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All round beat builds ground for optimism

Result Synopsis

Base business growth in Vijaya is running healthy coupled with robust addition from new hubs opened between FY21-23. We had been circumspect about base business expansion, but it does appear to be running at 8-10% YoY in our view and indeed Vijaya has surprised for 2 quarters in a row. Company has not added any hubs between JanNov’24 barring one opened in Ongole, AP as management focused on integration of PH. With ~4 hubs likely to be opened till Q1 FY26, we believe growth would continue to appear healthy in H2 FY26 and FY27. Accordingly, we have factored 19% YoY rise in footfalls in FY27. Meanwhile, lack of hub addition for most of CY24 may lead to a period where contribution from new hubs might go down and existing centres could be the dominant driver of growth. We marginally tweak FY26 estimate and introduce FY27 forecast. Roll over to FY27 EPS and rise target multiple to ~50x, at a premium to Dr Lal and Metropolis given the superior volume growth outlook. Upgrade to ADD with revised TP Rs1,240 (earlier Rs800). Slowdown in Hyderabad and related core market would be a key risk to our volume assumptions.

Result Highlights

Vijaya delivered a solid set of numbers with revenues ex PH up 23% YoY

Patient footfall was up 18% YoY as hub addition done prior to CY24 would have gained traction in our view

Sample growth at 22% on back of slightly higher wellness share

Margin at 41.5% largely in line with our near 42% estimate

PAT up 26% on reported basis including PH.

Opens a hub in Ongole, AP in Aug and Nizamabad, Telangana in Nov. Outlines Bangalore as an area with large potential.

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