Shalby Ltd
NSE:SHALBY
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Ladies and gentlemen, good day, and welcome to Shalby's Q4 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 Dr. Bino Pathiparampil from Elara Securities. Thank you, and over to you, sir.
Thank you, Steve. A very good evening to all of you on the call. On behalf of Elara Capital, I, Dr. Bino Pathiparampil welcome you to the management call of Shalby Limited to discuss Q4 and FY '24 earnings and business outlook. .
We have the top management team of Shalby present in the call. I now hand over to Jigar Todi from the IR team of Shalby for opening remarks and taking it further. Over to you, Jigar.
Thanks, Bino. Good evening, everyone. Our earnings presentation is uploaded on the stock exchange website and our company's website shalby.org. We do hope 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 uncertainties. Finally, refer to Slide #43 of the investor presentation for the detailed disclaimer.
Now I would like to hand over the call to Chairman, MD, Dr. Vikram Shah for his opening remarks. Thank you, and over to you, sir.
Good evening, friends. Very warm welcome to earnings call of Shalby Limited. Today, I'm happy to share with you that this has been landmark year of Shalby as an institution has completed 30 years of operation. 30 years ago, our first hospital was created out of vision and relentless determination to provide quality health care. I can still recall the complex hurdle that we faced. The financial clutters, the uncertainties of the clouded part. However, with every challenge we grew power and more resilient through sheer perseverance and unwavering dedication [indiscernible] into the opportunities.
Today, as I formally recollect those early days [indiscernible]. Our commitment to excellence has not only led to best clinical outcomes, but has earned our trust and gratitude of our patients. Our growth is not [indiscernible] in numbers, but in the [indiscernible] and the community side. And as we look at, we carry with us the [indiscernible] from our humble beginnings. This would not have been possible without support of each and very [ Shalby ] who have always played important role in this journey. Needless to say, the growth of the company is [indiscernible] with the support and contribution of the shareholders and all other stakeholders, each playing crutial role in our journey towards success.
The company continued to show steady performance in FY '24 with revenue of INR 953 crores and EBITDA of INR 197 crores, which translates into growth of 15% and 23%, respectively from last financial year. The acquisition of [indiscernible] hospital marks a significant milestone bringing our total telling of 16 hospitals in the coming year. We will be operational [indiscernible] Rajkot Hospital and also we can work at Landmark Mumbai project once we receive handover from the trust.
The [indiscernible] has made considerable strength across various aspects and compassing, supply chain, expanding customer base, operational efficiencies and operative management. Deepak will provide you a comprehensive overview of development in Implant business.
Now it gives me immense pleasure to introduce Mr. Deepak Ananth, who has joined our group as a Global Chief Business Officer on 9 January '24 and presently using U.S.A. -- any call from USA will be talking about Implant business. He holds Degree in Engineering from Mumbai University and Management Degree from Mumbai Management Institute, and he [indiscernible], and he has 2 decades of leadership experience in medical devices, telecom, IT and adtech as a variety of leadership roles. Over to Deepak for further communication, please.
Good morning, good evening, everyone. Thank you so much, sir. And let me just give you a quick brief about our Implant business. Our Implant business has delivered another consecutive quarter of positive EBITDA in quarter 4 financial year '24. Because of the growth that we have seen in this quarter, along with continuous improvement that is happening through process improvements in the production shop floor are securing a much improved procurement prices from our multiple vendors and we now having a very tight control on our operational expenses.
During the fourth quarter of this financial year, our Implant business made a significant progress generating revenue of INR 258 million with contributions from the U.S.A. and India at 41% and 59%, respectively. In quarter 4 financial year '24, our U.S. customer sales mix from retail and wholesale remained at 51% and 49%, respectively. We are actively focused on bolstering our team with skill professional, transitioning our sales mix to retail customers from wholesale, enhancing operational capacity and efficiency, expanding our product pipeline through extensive research and development efforts and significantly reducing procurement costs. The reception of our Shalby consensus implants in our hospitals has been highly positive, and we have received additional orders from the Indonesian markets.
