Shalby Ltd
NSE:SHALBY
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
210.59
323.05
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Earnings Call Analysis
Q3-2024 Analysis
Shalby Ltd
Shalby Ltd is forging ahead strategically, aiming to operationalize its next SOCE unit in Rajkot by the end of the current year or early 2025. The company displays a methodical approach in partner selection for maintaining its strong brand reputation. They are optimistic about further positive developments in the upcoming fiscal quarters and are intent on capitalizing on their orthopedic expertise. Their goal is ambitious: to establish more than 40 Shalby franchise hospitals across India in the upcoming 4 to 5 years.
The Home Care business of Shalby Ltd has seen substantial growth, serving 22,045 patients this year, a 13% increase from the previous year, and reporting a 52% revenue growth compared to the last fiscal year. Additionally, the company strategically acquired a majority stake in Sanar International Hospitals, thus improving their position in the Delhi/NCR region and envisaging a scale-up in their international business and consolidation in North India. The Sanar facility has a capacity of 130 beds, upgradable to 180 beds with additional investments, and predominantly caters to international patients with a diverse range of advanced surgical care specialties.
Shalby's Implant business has demonstrated a positive EBITDA in the third quarter of FY '24, marking an impressive 46% increase in revenue over the previous quarter. The growth was driven by process improvements, better procurement costs, and a tightening of operational expenses. While supply challenges remain, there has been notable business surge in the U.S. and India markets, especially with their Uni Knee (TUKS) products. Mr. Deepak, with an extensive background including medical devices and various leadership roles, has been appointed as the Global Chief Business Officer to spearhead the implant business worldwide.
Shalby Ltd has set clear priorities to spur their Implant business in the coming quarter. They aim to launch full commercial operations of TUKS in India, Indonesia, and the U.S., and introduce a cost-effective range of implants and instruments. Increased educational efforts for surgeons, an expanding sales team, and ventures into new territories like Malaysia and Argentina are in the pipeline. Leadership and engineering team enhancements have been made to drive growth, with a firm resolve to become self-sustainable by implementing smart procurement and reducing operational costs. The company is determined to reinforce stakeholder value through rigorous execution of its ambitious strategies.
You don't have any saved screeners yet
Ladies and gentlemen, good day and welcome to the Shalby Limited Q3 FY '24 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gaurang Sakare from Elara Securities Private Limited. Thank you and over to you, sir.
Thank you, moderator. Good evening, everyone. We welcome all the participants to the Shalby Limited Q3 FY '24 Earnings Call hosted by Elara Securities. Today, we have with us senior management representatives from Shalby. We will start with performance highlights from Mr. Amit Pathak, CFO; and Mr. Deepak Ananthakrishnan, Global Chief Business Officer. After that, we will open the floor for Q&A for all participants.
I will now hand over to Mr. Amit Pathak, CFO for important disclaimers regarding any forward-looking statements that may be made in today's call and financial performance for Q3 FY '24. Over to you, Mr. Amit.
Thanks, Gaurang and good afternoon, everyone. I'm pleased to welcome you all to Shalby Limited Third Quarter FY 2024 earning call. Firstly, we at Shalby would like to recognize, Dr. Vikram Shah, Founder, Chairman and Managing Director of Shalby Limited, who has been awarded with very prestigious Healthcare Entrepreneur of the Year by Hurun, UK in January 2024 for his extraordinary commitment and incredible work in the field of health care.
This is, again, back-to-back well-deserved recognition for Dr. Shah and Shalby Hospital, for the tireless work that he and the entire team does every minute, every hour and every day towards treating every patient with a smile. This indeed is a stupendous achievement that will -- everyone associated with Shalby, be humbled with huge pride and gratitude.
Our earnings presentation is uploaded on the stock exchange website and our company website, shalby.org. We do hope that you have already had the opportunity to go through the presentation. Please note that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainty. Kindly refer to Slide #44 of the investor presentation for a detailed disclaimer.
Now I will walk you through the financial performance of your company for the third quarter FY 2024. Consolidated revenue of INR 221 crores in Q3 FY '24 versus INR 207 crores in Q3 FY '23, grew by 6.8% Y-o-Y basis. EBITDA of INR 47 crores in Q3 FY '24 versus INR 38 crores in Q3 FY '23 with margin of 21.2% and in Q3 FY '24 versus 18.4% in Q3 FY '23 and grew by 23.3%. PBT of INR 31 crores in Q3 FY '24 versus INR 24 crores in Q3 FY '23, with margin of 14% in Q3 FY '24 versus 11.4% in Q3 FY '23, grew by 31% Y-o-Y basis and PAT of INR 19 crores in Q3 FY '24 versus INR 15 crores in Q3 FY '23, with margin up 8.6% in Q3 '24 versus 7.4% in Q3 FY '23, grew by 25% Y-o-Y basis. The group continued to maintain very strong balance sheet with a low gearing ratio of 0.14x and closed the year with a net cash balance of INR 61 crores at group level.
