Thank you. Good morning, everyone, and thank you for joining us on Max Healthcare's Q1 FY27 earnings conference call.

We have with us Mr. Abhay Soi, Chairman and Managing Director; Mr.

Yogesh Sareen, Senior Director and Chief Financial Officer; and Mr. Keshav Gupta, Senior Director, Growth, M&A and Business Planning of the company.

We'll begin the call with opening remarks from the management, following which we'll have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.

I would now like to invite Abhay to make his opening remarks.

Good morning, everyone, and thank you for joining us for today for Max Healthcare's Q1 FY27 earnings call. We started the financial year with healthy momentum across the network, recording year-on-year growth of 16% in revenue and 15% in operating EBITDA.

We continued to execute well on our ongoing capacity expansion plans. At Max Smart, we have currently operationalized 50% capacity of the 400-bed brownfield tower.

The remaining 50% are expected to be handed over to operations during the course of the current quarter. At Nanavati Max, remaining 50 beds will also be operationalized in this quarter and work on the Phase 2 expansion has commenced.

Coming to our recent acquisitions, the integration of Max Bhubaneswar into the network is proceeding as planned. The hospital contributed ₹19 crore in revenue and ₹2 crore in EBITDA during the post-acquisition period in Q1 FY27 with an occupancy of 50% and ARPOB of ₹35,000, both of which provide significant levers for growth going forward.

Prior to the acquisition, the hospital generated revenues of ₹154 crore in FY26. Going forward, our focus is on integrating operations, renovating infrastructure, upgrading technology, and enhancing clinical programs to turnaround the hospital over the next 12 months.

In relation to the Pune greenfield, we have acquired the SPV and it is now a subsidiary of the company. To further strengthen our existing network, the board has approved a capital expenditure of ₹425 crore for a new brownfield tower at Max Super Speciality Hospital, Vaishali.

This will add 202 beds to the hospital's existing capacity of 387 beds. The building plans have been approved and the construction activities have already commenced.

The project is expected to be commissioned before FY30. Alongside our capacity expansion, we continue to strengthen our research and academic ecosystem.

We have recently established a stand-alone Max Research Centre, marking a landmark milestone in our research journey. Over the years, we have built an integrated clinical research ecosystem and have conducted over 750 clinical trials, completed over 2,200 investigator-initiated studies, published nearly 3,500 papers in indexed journals, secured over 30 competitively funded research projects, generated patents, and established capabilities that translate scientific discovery into better patient care.

In recent months, we have also secured several research grants and awards from the prestigious institutes, including ICMR Centre for Advanced Research in Precision Diabetes, the ANRF-MAHA MedTech Mission, the DBT-York Brain Unit Dengue program, and IndiaAI Mission initiatives, and the National Cancer Grid amongst others. Our research capabilities are complemented by a dedicated education arm, the Max Institute of Medical Education.

This institute trains over 12,000 healthcare professionals annually, spanning across 180 programs, and our postgraduate ecosystem has over 600 DNB students across clinical specialties. Emboldened by the above and the change in recent guidelines of the National Medical Commission, we have decided to embark upon the medical education business and have received in-principle approval from the board for the same.

We believe this to be a significant line of business in years to come. Now moving on to the Q1 performance highlights.

Average occupancy for the network continued to be more than 75% despite a 13% increase in operational bed capacity year-on-year, with most units continuing to operate at near-optimal capacity. Occupied bed days were up by 10% year-on-year and 5% quarter-on-quarter.

Average length of stay reduced by 4% over trailing quarter, reflecting concerted efforts on this front. Average revenue per occupied bed for the quarter stood at ₹81,900, growing by 5% both year-on-year and quarter-on-quarter.

Network gross revenue stood at ₹2,982 crore compared to ₹2,574 crore in Q1 last year and ₹2,664 crore in previous quarter. This reflects an increase of 16% year-on-year and 12% quarter-on-quarter.

Due to the discontinuation of select high-value chemotherapy drugs for institutional patients, the share of oncology for in-patient revenues dropped to 22% from 26% in Q1 FY26. Excluding oncology, gross revenue grew by 20% and ARPOB grew by 9% year-on-year.

International patient revenue was ₹247 crore, registering a growth of 18% year-on-year and accounting for 9% of the revenues from hospitals. Digital revenue from online marketing activities, web-based appointments, and digital lead management was ₹941 crore, accounting for approximately 32% of overall revenue.

Website traffic crossed 97 lakh sessions during the quarter, growing by 41% year-on-year. Network operating EBITDA stood at ₹704 crore, reflecting a growth of 15% year-on-year and 3% quarter-on-quarter.

Network operating EBITDA margin was 24.8% for the quarter compared to 24.9% in Q1 FY26 and 26.8% in trailing quarter. The margin was relatively muted due to the recent commissioning of new brownfield capacities and the acquisition of Kalinga Hospital.

