Vijaya Diagnostic Centre Ltd
NSE:VIJAYA
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Vijaya Diagnostic Centre Ltd
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Ladies and gentlemen, good day, and welcome to Q4 FY '24 Earnings Conference Call of Vijaya Diagnostics Venture Limited hosted by YES Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Bhavesh Gandhi from YES Securities Limited. Thank you, and over to you, sir.
Thank you. Good morning, everyone. Bhavesh here from YES Securities. I welcome you all on the Q4 FY '24 Earnings Conference Call of Vijaya Diagnostics. At the outset, I would like to thank the management for giving us this opportunity to host the call. Today, from the management team, we have with us Mr. Suprita Reddy, Managing Director and CEO; Mr. Sunil Chanda, Executive Director; Mr. Narasimha Raju, Chief Financial Officer; and Mr. Mr. Sivaramaraju, Head of Strategy and Investor Relations.
I would now like to hand over the call to Mr. Suprita Reddy for her opening remarks. Over to you, ma'am.
Thank you, Bhavesh, for hosting the call. A very good morning and a warm welcome to everyone present on the call. I will first now present the key highlights for the period. After which, we will take you through the operational and the financial highlights for the quarter ended 31st March 2024.
I'm delighted to announce that this quarter, too, witnessed robust business performance with a remarkable year-on-year growth of 28.3%. Of which, an impressive 18.5% growth was achieved organically. This growth was primarily fueled by both footfall and debt volume. This quarter also marked a notable milestone with the wellness segment contributing 14% of the revenue. This is partly attributed to the recent partnerships with a few large corporates for the employee health checks.
Completing 6 months of successful business operations are our center in Tier 2 geography, Mahabubnagar, has gained significant traction, achieving breakeven within 2 quarters. Once again, this emphasizes the need of a quality-oriented, integrated diagnostic chains, and also validates our brand's ability to earn the trust and loyalty of our customers over time, empowering us to thrive in new markets.
Speaking of our Kolkata hub, the month-on-month performance has been very promising, and we anticipate reaching a breakeven within the next 2 months. Additionally, we have recently finalized leases for 2 new club locations. Regarding PH Pune, we have made substantial progress in integrating it with our parent company. We have successfully migrated all of PH's core ERP and other IT applications to the parent company's applications effective 1st of April 2024. I'm happy to announce that we have co-branded PH as -- PH and the new co-branded logo has been presented in the earnings presentation.
I would now like to provide you a brief overview of the expansion plan for the next 2 years. Our primary focus will be in Pune, aiming to capitalize on the brand and the market potential, followed by the east and our core geographies. We have made good headway in identifying strategic locations for expansion into Pune. Over the next 2 years, we have a clear visibility of 10 hub centers and a few spokes, out of which, 4 to 5 would be in Pune and the rest in the east and our core geographies. We have already finalized locations and signed leases for 6 hubs and would be closing a few more in a couple of months to come.
With this, I would like to hand over to Raju and take you through the operational and the financial highlights.
Thank you, Madam. Good morning, and a warm welcome to everyone joining us on the call today. I'll briefly take you through the financial performance and key developments for the current quarter ended March 30, 2024.
The consolidated revenue for the current quarter stood at INR 155 crores [indiscernible] INR 121 crores in the corresponding quarter of the last year, delivering a robust year-on-year revenue growth rate of 28%.
I am delighted to inform you that the organic growth rate, excluding PH Pune, is impressive 18.5% from INR 121 crores to INR 143 crores. And this robust revenue growth was again driven by volume growth of 17% and footfall growth of 15%.
Coming to PH Pune performance for the current quarter, the revenue is INR 12 crores, which is in line with our expectations. As you know, the contribution from our home market Hyderabad was 82% in the last year. Due to the recent PH acquisition, now the contribution from Hyderabad is 72% in this current quarter and the rest of of AP and Telangana is 17% and Pune is 8%.
Like the previous quarter, the revenue growth was [indiscernible] by both radiology and pathology segment, underscoring the robustness of our B2C-focused integrated business model. The B2C revenue stood healthy again at 93%. Our radiology business stood at 37%, slightly higher than 36% in Q4 of last year. The revenue per test was INR 462. And the revenue per footfall was INR 1,589 during this current quarter. And we reached a key milestone of 1 million patient footfall in this current quarter.
EBITDA for the current quarter stood at INR 63 crores as compared to INR 49 crores in the corresponding previous quarter, registering a year-on-year growth rate of 28%, in line with revenue growth. Excluding PH Pune, the organic year-on-year growth rate in EBITDA is 18%, again, in line with the revenue growth. EBITDA margin was healthy at 40.7% in the coming quarter in spite of expansion activities going on at both organic and inorganic [indiscernible].