If you look at the focus for us from the financial year '24, '25, we are looking up into 4 pillars that we have strategized, which we will be focusing on where the Pillar 1 is towards sales. In sales in the U.S., looking at coming on board to get an $8 million from the current year, we closed at about $4.8 million. We're looking at getting this by onboarding more distributors, sales team as well as marketing efforts. We will also be participating this year in a lot of large congresses. We will be initiating a digital marketing campaign in the U.S. in the next 4 to 5 months to come. Inside the sales pillar, outside U.S. sales, we will also be looking for another $8 million through the right products across Southeast Asia, Latin America. We're looking at about 4 to 5 countries in Latin America. Russia and especially countries where the reimbursements are higher at this junction, right? We have significantly taken efforts to put CapEx for these particular initiatives on the sales front.
Looking at the Pillar 2, which is of the COGS reduction, we are looking to end the year [indiscernible] and approximately COGS of about 50% to 55%, which is right now upwards by 80% improving our efficiencies, ship times, new vendors and suppliers and processes. Just wanted everyone to know this is an 8- to 12-month process from the time you identify a new vendor or a supplier or any efficiency change. The process takes 8 to 12 months, fundamentally, right from putting the plant across, getting the QMS done, getting the regulatory approval for the new vendor and the new supplier and then going by it. So a lot of initiatives have been taken in this direction, and we will be able to see quarter-on-quarter results starting to come in this place.
The third pillar, which is super important for us, and that's also 1 of the reasons why there have been slight delays in what we had to achieve was capacity increase and to build a dual supply chain system. Currently, for most of our products, we were dependent on 1 vendor or 1 supplier for the materials. So this -- hence, the cost becomes high as well as the business gets affected because there is only 1 supplier. So plan is to have a multi-vendor supply system with higher capacity contributing to our sales focus as well. And as soon as the higher volume commitment comes in for increasing our sales, we will also be able to lower the cost as well as increase the capacity. This will also help us to build a business continuity or contingency around not having a single supply chain system, but a dual supply chain system.
And the last pillar that we want to work on or we will be focusing on is new products. We've also looked at new product initiatives. We've just hired a head of engineering, very experienced and senior person from the industry of Orthopedics, who's come on board to build our new product initiatives.
The new product initiatives, we would be looking at into 3 parts. One, the new product launch that is around the corner, which is CKS Gold, Ambition, [indiscernible], which we are expecting to launch in this financial year. The second part of the product would be improvement in the current system, just adding a couple of SKUs into our current products, just adding a couple of sizes, improving our instrument sets. There is a huge growth of ambulatory service centers, surgery centers coming up in the U.S. and hence creating a system to cater to the same. That will help us to cater to the current sales needs.
Having said the same thing, even for any of these kind of small improvements, the process is about 6 to 9 months and sometimes in some cases, even 12 months, right? And the third part of it from a new product would be to completely focused on new design, which is a 2- to 3-year project where we kick start in terms of looking at revision portfolio for knee, revision portfolio for hip, a median knee a dual mobility of them coming into picture, right?
So sales growth costs going down, capacity being built for driving growth as well as new products coming into picture will put us not only for the short term, but also in the long term in an excellent spot. That's an update from my side on the Implant front. I would like to hand over the call to Mr. Amit Pathak for company's performance remarks in this. Thank you, and over to you, Amit.
Thanks, Deepak. Good evening, everyone. I'm pleased to welcome you all to the Shalby Limited Fourth Quarter FY 2024 Earnings Call. Now I will walk you through the financial performance of our company for the fourth quarter of FY '24.
Consolidated revenue of INR 249 crores in quarter 4 FY '24 versus INR 208 crores in quarter 4 FY '23. And we have grown by around 20% on Y-o-Y basis. EBITDA of INR 44 crores in quarter 4 FY '24 versus INR 35 crores in quarter 4 FY '23 with a margin of 17.6% in quarter 4, '24 versus 16.7% in quarter 4, '23. And we have been grew by around 26% on Y-o-Y basis.
PBT of the company is at around INR 21.8 crores in quarter 4, '24 versus INR 19.2 crores in quarter 4, FY '23, with a margin of 8.7% in quarter 4 of this year versus 9.2% in quarter 4 of the last year, and we have grew by around 13.5% on Y-o-Y basis.
PAT of the company is INR 16.04 crores in quarter 4 FY '24 versus INR 13.9 crores in the last quarter of the same year, with a margin of 6.4% in this quarter compared to 6.7% in quarter 4 FY '23, and we have been grown by around 16% on Y-o-Y basis.