Now let me go through the stand-alone performance of the hospital business. Standalone revenue of INR 200 crores in quarter 3 FY '24 versus INR 180 crores in quarter 3 FY '23, grew by 11.5% Y-o-Y basis. EBITDA of INR 48 crores in Q3 FY '24 versus INR 39 crores in Q3 FY '23, with a margin of 24.2% in Q3 FY '24 and 21.5% in Q3 FY '23 and it has been grow by 25.5% on Y-o-Y basis. PBT Of INR 38.5 crores in Q3 FY '24 versus INR 28.6 crores in Q3 FY '23, with a margin of 19.2% in Q3 FY '24 versus 15.9% in Q3 FY '23, grew by 34.6% on Y-o-Y basis and PAT of INR 24.7 crores in Q3 FY '24 versus INR 19.2 crores in Q3 FY '23 with a margin of 12.3% in Q3 FY '24 versus 10.7% in Q3 FY '23, grew by 28.7% Y-o-Y basis.
Now at a stand-alone basis, again, we continue to maintain a very strong balance sheet with a low gearing ratio of 0.02x and closed the quarter with a net cash balance of INR 177 crores. With the operational leverage kicked in and going with asset-light approach, our stand-alone ROCE has improved to 20% in quarter 3 FY '24 on annualized basis. On the operational side, we have performed around 6,476 surgeries in quarter 3 FY '24. ARPOB and ALOS has also shown the excellent improvement at INR 37,342 and 3.7 days respectively, in quarter 3 FY '24 versus INR 36,291 and 3.7 days in the same period of the previous year. The number of occupied beds increased by over 9% on Y-o-Y basis. Hence, the occupancy level has reached to 47% in quarter 3 FY '24 versus 43% in Q3 FY '23. The payer mix has been similar with the proportion of higher self-pay and insurance patients in the third quarter of this year as compared to similar quarter of the last year.
At Shalby, our undivided focus has been demonstrated, our clinical excellence through successful execution of many diverse critical surgery in several of our hospital units. A few of them that I would like to mention here are successfully operated first liver transplant at Indore Shalby. B/L TKR was done to a patient with 8 months old fracture due to arthritis for a complete at Indore. High risk P-TEVAR treatment to 30 years old female patient suffering from arteritis and Stanford type B dissection for the more than a year in the Shalby Naroda.
We have also performed a live surgical workshop organized by OLIF, a new technique for complicated spine injury cases at Shalby Jaipur. We also take pride in sharing that we have successfully completed 31 transplants, 18 kidneys and 10 livers, during the quarter and overall 275-plus kidney and liver transplants at our SG and Indore units till this quarter. We are also running the 20 active clinical trials across all hospitals. We have also received Ethics Committee approval for 6 new trials during quarter 3 FY '24, including 2 Phase I oncology trials, which are very first trial in India on human for oncology drug study.
Revenue from our international business remain at INR 1.7 crore in quarter 3 FY '24. I'm happy to mention that Shalby has grown its international presence in other new geographies like UAE, Oman, Bangladesh and Nepal through foreign partnerships to conduct regular OPD and health care camps and have planned to conduct surgeries in these locations. And we are very hopeful that these strategic locations will help us to increase our international hospital revenue significantly very soon. As a part of our social commitment, we continue to spread awareness about the importance of health and well-being through various social media platforms and created 70-plus health care videos. We also conducted more than 315-plus health care camps and 95-plus health care talks across all our units during the last quarter as a part of various community outreach program.
Shalby also takes pride in nurturing young talent through our Shalby academies vertical with 1,321-plus students registered in various health care programs during the current year. We'd like to inform that Shalby Academy has signed a Memorandum of Understanding with Kaushalya: The Skill University of the Government of Gujarat at Vibrant Gujarat Global Summit 2024, very recently, in the presence of Union Minister, Mr. Pradhan and other dignitaries. The Memorandum of Understanding signifies our commitment to collaboratively organize diverse health care skill enhancement initiative in upcoming years.