A few factors that have helped the company to maintain this industry-leading margins are the interest in top line growth, strong focus on B2C segment and the cost structure of the integrated business model, and lastly, the margins of PH Pune are also a single [indiscernible] the lower dilution at the margin closing due to this acquisition.
The profit after tax for the current quarter stood at INR 34 crores, and the PAT margin was also [indiscernible] at 22%. On the supply cash reserve at the end of this quarter are approximately INR 184 crores.
I will now summarize our performance for the entire financial year 2024. The consolidated revenue is INR 548 crores as against INR 459 crores in the last year, marking a remarkable year-on-year growth rate of 19% on total revenue and 21% on non-COVID revenues. And organic growth rate excluding PH, is 18.3% of non-COVID base. EBITDA stood at INR 221 crores as against INR 182 crores in the last year, registering a year-on-year growth rate of 21%, in line with the growth in revenue. EBITDA margin stood healthy at 40.3%, and the profit after tax was INR 120 crores, with interest PAT to margin of 22%.
I'm happy to inform you that the Board has recommended a dividend of INR 1 per equity share of INR 1 each. That is 100% dividend for this financial year FY '24, subject to approval of the shareholders in the coming AGM.
To conclude, I would like to say that the company is on track of creating dense network of integrated centers at the new geographies over a period through a careful expansion strategy, and this expansion will be funded from internal accruals and the existing cash reserves. And we continue to hold our position as the largest B2C integrated diagnostic chain, supported by -- balance sheet and impressive written ratios.
That's all from my side. I would now request the moderator to open the line for the Q&A. Thank you.
[Operator Instructions] The first question is from the line of Amey from JM Financial.
Yes. And congratulations to the management for the good set of ones. The first question I have is a reported strong volume growth this quarter. Is it possible for the [indiscernible] breakup at least in core regions, how has been the volume growth for [indiscernible] and Telangana?
So Amey, it's basically across geographies. Did you say -- if you see, right, we did not do any price increase in the last year, hardly [ 1%, 2% ] is the price impact, right? And if you actually see on the other slide where we have given the revenue contribution from each of these geographies, Hyderabad grew at almost around 13.5% to 14% in Q4 year-on-year.
And across geographies, it's driven by volume. So if you see equivalent growth in footfall, for example, Hyderabad is -- 13.5% revenue, close to at [ 11.1% ] is the volume growth. Likewise, in Tier 2 geographies where we have done the expansion. So the growth rates are much higher beyond 30%, 40% because of the capacity expansion. The reason the volume growth is approximately about [indiscernible] So it's across all geographies.
Sure. And do we expect [indiscernible] to grow at similar double-digit rate in the core regions for the next 2 years?
So like we always say, we are confident that 1%, 2% whatever revenue growth that you see, right, 1%, 2% will be a price impact or the case mix. If we grow at 15%, say, roughly around 12% to 13% growth definitely will come from volumes.
Sure, sure. And the second question is on the Kolkata region -- we have into that region. So what has been our learnings from that market? And how different the market is compared to like, say, Hyderabad? And what other changes do you expect to do in the strategy in expanding business in the Kolkata? Any thoughts on Kolkata?
So that go-to-market strategy has always been the same, whether it's Kolkata or Pune or any of our core geographies. So we look at the affordability of the population. The -- and Kolkata, being a city itself, all this was then, like we mentioned earlier. We entered Kolkata in the early 2000s with one of the hospitals then with MeDiNova getting acquired. And we know that market pretty well. And we feel that our differentiated model of a very highly integrated diagnostic chain with high-quality sophisticated equipment and top of the line consultants reporting is what is driving us to get to this double-digit growth.
And the same strategy will be followed in Kolkata. Like I mentioned in our speech, we've already signed leases for 2 more hubs. And we will slowly, organically build that market out in the same way that we've grown in our core geographies of AP and Telangana. So I don't see any kind of a very differentiated look when it comes to the East.
[indiscernible]
Also looking at the center which we've opened, I think, in the next 2 months, it is breakeven, and that's pretty promising. In fact, when we opened it, I said, we should give it an extra 6 months because it's far out geography, I would like to understand the market. But breaking even in the next 2 months has actually given us more confidence, and it's looking very promising, and we will definitely have a headway through there.
Okay. Just wanted to ask that the demand generation is similar. The activities we do in Kolkata compared to the Hyderabad region? Or do you have to do some...
All the activities across all geographies are very similar, probably a little bit of differentiation in the kind of reporting that we do the case mix that we do see you look at you would see differentiated diseases also. We see a lot more gastro, body imaging, liver, all that kind of work coming in Kolkata. So that's an area where we are investing in. We are having consultants. We brought in a consultant from New Delhi. He has about 13-plus years experience on board in Kolkata. So that's something that's a new learning. We keep building on those. But definitely, I don't think there's anything that I would have to learn new to make that market grow.
