is an exciting opportunity not only from an organic perspective, an inorganic perspective and a digital perspective, and we are continuing to evaluate all these opportunities as we look forward. So thanks to all of you, and we will talk soon.
Thank you. Ladies and gentlemen, on behalf of Edelweiss Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.