For an overall year, in FY '24 versus '23, our sales have been grown around 15.2% in consolidated level. EBITDA at 23.3% and PBT is [ 35.7% ] and PAT is by 23.4%.
On the consolidated basis, the group is maintaining a very strong benefit and low gearing ratio at [indiscernible] that is the divesting of equity of INR 1,000 crores and net debt is INR 156 crores.
Now I will be running through the standalone performance of the hospital business. The stand-alone revenue is around INR 211 crores in quarter 4 FY '24 versus INR 184 crores in quarter 4 of FY '23 and it grew by around 14.5% on Y-o-Y basis. [indiscernible] quarter 4 of this year versus INR 36.5 crores in quarter 4 of last year with a margin of 20.2% in this quarter versus 19.9% in quarter 4 of the last year, and we have grew by around 16.9% on Y-o-Y basis.
PBT of the company is INR 32.5 crores in this quarter versus INR 26.5 crores in the quarter 4 of the last year with a margin of 15.4% in this quarter versus 14.4% in the last quarter of the same year, grew by 22.7% on Y-o-Y basis. PAT of the company stands at INR 22.6 crores in this quarter versus INR 18.4 crores in the last quarter of the singular year, with a margin of 10.7% in this quarter versus 10% in the same quarter of the last year, and we have grew by 22.9% on Y-o-Y basis.
For the full year, the FY '24 versus FY '23, our sales grew by around 17%, EBITDA or 22.8%, PBT by 30% and PAT by 28.5%.
Again, at the standalone level, we continue to maintain a very strong balance sheet with a positive net cash balance of INR 22 crores. With the operating leverage [indiscernible] and growing with asset-light approach, our standalone ROCE improved to 18% in quarter 4 [ FY '24 ] on an annualized basis. Further from 2017 onwards to till date, our stand-alone revenue has grown with a 25% CAGR and EBITDA at 30% CAGR basis.
On the operational side, the inpatient-outpatient surgery count has grown in the range of 15% to 16% on Y-o-Y basis. [indiscernible] shown excellent improvement at INR [indiscernible] and 3.7%, respectively, compared to INR 34, 867 [indiscernible] in the same period of the previous year. ARPU on Y-o-Y basis has grew by 12%.
The number of occupied grades have increased by over 10% on Y-o-Y basis as an occupancy rate of 46% in quarter 4 of this financial year due to [indiscernible] Hospital in LCR region. The payer mix for quarter 4, 2024 is at 37% for the share, 41% for the insurance and 22% for the government business.
Our NPL for the acquisition of [indiscernible] has been concluded in quarter 4, 2024, with a total investment of INR 206 crores. In this field, we have acquired the operational hospital, [indiscernible] at a value of INR 102 crores for the 87% stake by way of primary and secondary acquisitions and dealer hospital, which own the land and building on which the [indiscernible] operated with 100% acquisition by way of secondary purchase at INR 104 crores. Now from this -- from investment point of view, our CapEx investment for the acquisition for the Delhi NCR region for [indiscernible] is concluded, and in future, the CapEx will be incurred for the capacity expansion from the 130 beds to 200 beds in the coming years.
Post our acquisition, we have consolidated the performance of [indiscernible] for the part of the year that is from 25th of January, that is a date of acquisition to 31st of March. The revenue for consolidated period is INR 16 crores with the EBITDA of around negative INR 0.17 crores, that is INR 17, 00,000 lakhs in our consolidated results.
Revenue from International business remained at INR 13.6 crores, that is INR 2.8 crores from Shalby Hospital and INR 10.8 crores for Sanar in quarter 4, 2024. The overall international revenue for Shalby is at INR 9 crores, and the Sanar was INR 67 crores in FY '24. I'm happy to mention that the acquisition of Sanar, our International segments and other new geographies have been increased. And now we have 23 OPDs as a group across the various international locations. I'm really hopeful that with this strategic location will help us to increase our international hospital revenues significantly in coming years.
At Shalby, our undivided focus has been demonstrating our clinical excellence through successful [indiscernible] critical surgeries and several of our optical limits. We also take a pride in sharing that we have successfully completed 46 transplants, which included 28 kidneys, 12 liver and 6 [indiscernible] during the quarter 4 of this financial year. Further, our franchisee business delivered an adequate performance in quarter 4 of this year. The total 393 surgeries has performed at SOC units. That is the book [indiscernible] in the quarter 4 of this year. The revenue from [indiscernible] business is at around INR 1.74 crores grew by 28.5% of the Y-o-Y basis.