Sure. Sure. And the last question is on the margins. What will be your thought process going ahead with the margin? Any incremental margins which will come in, will you like to reinvest in the growth or how that process is?
Well, let say that currently, if you look at the P&L EBITDA margins are at 40% level. If you see, okay, consistently, we have been achieving 39% to 40% level, okay? And as you know, as ma'am explained, okay, in the next couple of years, okay, we are planning to add at least like 10 hubs, okay. Out of which, at least like 5 hubs, we'll be planning in the region, okay?
So considering this expansion plan, as you know, it takes some time, right, for these hubs to ramp up, okay, breakeven in a couple of quarters are 2 to 3 quarters. So with this expansion plan, there might be like 1% here and there, in fact, might be there on the EBITDA margin. But on the core business, we are fairly confident of the 40% EBITDA margins.
The next question is from the line of Abdulkader from ICICI Securities.
Sir, just first question on the PS acquisition. So of the INR [ 147,200 ] crores which you have paid for this acquisition, so can you provide an [indiscernible] how that was that will look on the balance sheet?
Yes, Abdul. Abdul, this is considered like a business combination accounting under the IFRS 103. So as per the standard, we need to do a fair valuation of the all the assets and liabilities that we acquired on the acquisition date that was on December 21, okay? So we appointed a registered valuer to carry out the purchase price allocation, what it is called, is allocating this budget price of INR 147.50 crores, okay, with regard to all the assets and liabilities, intangibles, brand, et cetera, okay?
So out of this, if you see on the balance sheet, on 31st March, you see an increase in the goodwill number from existing INR 5 crores of goodwill [indiscernible] INR 119 crores. So the movement in the goodwill number that you see is INR 114 crores is on account of the acquisition of PH, that is one. And there are 2 more intangibles that are recognized during this purchase allocation that was the valuer has allocated INR 14 crores towards the brand.
And then towards the non-compete, as you know, we have 5 years of non-compete clause. As per the accounting standard, we need to recognize the value towards the non-compete which was INR 3 crores was recognized, which will be amortized over the period of the 5 years of non-compete fee, okay? So these are the 3 broad numbers that you see on the balance sheet because of the PH acquisition.
Okay. And so the rest would be towards working capital on the gross lock. Is that correct?
Yes. Yes. Maybe in the fixed assets and the net acquisition which will be approximately that INR 16 crores to INR 17 crores of assets minus liability. The net position I'm talking about including working capital in rupee.
Got it. Second question on the revenue split of PH. So would it be fair to assume that it will be more inclined towards the radiology business and the pathology in terms of integration would be a pretty small amount for -- I mean, I'm talking about the standalone revenues of PH.
So in Q4 of current financial year, they reported 60% revenue from pathology and 40% from radiology. Like if you see a 65-35. But at PH, it varies between the range of 50 to 60 from pathology and the rest from radiology. I think 5% to 10% is the difference here.
The next question comes from the line of Rishi Modi from Marcellus Investment Managers.
So just congratulations on the good set of results. So to start with, just need a clarification on the hubs announcement that you did. You're saying 10 hubs in the next couple of years, 6 of these signed you've leases for. And then you mentioned some 2 hubs that you signed leases for this. Could you clarify here?
So we said in the next 2 years, we would be doing about 10 to 11 hubs with a few spokes, and about 5 would be in Pune, which are more or less in clear visibility, leases are signed because that's something that we've acquired. We need to capitalize on that. So 5 of those is signed. And when it comes to another 2, that was referred to the East, so close to about 6 to 7 are already signed and 2 more are in the pipeline.
Okay. Okay. So 2 are in Kolkata.
Yes.
It's across, Rishi. Out of which, 2 are from -- in Kolkata.
Okay. And any guidance on the numbers spokes you are planning to put up like where and how many?
So Rishi, I probably be -- not be able to give you an exact place because we're trying to build out the hubs in the Pune region, which is new. And 3 of their centers have CT and MR, which are halved according to our categorization. And they have 3 spokes. So until and unless I build out another 5 hubs in Pune, it does not give me headway into building out spokes because I cannot create that network. So keeping that 2 or 3 years of visibility in mind, that's the reason why we went ahead and in fact, over sales and closed off the 5 bases without any further delays. So even if these come up in about 3 or 4 quarters, that region alone would be ready to take up another 12 to 15 spokes. Pune.
And coming to East, we have 1 center, so 2 more hubs will again give us the way to add more spokes there. Some spokes, you will be seeing about 5 to 6 coming up in our core geographies in the next few quarters.
Okay. Got it. All right. Second, I wanted to understand your -- you just mentioned that you hired consulting from [indiscernible] to lead the Kolkata hub.
He's a radiologist, Rishi. Like all of our other doctors who come under consultancy professional fee, we've brought in [indiscernible] all the way from New Delhi to report cases.