Now for our franchisee business. We have delivered the adequate performance in quarter 3 FY '24. We have performed 362 surgeries at our SOCE unit in quarter 3 FY '24. The total revenue from our FOSO business has around INR 1.4 crores, grew by 13.3% on Y-o-Y basis. The revenue from FOSM business is at INR 0.74 crores, grew by 6.1% on Y-o-Y basis. We have generated revenue of INR 5 crores in FOSM (sic) [ FOSO ] and INR 2.8 crores in FOSO (sic) [ FOSM ] with 56.5% and 28.7% growth, respectively, on a 9-month basis.
Our next SOCE unit at Rajkot is on satisfactory progress and we are expected to get operationalized tentatively by the end of this year or start of 2025. We have been incredibly selective in our choice of potential partners from the new inquiries we have received so far. To maintain the reputation of our strong brand, we follow a clear defined process and strict criteria when making this selection. Looking forward, we have a strong sense of optimism about the positive development in the upcoming quarters of this fiscal year. Our primary focus remains on utilizing our expertise and excellence in orthopedic, with the goals of establishing more than 40 Shalby franchisees hospital across India within the next 4 to 5 years.
For our Home Care business, we have served 22,045 patients in current year with a growth of 13% in patient count in a similar period of last year. Revenue from Home Care business is at INR 11 crores in the 9 months FY '24 versus INR 7 crores in 9 months FY '23 with 52% growth during the -- this period.
Further, we are happy to inform that we have acquired a majority stake in Sanar International Hospitals, that is the PK Hospitals Private Limited with a control of 87.26% equity stake by investing INR 102 crores as primary and secondary infusion. This will help Shalby to accelerate its presence in Delhi/NCR region with the vision to scale up international business and also to consolidate its presence in northern part of India. This facility is located at prime location of Golf Course Road, Gurgaon, with a land parcel of 1.27 acres, which has been taken on the long-term lease with a total buildup area of 1,25,000 square feet.
The current capacity of facility is 130 beds and can be expanded to the level of 180 beds with additional CapEx. At present, the hospital generate around 68% business from international markets, which comprise 43% from Middle East, 15% from Africa, 8% from CIS and remaining from others, catering to more than 60 countries. Sanar offers comprehensive advanced surgical care in specialties such as cancers; heart, blood, marrow transplant; kidney and liver transplant; bone and joints and neuroscience among other specialities.
Now coming to our Implant business. Our Implant business has delivered positive EBITDA in the third quarter of current year due to continuous improvement in operational efficiencies and thus, better procurement costs. The revenue is at moderate level of INR 21.5 crores in quarter 3 FY '24 versus INR 14.7 crores in quarter 2 FY '24.
Now it gives the immense pleasure to introduce Mr. Deepak who has joined our group as Global Chief Business Officer on 9th January 2024. Deepak holds a degree in engineering from Mumbai University, post graduate diploma in General Management from Narsee Monjee Institute of Management Studies and is the alumnus of INSEAD. Deepak has 2 decades of leadership experience across industries, including medical device, telecom, IT, education tech, in various of leadership roles. Prior to joining our organization, Deepak was working with various leadership roles in Byju's, J&J, Airtel, Tyco Electronics, et cetera. As global CBO, Deepak will directly drive company's implant business globally.
Now I would like to hand over to Mr. Deepak, Global Chief Business Officer of Shalby Limited, to give a outlook on the implant business and their performance in more detail. Thank you.
Thank you, Amit and good afternoon to everyone. Our Implant business has delivered another consecutive quarter of positive EBITDA in quarter 3 financial year '24 because of the growth that we have seen in this quarter, along with continuous improvement that is happening through process improvement in the production shop floor or securing much improved procurement prices from our multiple vendors and we're now having a tight control on our operational expense.
The revenue has been at INR 21.5 crores in the last quarter, which has delivered a growth of 46% over the previous quarter. The supply challenges, even though have not been fully solved but we've started to show some green shoots across portfolios. We've seen a surge in our business across our Uni Knee, which is branded as TUKS, both in U.S. and India. Unfortunately, there has been delay in the launch of several new products, including our new total knee, branded Ambition, that is expected to be a blockbuster in India, Indonesia and the U.S. market.
We've also seen a delay in our tendon offering for the CKS knee and TUKS uni knee. Our supply chain woes were compounded with further unforeseen delays in producing many complicated engineering drawings for our implants and instruments as well as providing quality approvals to many of our third-party vendors through qualified FDA auditors in outside U.S. countries. Their contribution in sales mix stands at U.S. contributing to 43% of the business, India 53% and the others contributing 4%. Others predominantly being Indonesia and Japan in the last quarter.