The revenue from the FOSM business is at INR 0.8 crores grew by 9.7% on Y-o-Y basis. We are proud to say that we have generated around INR 6.7 crores of the FOSM revenue and INR 3.6 crores for [indiscernible] with a 48.5% and 22.1% growth, respectively, on the financial year 2024 basis.
Our next franchise location at Rajkot is in satisfactory progress and is expected to get operationalized tentatively in the current quarter. We have been incredibly sensible collected in our slice of potential partners from the [indiscernible] we are receiving so far for our franchise operation. To maintain the reputation of our strong brands, we follow a clearly defined process [indiscernible] when making this collection.
Looking forward, we have a strong sense of optimize about seeing positive development in this coming -- upcoming quarter of the fiscal year. Our [ friendly ] focus remains on utilizing our expertise and excellence in orthopedics with the goal of establishing more than 40 franchises in India in the next 4 to 5 years.
Now for our Home Care business, we have served 30,496 patients in this current year versus 27,000 patients in the last financial year with a growth of 13% patient counts in the single period of the last year. Revenue from Home Care business is at INR 14.5 crores for this current year versus INR 9.8 crores in the last financial year with a 48% growth. As a part of our social commitment, we continue to spread awareness around the importance of health and well-being through videos, through various social media platforms and created 90 plus health care videos. We also conducted more than 305-plus healthcare campus and 145-plus healthcare stocks across all our mix during the last quarter as a part of various community [indiscernible] program.
Shalby also take pride of nurturing young talent through our Shalby Academy Verticals with 1,700-plus students registered in the various health care programs during the current year. We would like to inform that Shalby Academy has successfully rolled out [indiscernible] University and MBA [indiscernible]. The new student has been registered for various dynamic forces like labs technician, OT technician and others. The enrollment process is -- over 206 enrollments for the [indiscernible], which is the upper most in the academy by any single team since the induction. Total [indiscernible] this financial year is 313 numbers.
Our Implant business has delivered a positive inside fourth quarter of current year due to continuous improvement in operational efficiency and better procurement costs. The revenue is at a moderate level of around INR 26 crores in this quarter compared to around INR 24 crores in the quarter 3 of the last financial year.
In terms of the CapEx, for the current year, at Shalby level, we have invested growth around INR 28 crores of the CapEx, which includes INR 8 crores in terms of the intangibles, INR 5 crores for the building improvement and another INR 16 crores for the medical equipment. Out of the INR 16 crores of the medical equipment, close to around INR 6 crores for the addition of the medical equipment, [indiscernible] equipment and INR 2 crores is the replacement of the equipment.
We are also like to say that we are going to invest heavily in the CapEx in the next coming years, and we are planning to invest around INR 36 crores on the CapEx for our existing unit in terms of the new and the replacement of the CapEx. Along with that, we are going to install [indiscernible] machine at our 3 locations. That will be close to around INR 65 crores, that will contribute highly in terms of the top line [indiscernible] of the company. Now I will hand over the call to the operator to open the floor for the questions.
[Operator Instructions] First question is from the line of Ranodeep Sen from MAS Capital.
My question is to Dr. Vikram Shah. I think 1 of the business channels did a profiling on you in Jan, and it was incredible to now that you've done 1.5 lakh operations till today and almost 20 to 25 surgeries in a day and 6 days for a week. And I think we have done an incredible role in creating -- changing the perception about the operation. My question is, sir, how do you institutionalize this in Shalby. I know it's [indiscernible] your credential, but is there a way we are trying to institutionalize this in Shalby, which will lead to exponential growth of Shalby and eventually leading to a higher market share?
Thank you for the question. Dr. Shah is in the OT, but he should be back in a couple of minutes and should be able to answer the question. But let me tell you what he has attempted to do and how we have been able to successfully institutionalize it because it's a good question. So as we speak today, about 15 years ago when we started the first corporate multi-specialty hospital, all the surgeries were performed by him and done by him and his team -- his close team.