Got it. And finally, new store question from Hyderabad. If you could give me the fair value assumptions that are going into the goodwill calculations, like what are the growth rates? What is the discount rate and terminal value and how terminal growth rate and after how many years are you putting those numbers in?
So, Rishi, this is carried out based on the India business combination accounting perspective, okay? So what they do is, okay, first there in [indiscernible] the existing numbers of the plant and machinery and other working capital number, okay? And then they will arrive at a brand and non-compete, okay? And then the residual value is attributed to the goodwill, okay? They will test for impairment of the goodwill, okay? So you will not have a separate competition as such, but this will be -- out of the INR 147.5 crores, once the -- all the assets and liabilities are assigned the value, the residual value will be allocated to goodwill, which should be tested for impairment year-on-year based on the future projections.
So from an accounting perspective, when you take a projection, okay, you might not consider a future CapEx, future revenue potential of these centers, okay? So if you like, okay, currently, the valuer can consider only the 3 hubs and the 3 spokes, but as you know, we'll be adding 5 more hubs in the next couple of years from a Pune perspective. So that's not be captured in these projections because it's only for the goodwill impairment at [indiscernible].
Okay. Okay. So like what will trigger an impairment? Like when will you have amortization on this goodwill?
So Rishi, based on our internal assessment, I don't think there will be [indiscernible] in impairment on the goodwill because even if you make projections in just 3 hubs and 3 spokes at the current revenue run rate of INR 45 crore, we see in the financial year, it's INR 45 crores in this current quarter, we reported INR 12 crores. So the annual run rate is between INR 45 crores to INR 48 crore run rate, with a [indiscernible] EBITDA margin. So without even further expansion, okay, the goodwill is, okay, not going to be impacted to P&L impairment. But on top of that, what we're planning is we're trying to add 5 hubs, okay, in the next couple of years. And so what I expect is that in the next 4 to 5 years, I see this, okay, revenue of INR 45 crores to INR 50 crores, okay, should at least [indiscernible] the current number. There's no question of impairment on the current goodwill.
The next question is from the line of Daniel Shah from JM Financial.
My question is on the CapEx outlay for the next 2 years.
Yes. Daniel, as we just discussed, okay, on the CapEx plan, I would like to add at least like 10 hubs in the next couple of years, okay? Along with that, once the hubs are established, then we'll have opportunity to add spokes in these new geographies. That is Pune and East geography.
So from a CapEx requirement perspective, based on the internal estimates for the next 2 years, we expect around INR 200 crores to INR 220 crores of CapEx. Out of which, what we expect is, I think like INR 120 crores of CapEx for Pune region. So in Pune region, out of these 5 hubs, okay, what we expect is that 1 hub will be like a flagship hub with a [indiscernible], okay? Just like, okay, how we added all the modalities in our recent Punjagutta center in 2022.
So like that, we would like to have all modalities, okay? It should be like a flagship facility of Punjagutta in Pune. So one center will be a state of that facility. Apart from this, okay, even in our core geographies, Daniel, what we're trying to do is even the existing network, you see not any center, okay, there is still potential to add further modalities. Like in Pune, what we have done is that we can do 1 ultrasound machine because of the patient footfall load because we added a second ultrasound machine. In this year, in one of the Tier 2 locations, okay, where the footfall hub, where the footfall is almost close to 300, there only currently 1 MRI machine, we are planning to add a second MRI machine over there, okay, in our network in Tier 2.
So concluding these 10 hubs, and also adding new modality and also adding new modalities in these -- centers because of the higher footfall, we expect the total CapEx to be in the range of around INR 220 crores for the next 2 years, out of which INR 120 crores, we expect to be at the Pune region.
Sure. And just a follow-up. So you're already generating about INR 180 crores, INR 200 crores of cash. And about INR 100 crores, so we're adding another INR 100 crores each in the next 2 years. So are we also looking at inorganic opportunities in the -- out of our core region?
Inorganic is always a question mark. So I think what I can only say is that if we find suitable opportunities, we will look at them. And the balance sheet supports us, I think. As you mentioned, the CapEx that Raju just mentioned is probably taken care of even by internal accruals. So organic growth is it's always depending on whether we find the right fit, right asset, right valuation. And we can't answer that question right now because we don't have anything to tell you about it. But yes, we are open to that.
Sure. Got it. But just one for the -- I mean, where would you look at it? Would it be Mumbai, would it be south? Or is there any chance for a north country? I mean just...
It's not about probably the stage analysts about creating that network. So it's that hub and spokes. So down south towards the East is what is -- of our core interest. And whereas we already have Pune hands full, but if an opportunity, that's something that is absolutely making sense to us even Mumbai, we would definitely look at it. There's no way that we will not. I do not have a geography to tell you, but definitely, we're not looking at something up north. Our core geographies are down south towards the East.