We have also seen a surge in our hip business that has contributed to our growth and the product mix stands at knee is contributing to 71% and hip is contributing to 29%. As a part of our continued initiatives to educate our surgeons on our products and procedures, in the last quarter, we have trained more than 40 surgeons across our TUKS and hip implants. The growth also came from additions of new key opinion leaders, surgeons and hospitals across geographies starting to use our product.
Our core leadership team at SAT have jotted down the top priorities for execution in the next quarter, which are, receipt of the full instrumentation of our TUKS that would enable us to go for a full commercial launch in India and Indonesia and the U.S. that would help us recoup sales for our uni knee, launching our TIN BIN CKS in quarter 4 financial year '24 that would be used in India along with a couple of centers in the U.S. that would fetch out larger profit for SAT, accelerating production of our lower cost implants and instruments across multiple vendors that would help dramatically improve supplies to clear back orders in India and Indonesia, engaging our prospects to participate in various virtual and face-to-face training and educational programs and live surgery by our designer knee and hip surgeons.
We are confident that this would help us tremendously in gaining surgeons' confidence and support. Our participation at the current AAOS conference in the U.S. is a testament to the same where we have a CME with 25-plus surgeons registered to understand TUKS, hips and our future pipeline and road map. We've added 3 engineers who will full focus on growing our engineering team with addition to our team members to accelerate the project TUKS direct contributors to our growth road map at SAT.
We would continue to strengthen our sales teams and add more feet on ground, both in the U.S. and India; entering new territories like Malaysia, Argentina and Middle East country by the end of this year; continuous focus on smart procurement and reducing operational costs on day-to-day basis to achieve the target of being self-sustainable in due course of time.
We remain confident enough to significantly improve our Implant business results through accelerating the launch of our new products, winning new accounts, adding new territories and new experienced salespeople, continuously improving our operational efficiencies and furthermore substantially bring down our procurements and day-to-day operational costs to add more towards operating profits.
With all these key strategies, relentless and ruthless execution will be the key to our success in the near future with having the right people and leadership in place. This in turn will contribute to the ongoing creation of sustainable value for all stakeholders at Shalby Limited. Thank you.
Now we can open the call for the Q&A.
[Operator Instructions] The first question is from the line of Pinaki Banerjee from AUM Capital Private Limited.
Sir, in Slide 15, we see that the revenue breakup by the previous fiscal arthroplasty was 43% and it's now 38% while the critical care and general medicine was 9%, now it has increased to 13%. So can we fairly assume that now we are actually diversifying into other arenas? And in the coming time, what is the ballpark percentage we can expect to see in this division?
Yes. So it's a good question. In fact, we have seen that some of the newer units like Jaipur, Naroda, as well as Jabalpur, these have done extremely well and have demonstrated between 20% and 35% kind of growth both on top and bottom line. So yes, we are expecting significant growth to coming from these hospitals, even going forward, because there is a lot of capacity unlocking, which is yet to be done in these units.
Okay. And sir, last question, actually, in the PL statement, actually, when you have -- there's a reduction in these other expenses as well as material consumed, so actually, can you spell out what is the main reason for this?
Yes. Can you just repeat your question? You are talking...
Sir, in the PL statement, in the materials consumed and the other expenses have shown a year-on-year decline. So please, can you elaborate and what are the reasons for this?
Correct. So in this quarter compared to the previous quarter in the same year, the medical work as a percentage of the total work was more than the surgical work. So because of that, the material consumption has been slightly on the lower side. Also, there has been a significant exercise carried out across the group level to kind of rationalize the supply chain and optimize and bring in the efficiency. Both of these have contributed to a 2.5% kind of EBITDA improvement in this quarter.
[Operator Instructions] The next question is from the line of Bino from Elara Capital.
A couple questions from my side. I'm sorry, I couldn't understand completely from your initial comments. What is the latest updates on the franchisees that's in Rajkot and the new facility in Nashik?
So Rajkot, we have mentioned that will come by the end of this quarter, start of the next quarter and Nashik is in progress.
For Nashik, we are dependent on the developer who is the partner with us and there has been a significant delay on their side to be able to deliver on the commitments they've made to us. And I think in one of the earlier calls, we have mentioned that we -- as soon as we receive the building as is -- as it is expected from them based on the commitment, we will take between 3 to 4 months to operationalize the hospital. But having said that, at the moment, we don't have a timeline. We are expecting it to happen soon, that is why [indiscernible] give you a timeline on that. And also to add to that, there is no capital employed from Shalby Limited or any of its subsidiaries for the Nashik opportunity.