As we speak today, only 20% of the arthroplasty surgeries are done by him, and balance 80% are done by the surgeons across all the different hospitals, which we have. So essentially, to that extent, he has been able to successfully institutionalize this practice. And a lot of 80% of the patients now come in to get treatment for the [indiscernible] surgeries at Shalby, right, and not a particular doctor.
Sure, sure. Appreciate that. Shanay, the next question was on Sanar acquisition. If I'm not wrong, we mentioned that 70% of the top line generated there is from international business and ARPUs is at INR 1 lakh. With these 2 metrics, any specific reason why we had a negative EBITDA for the last quarter?
Sure. So Sanar, if you can see from the time we have taken the Sanar it's a good deal for us, okay? The company are into the capstone situation, and we are ramping up the business now. There are a lot of pending, which is happening into the company, which is on the higher side, and we have started controlling if you can see the overall performance, the loss was pretty high into the Sanar compared to the time we have took over. So we are happy to say that within 2 months, we have just [ operationalized ] in a way that we are at the breakeven. And from the next quarter onwards, we are definitely going to see the positive [indiscernible] in this company.
Sure. And if I can squeeze in 1 last question. We had an aspiration for our implant business to grow from INR 100 crores to $100 million. Are we on track for that aspiration?
Absolutely, on track on that. The way I would pull across it's a $30 billion market globally, -- and $100 million is still a small number that we can go behind. But we are on track to it on multiple things. At the end of the day, we could only do that if you have the foundation and the fundamentals strong. So like what I mentioned, building the right supply chain system, building the right cost efficiencies, right COGS -- without that growth at any cost will not make sense. And hence, that's the reason why you see these foundations are being laid out very strongly. And once these foundations we have in place, we're 100% on track to that. .
Aspirationally, which year are we plan to get that number?
We're looking at about 5 years from now. Is that right Amit? That's what it is, right? 5 years.
Yes, 5 years from now.
[Operator Instructions] The next question is from the line of Rohan from [indiscernible].
So I just had a couple of questions. Firstly, you said in the commentary that we had -- we experienced a 12% growth in ARPOB on a Y-o-Y basis. So I just wanted to understand what were the major reasons that led to this growth? Did we take any price hikes or was it largely led by volumes or [indiscernible] ?
We should not look at Y-o-Y from the ARPOB perspective because a little bit of case mix -- as a little bit of case mix changes, you can expect the ARPOB to significantly move. But if you see the annual ARPOB difference, it's been -- the growth has been about 2% to 3%. So it has not been so significant.
All right. And my second 1 was about the Delhi CapEx that you mentioned in the commentary. So we are planning to add around 150 to 200 beds. What will be the amount that we'll be incurring for that particular?
Yes. So at this point of time, our full focus is how to kind of increase the occupancy in the existing 130 beds that we have operational, right? And we are already working on a plan on how to add another 50-odd beds in this hospital. So we are working with consultants, architects and other agencies.
But at this point of time, the full focus will be on how to kind of get to a higher occupancy in this existing hospital, which already we are seeing a significant growth over the last 90 days since we've acquired it.
[Operator Instructions] The next question is from the line of Bino Pathiparampil from Elara Securities.
Just a question on Nashik and Mumbai Santa Cruz projects. What's the latest update there? And what are the time lines looking like?
Yes. Sorry, I didn't get the second part of the question.
Time lines and what's the current status and what are the time lines?
So I think what has happened is there has been a delay in the project because of the trucks end. And they are, at this point of time, working internally and they need certain documentations done, including taking the approvals from the necessary authorities. So they are in the process of that. And we are expecting that in the next couple of months, we should be able to get the approvals. And once the approval is done, the handover will be given to us. And from that point of time, we will be in charge, and we will have to kind of get the BMC approvals and start working on the project.
Understood. So maybe you can say it would start around a year from now, maybe another 2 years of construction. So maybe 3 years before we have a full fledge facility. Is that right?
Yes. So based on the last discussion with the trust authorities, we were told that the approval should be in place in the next 2-odd months. So if that is the case, then things can start a lot earlier as well.
Understood. And Nashik?
Well, Nashik is another project. However, there we were supposed to get the handover for the hospital, which is -- which was to be constructed by them, and they were going to then hand it over to us. So, which has still not happened. So we have written to them at this point of time to kind of confirm when they will be able to deliver and hand over the project to us. So we have not heard from them yet. But as such, there is no capital employed over there from Shalby Limited, so from that perspective, we are okay. .
