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Revenue uptick, margin stability key to positive stance

Result Synopsis

Vijaya reported a better revenue performance with like for like patient volume growth of 13% YoY adjusted for 50k covid patients in the base quarter. Realization per footfall also surprised on the higher side; increase in volumes led to operating leverage which partly offset the rise in other expenses on account of opening of ~5 hubs and 15-20 spokes in the last 12 months. With newly opened centres like Tirupati, Rajmundry and Panchguta doing well, reckon slight miss on volumes should be recovered in the coming quarters. We would keenly watch the breakeven timeline for newly opened hubs and spokes as that would be a good indication of incremental capital efficiency, footfalls and, consequently, margin trajectory too. We tweak our volume growth assumption marginally to 16% for FY25 along with change in realization/footfall to Rs1475/patient (from Rs1455) along with higher other income resulting in EPS upgrade of 8-13% over FY24/25. Retain ADD as there could be revenue buoyancy over next few quarters due to Rs1.3bn capex incurred last year. Our revised TP stands at Rs530 (earlier Rs460) based on ~36x FY25 EPS.

Result Highlights

Vijaya reported 16% YoY revenue growth, largely in line with our expectation of 14% growth

Non covid volumes up 20% (though reported footfall growth was up 5% YoY) translating into non covid revenue growth of 19% YoY; realization/patient up 10% YoY

Wellness share at 12.4% vs 9.6% in Q1 last year

Despite opening of ~5 new hubs in last 12 months, margin was defended at ~40%

Achieved operational break even in Tirupati within 3 months of operation and also opened 10k sq ft hub in Kolkata

PAT growth higher due to change in depreciation policy in Q4

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