[Operator Instructions] The next question is from the line of Anshul Agarwal from Emkay Global Financial.
So my question is on the hub additions. While we are saying that we plan to add 10 hubs in the next 2 years, we have already signed leases for almost 6 hubs. Do we think that we can grow beyond this as well? Can we add more hubs beyond these numbers that we are quoting because we are seeing better traction in -- quick traction in breaking even for hubs. So is there a reason why we -- or is there a chance that we can grow more aggressive?
We can, Anshul. There is no end to that number, but the problem is we also -- it's just not about signing a lease or opening up a center. We also need the team, right, the talent, the pool, getting the staff ready, qualities, SOPs, processes, training. It's like a never-ending [indiscernible]. So I think normally, we would do 4 hubs. We've gotten that to 5. Now we're saying 10. So we feel that we're able to maintain that credibility, the brand recall and give the same kind of customer experience and service without compromising on that, we would definitely do it. But we are comfortable, at the moment, with this number, keeping these factors in mind where we actually give a good experience to our customer. It's the team that is difficult to build. It's not the CapEx or the treasury or the number of leases we'll be able to [indiscernible]. So if we're comfortable with that, we will definitely go ahead and do that.
Also, Anshul, the spokes are where -- the model is the hub and spoke. So when we do hub, we have to also plan for the spokes. So that is also a big number, right? When you do 10 hubs, you're looking at multiple of that in terms of spokes.
Yes. Just to follow-up on that. So typically, considering that these are newer geographies, new geographies or noncore geographies, what kind of number of spokes are you envisaging for each hub in this noncore geography?
So it was never a ratio is 1:5 or 1:6. It's about the density, the population, the residential area and all that, that we take into account when we open hubs. Even if you look at our core geographies, there are certain hubs which would cater to 13 spokes. And some would only cater to 3 spokes. So it's not about the number. It's about the -- probably the -- you have to be right there in the middle of a residential area. So the density, the population is what we look at and map this out.
Sure, I believe while sort of signing up leases [ 14 ] hubs also, you would have [indiscernible]
[indiscernible] normally in areas where they will be in a very upmarket high-end street areas. So if you look at the Kolkata, it's right on the VIP road close to the airport. But the spokes are going to be in multiple in our geographies, right, Anshul. So the hubs are always on main street. We don't look at residential population perhaps. We look at residential population for spokes.
Got it. Got it. My second question was on margins. Like obviously, the Kolkata hub has fared better than our earlier expectations. Do we foresee -- or just wanted to understand your thought process around margins going forward? As we mentioned, as Raju has mentioned that core margins would continue to be around [ 40 ] But the new centers would take some time for ramping up, which could impact margins, say, beyond FY '26, if currently in FY '25, we are going to add more hubs. So would margins get impacted in FY '26?
I think Raju answered that. So because there is growth happening even in the existing centers as well as we are adding spokes around hubs that have been added earlier, the overall valuation, as you mentioned, will not be significant.
It might be 1% or 2%, but that's also because of you building out the team and getting that market ready. So 2028 would look prettier, right?
Just one last small question. On the CapEx number of -- CapEx guidance of around INR 200 crores to INR 220 crores, bulk would be hub-and-spoke CapEx? Or are we also accounting for any other maintenance, IT upgradation kind of CapEx? Is that accounted for? Or will that be over and above this number?
Bulk will be for towards the hub-and-spoke new center additions, okay, our new equipment that is getting added in an existing center. But there might be a replacement CapEx, okay, [indiscernible] national getting replaced, et cetera. Generally, what we see, the trend is that okay, between like INR 10 crores to INR 15 crores, we might need towards the replacement CapEx, but it depends upon the future activity that is.
And that INR 10 crores to INR 15 crores would be included in this INR 220 crores add in. Correct?
For our digital, okay, we spend at least like INR 2 crores to INR 3 crores. It's not a significant number. For the last couple of years, the CapEx in terms of digital initiatives, is around INR 3 crore each year.
Got it, sir. This would be included in this INR 220 crore guidance, right?
Which one? The replacement CapEx you're talking?
The replacement CapEx.
So that will be an additional number. I'm talking about INR 220 crores towards the new centers.
The next question is from the line of Sumit Gupta from Centrum PMS.
Sir, majority of my questions have been answered. So I just want to understand about the debt structure going forward. So looking for some light on that.
Sorry, [indiscernible].
Debt structure?
Debt. So how much of net debt do you expect over the next 2 to 3 years?
So we don't -- so as I mentioned, currently, we're having a treasury of almost close to INR 185 crores. And currently, the cash back is going to be at a 29% level. So you will be generating almost close to like INR 170 crores to INR 190 crores of free cash flow every year, okay? And so I don't think we need to take any debt because the next 2 years, the CapEx is almost close to like INR 220 crores for the new center, okay, with the 28% of cash back coming in, and it is INR 185 crores, unless you do an organic acquisition, okay? You don't need to get. If you do any inorganic acquisition, okay, then you might be due or [indiscernible]
The next question is from the line of Naman [indiscernible] from IIFL Securities.