Understood. And what will be the CapEx -- total CapEx in FY '25?
So I just mentioned, we are looking forward for the Shalby, and we are talking about that we are going to invest close to around INR 36 crores for our hospital business. And apart from that, we are going to invest odd INR 60 crores to INR 65 crores for 3 units at 3 locations.
Understood, yes. And 1 last question on tax rate. So we are running at the consol level around 34%, 35% tax rate. What will be the consol tax rate outlook over the next 2, 3 years?
So it will remain on the same line. Look, if you're looking after the tax that comprise the 2 parts. One is the [indiscernible] also created on a couple of entities, okay? -- for our Implant business when we are consolidating under the [indiscernible], we have to create the deferred tax asset. But overall effective tax rate will go to remain the same.
From Shalby point of view, we are under [indiscernible] right now, and we are going to utilize the MAT by the end of the next financial year. Thereafter, we will be under the normal tax rate.
The next question is from the line of Pinaki Banerjee from AUM Capital.
Sir, my first question is regarding the [indiscernible] business in the U.S., you had some supply side issues from the vendor. So sir, actually, where you have taken a conservation to change the vendor. Sir, what is the status now of that problem now? Has it been resolved?
Yes. So from an Implant standpoint of supply vendors are on track. So we have been able to figure out new vendors and onboard them. But the reason why you see a slight delay in all of those things is because a new vendor comes with a certain process. So from the time you identify a vendor, the quality checks happen, the QMS process happens. Every time you change a vendor, you have to also get a regulatory approval once again. So that whole thing of getting is what has taken time.
I think as the same thing. It's an ongoing process. We are better than where we are, but we still are building more robust supply chain still so that we don't end up in the same position. But just to answer your question short, from where we were to where we are, yes, there has been an improvement on that.
Sir, and 1 -- second last question. With the Sanar acquisition, actually, we find that it is -- in the Slide 19, it is mentioned that it is [indiscernible] expertise in liver, kidney, [indiscernible] and bone marrow transplant, which is a deviation from the [indiscernible] segment, which where we are a leader. So is it fair to assume that whatever acquisitions organic or inorganic would be looking to diversify in other specialized needs from now on?
Well, even if you look at Shalby Hospitals revenue mix, about 60% plus of the revenue today comes in from other specialties, right? And cardiology, oncology, critical care, [indiscernible], nephrology contributing significantly to the balance 60-odd percent of the top line.
Having said that, in Sanar, of course, they are doing a lot of high-end [indiscernible] care works such as bone marrow transplants, liver transplants, kidney transplants and among other specialties, so we will be looking to build on that in terms of [indiscernible] international business. We will also look to take some of this high-end work, which we are not doing currently in some of the other hospitals of ours across the country.
And at the same time, there is another synergy, which is that -- for orthopedics, the Sanar Hospital was not doing a significant volume of work. So with Shalby coming in, we'll see the orthopedic numbers also grow at the Delhi NCR hospital.
The next question is from the line of Rohan Vora from Innovation Capital.
Sir, my first question was around the FOSM [indiscernible] model. So just to understand what we are doing to scale those 2 models and adding partners there, adding franchise there? And another question was, I just missed your guidance on the Implant business. So you said $8 million plus $8 billion. So just wanted to confirm if it was $16 million?
Sure. So Deepak, do you want to start with the Implant business? .
Yes, that's right. So we're looking at about $16 million this year with $8 million in the U.S. and $8 million in the [ O.U.S. ]
Yes. In terms of the franchisee business, we already have 5 operational franchisees and the Rajkot franchisee will be operational in Q1 or Q2 of FY '25. So we are in the works of building this business. We are also looking at opportunities right now. Of course, there is funnel, and we are talking to several other franchisees across the country. We are in line to kind of do between 30 to 50 franchisees over the next 3 to 5 years has been guided.
The next question is from the line of Surya Patra from PhillipCapital India.
Sir, my first question is about the Implant business. So did you say in the opening remarks that you are looking to see a kind of improvement of almost like 30% in the COGS this year or it is your future target?