The line for the current participant seems to have been disconnected. [Operator Instructions] The next question is from the line of Heet Van from Elara Capital.
Sir, my 1 question would be like, in the Implant business, I'm looking at the geographical sales mix. So for the previous quarter, we used to look higher contribution from U.S. But now India is like at 60%, 55% and 60%. So any possible reason for that or it's a onetime impact, like?
So I think there are 2 things that are happening. If you would have looked at it from a growth standpoint, right, you would see that from last year's quarter -- last year same time quarter to this quarter, we've had U.S. being flat and outside U.S. contributing to a large percentage of this growth that's come in. [indiscernible]. We've lost anything but because of the implant issues, there has been a delay in our growth -- so those surgeries, we would be able to get back very soon.
And just to add one more thing in terms of the revenue growth. U.S. has grown from [ 1.17 million to around 1.66 million ] in this quarter compared to last quarter. And outside of U.S. has grown from [ 0.6 to 1.12 ]. So there's a growth in both the territory, geographical territory.
Sir, are we still alluding with our target of [ 100 million ] sales like in the next, like FY '27, your previous guidance, right?
So I think from a vision standpoint, we still stay committed. The way we look at it is, this is just a delay. The market is still growing and then it's just a matter of work that we would have to put in a lot more later to get the market share gaining and going forward. So I don't think there is any change in the vision that we want to achieve in the next 5 years.
And secondly, on the Sanar Hospital, sir. Could you please show some points when are we going to scale up fully and timeline and all?
Yes. So this is -- as you know, as we have kind of shared earlier, it's a 180-bed kind of hospital facility in terms of capacity. And we are already having about 130 beds which are operational there. And it has some of the high-end specialties. In fact, what is very unique about this hospital is that, 70% of the top line that is generated here is from international business, 30% is from domestic business. It does one of the -- it does some of the most high-end treatments, which are done in the tertiary, quaternary care hospitals in India. It does a lot of bone marrow transplants, kidney transplants, liver transplants and has all the offerings that every other Shalby unit offers for a total comprehensive kind of care.
What we believe is that because of the ongoing run rate of that particular hospital in terms of the revenue it has been generating, we believe INR 120 crores to INR 150 crores will be the right target for this hospital for the next 12 months from now. And given the kind of ARPOB that we are able to generate over there, which has been over INR 1 lakh in the past, we believe that we'll be able to add significant top line to our existing hospital business through this hospital over the next 3 to 4 years.
[Operator Instructions] The next question is from the line of Bino from Elara Capital.
My -- I was talking about any further updates on the Mumbai...
There's a lot of noise disturbance.
Hello? Can you hear me?
We can.
Yes. Sorry. I was asking about any further update on the Mumbai, Santacruz plan.
Yes. So the update there is that the trust had the obligation to kind of apply for charity commissioner's permission and receive the kind of -- and kind of complete the other formalities before handing over the premises to us.
So they have done the needful. It is -- the ball is in their court but we are hoping -- and they've given us a timeline of the next 3 to 4 months by which they should be able to hand over the property to us, after which we will be doing the -- completing the other formalities like going for permission from the BMC and working closely with the architects to put up the structure.
Understood. On this Sanar Hospital acquisition, what is the debt on the book [indiscernible] of the company with PK Healthcare?
So the long-term debt is close to around INR 38 crores and the working capital outstanding is around INR 7.5 crores.
So total only INR 15 crores, 1-5, around?
No, no, no. INR 45 crores, INR 38 crores and INR 7 crores.
Okay. INR 38 crores -- INR 45 crores. Understood. And finally, Amit, at a consol level, what sort of tax rate are we looking at for this year and next year? It's been quite a bit up and down and quite high.
Can you repeat again?
Yes. At a consolidated level, what sort of tax rate are we looking for this year and next year?
Look, on the consol level if you are saying, the funding what we have done for Sanar right now, that is from our internal accrual, INR 102 crores, what we have done. We are going with the debt-equity mix of 50%-50% from the bankers and from our side. So the INR 50 crores of cash infused by the company that will impact the net debt position of the company from company side.
Apart from that, in the Implant business, in the next 12 years -- 12 months, looking after the product what we are going to launch, PK's Board and the Ambition, maybe another INR 15 crores to INR 20 crores of working capital upside we are going to see.
So around INR 70 crores of cash utilization from the current level will be there. But on the other side, the company is going to generate the cash into the next 12 months. So we are seeing that position will remain same or improve the net tax position.
Sorry, my question was on tax rate. Corporate tax rate at the consol level.
