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We hosted Vijaya Diagnostic’s senior management for a non-deal roadshow (NDR) in Singapore and came back with greater conviction on the company's growth trajectory, with both volume drivers and margin levers appearing robust. KTAs: 1) Growth continues to be secular, with the core region growing in high double-digits on the back of continued market-share gains and network expansion in newer clusters within Hyderabad. We expect the core region to continue performing well over the next 3-4Y. 2) The management plans on replicating the Hyderabad densification playbook in its non-core clusters (Karnataka and WB), which should aid in delivering higher growth in the medium term. 3) Pune integration took longer than expected, as focus was on internal controls and SOPs rather than growth. Organic growth is now in double-digits, supported by two recently added hubs. With integration now complete, Pune is expected to deliver growth in line with overall company growth. 4) Rising NCD burden is structurally expanding the addressable market for organized players; Vijaya's integrated business model allows it to capture this tailwind, as consumer awareness improves. 5) Vijaya is leveraging AI (dental 3D imaging, CT KUB), offering differentiated services without additional costs to patients. With strong ramp-up in the recently added centers (FY26: 11 hub adds), we forecast EBITDA margin expansion of ~135bps over FY26–28 after absorbing incremental investments in NGS capabilities and IT infrastructure buildout. We retain BUY and TP of Rs1,400.

Vijaya’s business dynamics – all portfolios tracking well

Hyderabad continues to deliver high double-digit growth, with elevated hospital bed density in the city augmenting diagnostic players’ volumes. The management is deepening its footprint within existing Hyderabad clusters while simultaneously targeting the underpenetrated Western corridor (Gachibowli, Financial District) as a meaningful incremental growth driver over the next 2–3Y. Non-core clusters: WB has structural economics superior to that in Hyderabad at scale – better pricing on most modalities, lower opex, and a favorable consumer base. In Bengaluru, despite being present for only a year, Vijaya has seen early proof points (sub-12-month breakeven at both initial hubs), with the upcoming Rs300mn flagship facility at Bg Road likely to cement Vijaya's position as a leading player in the region. Pune has been on the recovery path after PH integration.

Retain BUY and TP of Rs1,400

The management's 15% revenue CAGR guidance (10-11% organic, 4-5% from network additions) in the long term is underpinned by i) structural demand tailwinds (rising NCD incidence in younger-age cohorts, growing wellness awareness in Tier-2 markets, and insurance-driven formalization of diagnostics), and ii) the management’s clear expansion plan over the next 2Y (estimated capex: Rs2.5-2.6bn). Given the franchise's cash generation capability, we forecast 19%/21% revenue/EBITDA CAGR over FY26-28, without compromising on returns. Operating leverage should be able to offset margin headwinds (IT infra buildout, NGS infrastructure, and currency cost inflation).

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