So we will be looking at that particular cost structure coming into picture, but it will be an eventual one. By end of this year, you would have seen that kind of a reduction. So it will happen gradually -- basis how each 1 of these new suppliers and vendors and start coming on board, but the reduction of 30% is what we are gunning by end of this year. So by the last quarter, you would have seen that COGS slowing down by about 30%.
Okay. So then for FY '26 kind of optimal margin structure should we see targeted [indiscernible] for the Implant businesses [indiscernible]?
[indiscernible] happen in the last quarter, then that will continue for the next year.
Okay. Okay. So given that, what profitability one should think about for FY '26?
Amit, do you want to step into that?
Sure. So look, we have a very clear 5-year plan what Deepak has beat and the way we are seeing the profitability improvement into our implant business. We are seeing in FY '26, we are on the single high double digit -- single -- high single-digit growth, we will be close to around 9% to 10%. And going forward, close to around '28, '29, we will be close around 18% to 20% of the margin.
Okay. Okay. My second question is about the ARPOB. In fact, while we have seen a kind of improvement in the current financial year versus last year, -- so the company as a whole, what should be the kind of goal that in terms of upside potential that we are anticipating? And do you or given the kind of a policy development, what is talked about, so is there any risk to the ARPOB generally in the near future?
So look, the ARPOB has been -- for the year, it has grown by about 2% to 3%. Generally, we see that in a year, we kind of do not increase the prices at one go. So every quarter, we look at the different pricing structure across the different verticals. And then accordingly, we kind of increase the prices in a structured manner, over every quarter. And overall, we don't see that this should significantly change, because I think what is important to understand is that this is also subject to the case mix, the specialty mix. So since our specialty mix has been in a certain range over the last 8 to 10 quarters, we have not seen the ARPOB move much except by 2% to 3%.
Coming to regulatory risk, I think Shalby is probably going to be the least affected because if you look at our ARPOBs, they are 1 of the -- of course, 1 of the highest in our regions. But having said that, if you look at most of the major players who are in the metro cities, ARPOBs over there are much higher. So from that perspective, we are already in a very comfortable range. However, we don't see any of that coming in, in the near future, as already the hospitals are making not so high ROCEs that there is any scope for reducing the package prices for the patients.
Okay. And just lastly, about the Home Care market, sir, or business, -- so for the full year FY '24, what was the kind of progress and the business that we have seen? And what it can be achieving in the following year?
The Home Care business has grown by nearly 50% for us in the last 1 year. And we have always said that the potential that we see. So we are currently doing the Home Care business in all the cities where we run hospitals. And we maintain what we have said earlier that the potential is nearly 5% of the hospital revenues is what we could do if we are able to kind of penetrate across those -- all these towns where we are operating our hospitals. So say we did about INR 850 crores of revenue last year. We can do about INR 40-odd crores in the Home Care business.
The next question is from the line of Kashish Thakur from Elara Capital.
First question, sir, I just missed your commentary on international revenue, which [indiscernible] revenue, which was generated for FY '24. Can you just help me out to understand?
So can you just repeat the question?
International patient revenue, which you have generated for FY '24?
Yes. So FY '24 for the Shalby existing setup, we have around INR 9 crores of the international revenue. And Sanar has done close to around INR 67 crores in this last financial year.
So the next question is if we see historically, our EBITDA margins for Q4 has been suppressed for Q4 FY '22 was somewhere around 15%, for Q4 FY '23 is some around 13%. And this year, it is somewhere around [indiscernible]. So like any specific reason why our Q4 margins have been suppressed?
Well, the Q4 margins as such, the EBITDA margins have not dropped significantly. So if I look at the EBITDA margins for the year -- I mean for the quarter, they have been at about 20%, 3% lower than the annual average. So usually, what happens is that there are 2 things. One is, of course, most of the doctors incentives are released in the fourth quarter. And in this particular quarter, we also had 30 years of completion of Shalby. So the marketing spend, which is usually about 2% of the top line has been at 4% in this quarter.
Understood, sir. So going ahead, what kind of marketing spend can we expect for FY '25?
The marketing expense will continue to be in the range of between 1% to 2% in total.
[Operator Instructions] As there are no further questions from the participants. I would like to hand the conference over to the management for closing comments.
Thank you, everyone, for joining the Q4 '24 Earnings Call. We will make [indiscernible] the next quarter with a good result from the Shalby tank. Thank you for your patience and participation.
On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.