Yes. So at the max, we will get exhausted by the end of the next year. Thereafter, we will be in the regular tax rate.
And the next question is from the line of [ Sameera ], an individual investor.
I have 2 questions. I was going through your investor presentation of current quarter, as well as the last quarter. So I noticed the difference that earlier you were guiding that the company will be doing -- will be opening 50 franchisees. But now the target has been downgraded to 40 franchises. I mean, is my understanding correct or am I missing something?
No, your understanding is correct. But we have changed slightly our strategy in couple of locations where we want to go with the franchisee model like Delhi, where we have come with our own hospital, so in that location, we are cutting down some franchisees. There are other investment opportunity we are exploring. So if that is coming in the form of our own hospital, then we will see some reduction in the franchisees business. So we are seeing the 40 going forward into the next 4 to 5 years.
Okay. And currently, we have 6 operating franchisees as of date?
Yes. Six including Mumbai [indiscernible].
Okay. And sir, that segment which has been presented in the investor presentation by the name of Shalby Academy, is this a complete social initiative or is this a part of our business segment?
Yes. It is -- as you rightly guessed it, it is a social outreach and a platform to upskill youngsters for various courses and skill in health care [indiscernible]. And we have been doing it for last 7 years but we are now in a very reputed stage. Every year, we train around 1,500 to 2,000 students. And all of them get jobs immediately after their training is completed or their course is completed. And currently, we have also got affiliation and the partnership with 6 of the universities in India and 2 of the other health care education platform in Australia. So the work is going on very well but it is more of a reputation building and social outreach for our group.
Okay. So we don't count any of the revenues from this segment, right?
Not in a big way -- significant way but yes, there are now revenue getting created from this but this is not very significant numbers.
And the next question is from the line of Surya Patra from PhillipCapital.
Yes. My first point on the Sanar Hospital. So obviously, this is a strategic move to acquire a company -- acquire a hospital having presence in the NCR region and having a kind of a stronger revenue mix from the international customers or patients. So do you anticipate any kind of a cross-selling in terms of therapeutic presence and all that for Shalby? So do you anticipate any cross-selling advantage from that hospital in terms of any specific strength that is getting added and that can have a kind of a positive impact to the overall chain of Shalby?
Yes. So there will be a major impact of that because we see lot of synergies coming along. Shalby has a huge clientele in the Northern region, including Delhi and NCR and we will be able to address it a lot better with the Sanar Hospital now as part of Shalby Hospital. So that will be a major advantage and we will be able to kind of see the changes on an immediate basis as we kind of start the integration.
Okay. And regards to medical tourism opportunity for the group as a whole, will this play a role and how important and significant that could be going ahead because of this acquisition, sir?
Yes. So in fact, as I said earlier, it already does 70% of international work. It has clinics in more than 10 international cities at present, where they are conducting regular OPDs, they are consulting patients, doing telemedicine. And they will be able to use our network. So Shalby will be able to use their network now and -- across these 10 cities. And Sanar will be able to use Shalby's network in Middle East and Africa over and above this. So overall, there will be an advantage for both Sanar as well as Shalby from the medical tourism standpoint.
Okay. So what -- in terms of the profitability of the acquired assets, sir, at what level that they are operating at in terms of EBITDA and all?
So this hospital started close to around 20 months back. And in the hospital business, if you can see the first couple of years are EBITDA-negative. They are operating at close to around 15% EBITDA-negative because of the occupancy level, even with the 70% of the business are not very high. They are close to around 20% to 22% occupancy. But with the synergy and from the next year onwards, the occupancy will ramp up. And we are really -- we have found that we are going to have the higher single-digit EBITDA in the next year and higher double-digit EBITDA in the year thereafter.
Okay. Okay. The second question is on the implant business. So it seems that the business has really picked up within India well. But if you can throw some light, what is in the sales performance in the U.S. market itself, the home market and now your kind of initiative to tap really practically in terms of business, the Japanese and the Indonesian market and other potential export markets?
Yes. So if you look at it, even from the U.S. market standpoint, we've grown significantly over the previous quarter and we would continue to launch new products as well as gain new surgeons in the United States by putting more people as well as increasing our distribution.
The proof of that is the testament of the fact that I said that this year, one of the largest orthopedic congresses that happened in the United States in February -- which is happening this week, we have more than 25 surgeons who have registered to just know about our new products and engage with us to understand.
So the kind of efforts that are being put across distribution channels as well as through our own feet on street is acting on -- is giving us the fruits. And on the other hand, we are also increasing -- planning to increase our feet on street this quarter in the U.S., which should add in addition to the growth in the U.S. market.