Annualized EBITDA per bed for the network stood at ₹71 lakh versus ₹68 lakh in Q1 FY26 and ₹73 lakh in the previous quarter. Profit after tax for the network was ₹357 crore against ₹345 crore in quarter one last year and ₹387 crore in the previous quarter.

The network generated free cash flows of ₹397 crore during the quarter. ₹386 crore was deployed towards the acquisition of Kalinga Hospital and Yerwada Properties Private Limited, and ₹337 crore was invested in ongoing capacity expansion projects.

Net debt for the network stood at ₹2,384 crore compared to ₹1,908 crore at the end of March 2026. While the net debt to EBITDA ratio continued to remain below 1, the increase during the quarter includes ₹153 crore towards Kalinga and the put option liability for the balance stake in Yerwada, which is the Pune project.

Continuing our efforts to support the local communities, we provided free treatment to over 56,000 patients from economically weaker sections of the society worth ₹78 crore at hospital tariff. We also spent around ₹6 crore towards various CSR initiatives during the quarter, which include provision of medical scholarships to underprivileged students, promoting maternal and newborn health, vocational skill training, and environmental projects such as pond rejuvenation and tree transplantations.

Both our strategic business units continue to deliver steady growth in revenue and profitability. Max@Home reported revenue of ₹78 crore, reflecting a year-on-year growth of 32%.

It offers 16 specialized service lines across 15 cities with over 56% repeat transactions. Max Lab reported revenue of ₹58 crore, reflecting a year-on-year growth of 20%.

It provides services in over 60 cities and served over 6 lakh patients during the quarter. Now moving on to the status of expansion projects coming on-stream over the next two to three years.

100 beds at Max Lucknow, additional 100 beds in the existing 468-bed facility will be commissioned over the next two quarters. 500 beds at Sector 56 Gurgaon, we expect to start phased commissioning of this facility by end of this year.

250 beds at Bhubaneswar, renovation of existing facility should be completed within 12 months. 100 beds at Nagpur, project work continues to be on track and we expect commissioning by FY28.

400 beds at Zirakpur, Mohali, project is on schedule and we expect to commission it in FY28. Onco Day Care block at Max Dwarka, this is the second phase, project work is complete and we are awaiting occupancy certificate.

260 beds at Dwarka, which is the next phase because Dwarka hospital is running full, it will be commissioned by FY30. 200 beds at Pitampura, project is on track and we expect commissioning in FY29.

271 beds at Nanavati in Phase 2, project work has started and will be commissioned in FY30. 400 beds at Patparganj, D-wall work has started, we expect commissioning by end of FY29.

And 450 beds at Pune, we have received IOD, project is expected to be commissioned by FY30. With this, we open the floor for any questions that you may have.

Thank you.

Hi, good morning and thank you for the opportunity. My first question is, Abhay, if you can share your thought around the recent Parliamentary Standing Committee recommendations for the healthcare sector?

Any initial thought on the recommendations which came?

I think the recent committee report speaks about affordability, but I think one needs to look at another important aspect, which is going to be the need for new hospital beds and viability. I think both need to go hand in hand.

I think once you take that equation into account, I think wise minds will think otherwise, perhaps.

Are you involved in some of the discussions which could have gone for these recommendations or you think it will be more in the future?

No, I don't think there's been any reach out to hospitals on this committee.

Okay.

I've read it as much as everybody else. It speaks about certain FDI caps and so on and so forth.

Like I said, as it's a sector, we believe that you require a lot more capital, and you have to have an environment which is both viable and conducive to investment for hospitals to be built. I think all in all, this is 176th report by the committee,

and

I think you need to look at it in the balance. I'm sure the ministries will look at it in the balance.

Okay. Thanks.

My second question is your plans for turning around the Kalinga hospital. You mentioned around 12 months to set up infra and bring the SOP changes, etc.

Once these changes are implemented, what is the headroom to improve in terms of the profitability profile, ARPOB, etc.? Because at this point of time, it looks very low compared to the corporate average.

If you can share your thoughts.

I think the occupancy is 50% and ARPOB is ₹35,000. I think there's significant room in both these.

You should be able to effectively have a 50% to 80% enhancement in both of these. In order to do that, we have a current hospital, you have a head start.

It makes a marginal amount of profit, but you have to renovate it, you have to get the technology, you have to get the clinical programs. We intend to do all of this over the next year or so.

Then of course, we alongside will be building another 200 beds over here or 250 beds here. We've been through this route before, whether in Lucknow or in Noida with our acquisitions.

We've done it many times, it's the same sort of route that we intend to sort of follow.

Okay. My last question is on Max Smart where you commissioned 50% of beds and you mentioned 50% will come this quarter and beyond.