Hello?
Yes, Naman. [indiscernible]
Congratulations on the good set of numbers. I just want to understand on the 5-hub expansion that you are going to do, could you give us some guidance in terms of when and how basically the breakeven in how many quarters once they are operationalized?
So I think post acquisition, we had to start up our hubs. So the is like -- we expect these hubs to break even, maybe they may take one more quarter extra, right? Because [indiscernible] in the market. It's not a new brand there. It's only a new hub addition. So we expect these hubs to break even within 1 year. But again, we'll have to wait and see because that's new for us. We have to see the results that the first hub is going to give us. But these locations are the locations that we have finalized, they are good locations with a lot of doctor networks and hospitals being present there. So our guidance would be about close to [ 1 million ].
One. Okay. Got it. And the 5 hubs that you are looking at, is to -- I mean, this will be -- I mean, a majority of which will be in FY '25 or we are looking at, let's say, towards FY '26?
I think 2 to 3 should come in FY '25. Maybe 2 more in either Q1 or Q2 of FY '26.
Okay. Okay. On the margin front, I just wanted to ask. In the quarter -- I mean, this quarter, if you look our -- segment contribution has improved by almost [ 300 ] bps. So was it because of PH? Or was it because of, let's say, excluding PH business [indiscernible] because PH, I believe, has higher contribution towards wellness business versus our own wellness business. Is that understanding correct?
So it's a mix of both. Like you rightly said, PH has highest higher contribution from wellness. So basically, also we have seen increase in base revenue business here in Hyderabad, Data and Telangana. So it's a mix of both. Almost -- I think last year, we have closed around 13% from [indiscernible]. We say close to 13.5% for the region [indiscernible] And because of PH contribution from INR, at a company is now...
14%.
Okay. Okay. Okay. So 13.5% would be PH -- sorry, from [indiscernible].
13.5%, we've always ranged between 12% to 13.5% like we've mentioned earlier. So it's also kind of a little seasonal, but 13.5% is from the core geographies and the -- network and 0.5 got added because of the PH new addition.
It's not very large in terms of the total size, right?
Yes. Yes. Yes. So I missed the one comment. You said what are the current revenues of PH, which is almost around INR 45 crore, INR 50 crore annualized run rate. It will [indiscernible] in how many months, you said?
4 to 5 years because [indiscernible] taking these 5 hubs to come in 2 years, then the full revenue potential, in our experience, okay, we feel like 3 to 4 years if you take specific revenue full revenue potential from a hub center. So that's why, okay, at least, we'll have to gain like 4 to 5 years' time to achieve current run rate of INR 45 crores to INR 50 crores, okay, to at least like a trip from that number.
Okay. Okay. And I believe the new expansion that we are doing in [indiscernible]. So the asset turnover would be largely 1x, right?
1:1.
Yes. One. Okay. Okay. And then one more question. I mean, could you give some time line in terms of when will Gulbarga get breakeven?
I think it will break even in 3 quarters. We just completed 1 quarter. So I think it should breakeven in the next 2 quarters.
So in next 2 quarters, we see. Okay. Okay. And largely, if you see -- I mean we have seen competitors increasing price hikes. What is stopping us from any price hikes in our core geographies?
We normally -- like we said, the founder's vision was trying to keep prices affordable and get growth through volume and new customers. Until an analyst, we see a significant increase in price and input costs, we do not pass that down to the customers. And for probably the volume and the growth, even we haven't seen a significant increase being asked by some of the vendors, and it's mostly been in very specialized setting, and that's why you're seeing a price hike of only 1% to 2% on the overall attachment. When we see that and there is an increase, definitely, we will make a change.
And just the last bookkeeping [indiscernible] I just wanted to know what would be the cover, let's say, revenue, I believe, it will be very good for the full year.
Full year.
Insignificant currently...
Point -- 2 to point 3% [indiscernible]
[indiscernible]
So close to around INR 1 crore.
Less than a crore.
Less than a crore. Okay. Okay.
The next question is from the line of Girish Bakhru from OrbiMed.
Just the first question, a clarification on this 145 centers number, which includes, of course, the PH centers. 12 are collection centers, right? Earlier, this was not part of the mix. So just wanted to get a split of spokes or the collection centers in this?
So Girish, out of these 18 centers, 95% of the revenue coming from the INR 600 crores. That is the reason we just talked about these 6 centers, 3 are hubs and 3 are spokes, and the rest 2 centers are collection centers.
Yes, that I'm aware. So total hubs in the network would be how much now and how much spokes?
Our entire network.
Entire network. So closely around 35 hubs, and the rest of spokes. In 145, 35 are hubs.