Coming to the other markets, Indonesia is in the similar stage as India. We've been able to kick start over there but we are waiting -- the supply chain has also affected the Indonesian market in a large way. So we're waiting for that to get resolved.
On the Japanese market, you will see some action in this particular quarter, primarily because of reinitiating the market and we've done some changes. We've visited the market and understood something. This quarter, we've already started seeing, so January and February, we've seen some movement in the Japanese market already.
Okay. And simultaneously, you have mentioned also, sir, about introducing new products. So if you can throw some light on that nature of the products, the strategy behind introducing those and how important those -- because we were anywhere having a large basket of the products?
Correct. So the way the market works is very different. So 1 is about what we have. So if you look at it primarily how the market is -- the orthopedic market is, there is primary knee, then there is uni, then there is primary hip. And then also within the primary knee, the market keeps moving very fast.
So if you look at the large players in the orthopedic place, each one of them, only in the primary knee portfolio would have minimum 3 to 4 brands, right? So in our case, currently, what we are looking at are 2 brands with 2 extensions to those products, which is the CKS being a primary knee with an extension of gold into it, which will significantly add to our both top line and bottom line. And Ambition being the new-age knee, which was, again, a primary knee with an extension of gold into it, right?
So these are the 2 primary knees that we have and TUKS being our unicompartmental knee. And then hips, right now, we have only 1 brand at this juncture, which is our TaperSet and CS2. So how we are looking at the market is, 2 -- primary knee is important because knee is the largest market in the orthopedic space and having 2 primary knees with 2 different products and specifications, depending upon the surgeon's choice is important to have and that's how we're looking at it.
Okay. Just last 1 bit on the way forward for the Implant business, sir. So let's say, while there is a well jotted down future plan for tapping newer markets and all that. But let's say, with all your effort and all that, what visible business progress one should expect for this segment over the next 3-year period?
So I think the 5-year vision still stays the same. I mean making that into a 3-year and 4-year is going to be only a pathway towards that 5-year thing, right? It's just a journey towards that 5. So like I said earlier, we are committed to that 5-year mission and we still stay to it.
It's a very simple game of trying to get the supply in place at the right cost. And demand for us so far has not been such a large challenge with the right people, right leadership, right team on the front, we're very, very confident that we should be able to get our both top line and supply coming at the right cost to us, we should be able to deliver the bottom line, too.
[Operator Instructions] Next question is from the line of Nishid Shah from Ambika Fincap Consultants Private Limited.
This is Dhruv here. Congratulations on a really good set of numbers. I have 3 questions. First is on your implant business. Sir, you had guided for INR 110 crores to INR 120 crores of implant revenue this year, do you want to revise this downwards considering first 3 quarters, we have hardly done INR 50-odd crores?
So if I look, we are committed to deliver at the same level where we are right now in the last year. So quarter 4 is really aggressive task for us. But looking after the plan that we have, we are confident that we are going to achieve the similar kind of revenue as compared to last year.
Okay. My second question is, sir, can you just guide us how much did Sanar did YTD till now? Till last year, they did INR 67 crores, YTD, what is the revenue they're talking right now?
So they have done close to around INR 70 crores, INR 72 crores in -- around INR 70 crores in 9 months of this year.
Okay. And last question is on your SOSE (sic) [ SOCE ] business. How many franchisee hospitals apart from Rajkot are we planning to open next year?
So as I mentioned, we are exploring the multiple opportunity. We are working right now on 4 or 5 opportunity, and we are going through the [indiscernible] and business evolution. So there are lot of opportunities which are always be on our desk and we have to decide which one we have to choose. So we are continuously working towards that and we will inform once we have the right opportunity to our other franchisee business.
Yes. We have also added 30 -- I mean, we've made a list of 30 cities where we would like to have our franchisee hospitals. So in these 30 cities, we will be continuously evaluating different opportunities. As and when there's something that materializes, we will be sharing it.
The next question is from the line of Rikesh Parikh from Rockstud Capital.
Congratulation on good set of number. My first question is on Implant business. If I look at it for the Q3 with Q2, the margins have declined substantially, probably it seems because of the mix more in India. So how we should be looking at the Implant business as such?
So if I'm talking in terms of the performance for the current year. In current year, even with the lower sales we are able to maintain the EBITDA margin in the first and second quarter, even with the low sales. But with the high sale in U.S., low sale in India, we are able to maintain the EBITDA at the breakeven kind of thing. In the quarter 3, definitely if we have the some more US sale as compared to the earlier quarter, we have the higher EBITDA. But as the sales are high into the India, where the margin has been suppressed but still we are maintaining the positive EBITDA framework for the Implant business.
Sir, I just wanted to know -- I mean, how kind of -- means, what kind of EBITDA level we should be looking at going forward next year-or-so with even Indonesia, Southeast East Asia coming in as such? So how should we be looking at this business?
Looking after the kind of the way we are progressing, we mentioned earlier also, next year we'll be in the higher single-digit margins. We have the EBITDA. And down the line, 2 to 3 years, we will be in the higher double-digit margin.
Okay. That helps. Second is on our growth strategy. So 2 of our large -- this greenfield project, Mumbai and Nashik are facing inordinate delay as such. So are we looking at acquisition more as an opportunity or how one should be looking at?
Yes. So we are looking at both opportunities right now because we were in a net cash position. We also pursued an acquisition strategy because we could work on something which is already operational and would add to the top and bottom line straight away.
At the same time, we have greenfield projects planned as well. So like, for example, Mumbai is a greenfield project for us. And we are looking at building it from scratch, it will take 3 to 4 years from now to kind of operationalize that facility. So it will be a mix of both greenfield, brownfield, as well as acquisitions, depending on the opportunity that we get as long as they are in the geographies which are strategic in nature for us.
And the next question is from the line of [ Dilip Rao ], an individual investor.
I just wanted to understand what could be the occupancy levels and the margin profile going forward in the next few quarters.
Yes. So if you see the occupancy this year has -- I mean, this quarter has grown about 8% for us. If you look at the first 9 months growth, the occupancy has grown double digit for us. So we can expect that we'll be able to grow the occupancy levels at an absolute level in the existing facilities at about 15% to 18% level with a ARPOB increase of 3% to 6%. So overall, 20% to 22% growth is what we foresee. Having said that, this growth will be higher because there will be inorganic opportunities that the company may pursue like, for example, the Sanar Hospital deal that just went through. So in which case, the inorganic growth and the new capacity addition will be in addition to the number I mentioned.
And the margin profile, do you see any improvement on that?
Yes, I think the margin profile, if you see the first 9 months of this year compared to last year, the EBITDA margin is now at a 25%, 26% kind of level in the hospital business. And we are still at a 50% to 52% kind of occupancy levels at some of the hospitals. So there is a big factor of operating leverage, which will come in and play out over the next 2 to 3 years in these facilities. So you will definitely see a margin expansion.
Okay. One more question. Apart from Sanar how many more beds would be operational? Any more beds from our existing facilities would be operational in Q4 and next year?
Well, it -- I think the way Jaipur and Naroda, Surat as well as Jabalpur have done and performed, we will shortly have to reassess and operationalize more beds in the existing facilities to be able to meet the demand.
The next question is from the line of Rohan Vora from Envision Capital.
I'm sorry if the question is repeated, I actually got disconnected in the call. So sir, what could be the [Technical Difficulty] for low occupancy [Technical Difficulty]
You are not audible.
Hello?
Yes. You are not audible.
Hello? Is it better now?
Yes.
[Technical Difficulty]
Hello, Rohan sir, your voice is breaking, sir.
Hello. Is it better now?
Yes, sir. It's better.
Hello. So sir, my question was that what could be the reason that our growth has been 8% in our core business and occupancy has also grown on that lines? So while we are guiding for 14%, 15% growth in occupancy, so what could be the reason for that?
Sir, your question, I'm not able to -- I couldn't hear half of the question. Can you please repeat?
Sure. So sir, what is the reason that our core business has grown by around 8% in this quarter? So what could be the reason for that?
Well, the [ cold ] surgeries which are usually planned, we have seen that the growth in those planned surgeries was not as we had planned and what usually is the case. But we believe that this has -- and we have seen that this has been the case across all the hospitals. So it's not something region-specific. But I think what -- from the way we are seeing Jan and Feb going, I think there has been a lot of spillover from Q3 quarter into Q4 of this year.
So I think it's more of that. So the way I would look at it is that in quarter 1 and quarter 2 if you see, we had 20% on the hospital business. In this quarter, the growth has been slightly on the lower side at 11%. But on a annual basis, we believe that this 18% to 20% growth will be definitely achieved by the hospital business.
That was the last question. I now hand the conference over to Mr. Amit Pathak, CFO, from Shalby Limited, for closing comments.
Thank you, everybody, for joining the call. We will connect again into the next quarter. Apart from that, if you have any questions, you can reach out to our investor e-mail id. Thank you.
On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.