Understood. And when you talk of, of course, 5 more hubs, one being the flagship one that you will launch in Pune, with your assessment of Pune market, is this flagship something that may have a potential to reach to the level of [indiscernible] or Punjagutta? Can you give some clarity on that?
Definitely, it should reach if we're going to be investing in creating a state-of-the-art center like that. But in terms of time I may not be able to give you clarity on that because I've not opened a single hub after the PH acquisition. But given probably a few years, it will definitely reach the Punjagutta level because it's going to be having a PET CT and state-of-the-art lab with most of the tests being performed in Pune itself.
And also with this comes out building a large team. They only have 3 hubs as we speak now. So we need to build out on a large team of consultants for both pathology, radiology and the other facilities. So I would definitely -- I'm very confident it will reach Punjagutta level, but probably not confident in giving you those time lines right away.
Understood. But like Hyderabad, of course, has been a very strong market for you and you actually continue to show double-digit growth there. Relatively, Pune can be faster growth market initially?
Yes. Initially, yes, because we don't see a very significant integrated diagnostic chain like you will see a lot more in our core geographies. In Pune, I would definitely say the growth would be faster. But like we told you, we need to open up a couple of bucks to get a better understanding of the market to give you a better clarity.
Understood. And just last one on the wellness, 14%. Of course, this number is slowly increasing. You had clarified in the past that there is largely no radiology in wellness, right? eco USG and probably.
Ultrasound actually. And some of the very high-end packages have some amount of high-end radiology like a CT and MR, but that should be relatively very low when we look at this entire 14% number.
And when corporates are signing with you, they are not taking high-end packages?
No, no, mostly because the age group in a corporate would be between that 35 to 45, and it's the active workforce, right? So they wouldn't be needing that kind of high-end imaging, in fact. This is more for older people. We've not seen that come as a request from any of the large corporates still now.
The next question is from the line of Girish Kate from [indiscernible].
I don't have a question. I just want to make a comment and ask. So from our point of view, we would like you to invest in management bandwidth to open more hubs than what you have guided for because I think the economics [indiscernible] low base. I think there is an opportunity to be more aggressive on the vision. I heard a few questions around margin compression on the open hubs. That is not of concern to us. And I just want to see if you have a promising in that direction.
Yes. In fact, we would be happy to do that. But again, as we have mentioned multiple times, there are constraints in operational scaling up. So we are going at the pace at which we feel that the company can manage that growth.
And so what I wanted to ask was that if you can invest at an organizational level, increasing the bandwidth so that you can add more hubs [indiscernible].
Yes. So again, fully understood. Capital is not a constraint. It's always about people and getting...
It's also finding the right talent with the right wavelength right grace, skilled manpower. 70% of our are skilled manpower. As we speak, we do different things. That's also the reason why we do a lot of skill development programs and all that. But building that is not as easy as probably we speak. So that's something that we're building. That's why we got from 4 to 6, 6 to 10. And if we feel very content, we'll definitely be adding [indiscernible].
The next question is from the line of Naman Babesia from IIFL Securities.
Just one question. I mean, on the [indiscernible] business, what could be the -- I mean, what are your internal targets in terms of the current base business volume growth, patient volume growth, excluding the, let's say, excluding the hubs that you're going to open?
So within the existing network, just with 3 hubs and 3 spokes, they get 95% of the revenue. So they're coming close to INR 42 crores -- more than INR 40 crores plus from these 6 centers. I think that itself is a very good number for this capacity. So we foresee the next 1 to 2 years from the existing network, the growth will be in single digit, right? And once we start adding the capacity and a few more additional modalities there, that is then we may see some more growth coming from the entire network.
Okay. Okay. So maybe more of a low double-digit -- I mean low double-digit number, including the...
The single digit number [indiscernible] because the existing network of the 6 centers because you'll also have to take into account the capacity issues of those centers. Those are centers that have already reached full capacity. Until and unless we add and declutter these centers, we will probably not be able to grow footfall in the existing centers. It's not because of any other reason. It's because of a capacity issue.
Okay. Okay. Okay. No, no. So what I was saying is that with the new hubs opening, that could be more of a low double-digit number.
The opening, like I told you, we will definitely see a faster growth than we see here. I think double-digit number is what we would be looking at. But like we said, we would need -- at least one has to open, and we look at that happening probably in the next -- after 2 quarters, right? So we'll be able to give you guidance on that then.
The next question is from the line of Sriram, an individual investor.
Just wonder, do you track patient wait time or patient turnaround time? And also, can you elaborate on the efforts that are taken to improve customer experience?
Yes, Sriram. So of course, right, customer experience is our priority, right? So we do track patient wait time. And generally, we have high wait times for high-end modalities like MR and CT. But in et cetera, et cetera, I think it's generally less than 10 minutes. And sometimes in few of our old centers, we have a wait time for our billing, billing counters in the model, we generally experience 20, 25 minutes of waiting.
So in order to improve the customer experience, we have launched the digital app and also e-commerce website where the patient can book tests online, come to the center directly do the sample and go back, right? And also in the -- coming to centers for MR, et cetera, if the wait time is high, we generally try to send the patient to a nearby Vijaya center if we have one more MRI in 2 to 3 kilometers radius, right? We generally try to send -- direct the patient to the center so that they can get the scan faster.
So turnaround time is something that's also a regulatory requirement as per your NABL MEDS. So we track this patient as soon as we enter, gets registered in one of the centers through the report is released through the app or through a WhatsApp message [indiscernible]. Like [indiscernible] said, there have been multiple ways that we try to declutter the centers. Now supposing we have a center, like I would give you an example, in one of our mature centers in Hyderabad where we were seeing a footfall of 200 and the wait lines would be unending, we said we will add 2 more collection centers, what we call center where people who have only pathology could actually access those centers, they're not coming to this long way to this center. We have the app to do a booking. We have e-commerce. We encourage customers with pure pathology to do home collection. Our call center always tells them that we'll send somebody. So for a pure pathology routine specialty test, [indiscernible] would not be more than 6 hours as we speak today.
And in high-end imaging, we would be the only center in India, where even if something like an MR epilepsy protocol is turned, if the test is performed, the report could be released within 3 hours of the test being performed. It's the only -- the only difficulty is getting the test to be performed is when we actually look at sending customers to different centers so the way time itself is shortened and the experience is a little better for them.
Okay. But the trajectory, let's say, in your legacy centers, how does it fare? I mean, 3 years before and now, are you seeing some sort of difference?
Absolutely. In fact, in fact, 2 years back, when we moved from our older legacy software to web-based software itself, we saw a lot of improvement in that. Then we also saw that when we started, there was a time -- I wouldn't know the exact year, we started close to about 10 to 15 IP centers to declutter these centers. We saw an improvement in fact. Today, are the main center and you might [indiscernible] With close to 800, 900 footfall, you will see only a 10-minute waiting for a bill to happen. Whereas probably 3 years back, that would take half an hour.
And Sriram, I would like to share one data point, right? If you see maybe in '19, '20, when we were doing close to 400, 450 CTs per day, we used to release 75% of the reports within 3 hour stack. Whilst for MRI, CT, generally many centers, it's like 12 hours, and even in hospital, it was 24 hours for the reporting. And today, with close to 900 plus MR, we are releasing 85% of the reports within less than 3 hours. They will be outliers because of the difficulty in scan, complex case, et cetera. But 85% of the reports that came within 3 years, I think is a very good back.
The next question is from the line of Amey from JM Financial.
I just had one question [indiscernible] the wanted to have you on the emerging trend basically. So the point-of-care systems which we witnessed during the times of COVID, when you saw a lot of PCR testing happening. Now companies are trying to expand this thing into other disease platforms as well. So how do you see this change coming in? And is it really a threat to...
I'm sorry. I'm not able to hear you very clearly. If you could repeat it would be...
Sure. What I was asking, we saw during the times of COVID the point-of care system that emerged we saw PCR testing happening for the COVID. Now companies are trying to -- this platform into the other disease profiles. So you see that thing as a price to the investing companies like us? Or how do you see this POC or point-of-care system evolving over a period of time?
So basically, point of care is not new. It has been around for a long time. And you have to differentiate between POC and PCL. Where PCL is considered a confirmatory gold standard kind of a test, whereas point-of-care is usually done more from a screening point of view. So whether it is in COVID or in other indication, the market is very different for both. Somebody who gets a point-of-care will probably need to go and again and get a confirmatory test. And usually in the diagnostics space, we are focused on giving -- using technologies where the accuracy and sensitivity are fairly high. So I'm not sure of the point-of-care has been talked about a lot.
It also has a limitation in terms of number of tests that you can do in point of care. And like Sunil said, that's mostly done for emergency testing. That's why you see it in more of the annual in services and emergency services. And they will have to be confirmed and retested with a confirmatory test.
Got it. So that market is expected to stay with the diagnostic labs, basically, what you need to, rather than starting happening at the center?
Yes.
And just to add, PCR itself, we started PCR in 2000. So we were doing other -- maybe we are doing [indiscernible] testing or [indiscernible] hepatitis. When COVID came, it happened...
PCR came into the limelight and became a superhero. So it's been an old method. It's a confirmatory testing method for a lot of retro diseases.
Thank you. As that was the last question for the day, I now hand the conference over to management for closing comments.
I would like to thank everyone for attending this call. I would also like -- I hope you have been able to answer all of your questions. Should you need any further clarifications or like any other information about the company, please feel free to reach out to us. Thank you.
Thank you. On behalf of YES Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.