On the commissioned beds, what is the current occupancy and which is the focus segment or focus specialties which are offered in this particular unit?

You have oncology here. Whatever has been opened is running to 80% occupancy.

Quite full. The rest of the beds are not going to come in this quarter and the next quarter.

They are all coming in this quarter. You'll have all the beds operational in this quarter.

I think we're expecting good occupancy over here. Like I said, whatever has been opened is already at 80%, but it's been opened in a phased manner through the quarter also.

I'm talking about half the beds are open now. A lot of them got opened in the last one month, and as they are coming on-stream, they're getting occupied.

Got it. One last question before I get back in the queue.

In terms of your insurance empanelment or renegotiations, etc., anything pending in near term which are due for renewal or renegotiations,

etc.? Damayanti, this is Yogesh here.

There are ongoing negotiation going on with GIPSA and some other insurance companies. Also the insurance company that we had discussion last time, those are up for renewal in September-October period.

We hope we will get some price increase going forward in the insurance segment.

September-October is the time, okay, when renewals are due.

This is, Damayanti, last time when we had this stalemate with the insurance companies, we had agreed a 6% automatic price revision, and that's what is going to happen. Also on the CII side, there has been engagement with the IRDA, etc., and with the insurers also.

There, more or less, we have agreed that the level of inflation that hospitals have and some kind of a recommendation to the IRDA in terms of automatic price revisions. At the end of this period, we have automatic renewal and price inflation, which is a part of the previous negotiation, these don't go into renegotiations.

6% revision which was earlier agreed upon, that will come into...

That's right.

Okay. Great.

Thanks. I'll get back in the queue.

Thanks for taking my question. Abhay, on the Max Smart beds that we've commissioned, given that you're seeing such good ramp-up on the beds that you mentioned that they're already at 80% occupancy, shouldn't the incremental EBITDA from these beds be very high and therefore start contributing to EBITDA significantly starting from first quarter itself?

When should we start seeing that EBITDA improvements from these new beds come through?

See, what happens is it's very standard sort of for any new hospital, brownfield, otherwise, or whatever. The trajectory is very simple.

First, you ramp up occupancy, right? You ramp up that occupancy using low ARPOB, any ARPOB, whatever is sort of coming your way, but you focus on revenue while you're bearing the cost of the place.

As you sort of ramp up, you start also improving your ARPOBs. You hit breakeven with occupancy, and once you do that, you start improving your sort of bottom line.

As you kind of distil your payor mix, it starts coming down to the bottom line. We've been through this in Dwarka, we've been through it in other sort of brownfields that we've opened up.

The trajectory is the same. First revenues, then the profitability sort of this thing happens.

Now the occupancy will be high, revenue ramp-up will be lower relatively, and EBITDA ramp-up will be lower even more so relatively, right? Then the second thing which starts happening, your revenue ramp-up moves beyond your occupancy ramp-up, of course, and your EBITDA starts picking up.

Then your EBITDA ramp-up is going to overtake your revenue ramp-up as well. It's a very standard sort of operating book as far as occupancy is concerned.

The next couple of quarters, you will see that, yeah.

In which case, when do I start seeing the revenue ramp-up and EBITDA ramp-up? When like you said couple of quarters, so that starts happening let's say by third quarter, fourth quarter, or is it a little more phased out in your experience?

No, no, by the second, third quarter of operation, you are there.

Understood. My second question is on Max Nanavati.

I think you mentioned that the remaining 50 beds would be operational. If you could give us some color on how the beds that we've commissioned are doing.

Phase 2, when do we expect to start that given that we're just starting activities? When should that be ready and commissioned?

No, look, the Phase 1, again, whatever we've opened up is at about 80% occupancy. We're just waiting for the 50% 50-odd beds which are remaining over there.

As soon as they come up, hopefully we'll have that occupancy also done. It's a little further out on the trajectory compared to Max Smart in the sense that there's already a significant pickup of occupancy happened before revenue, and now EBITDA is sort of catching up and is going to surpass that soon.

We're already at that curve, and with respect to the second phase, what that means is we need to kind of shut the 100-odd beds over there which we have, and we've started the works on our second phase. That will take us about two and a half years.

Okay. If I remember correctly, Max Nanavati was lower on the margins because of the type of patients that we were able to serve and the limitation on capacity.

The improvement in Max Nanavati should therefore come once the Phase 2 comes through, a meaningful EBITDA improvement, or you start expecting that it to catch up with the corporate average let's say with the Phase 1 itself? No,

no, with the Phase 1 itself. You already see the ramp-up over there,

you'll

have that. It's very high-ARPOB business.

Your EBITDA is already sort of ramping up, and you'll get there, yeah.

All right. Thank you so much.

Thank you.

Hi, thanks for the opportunity. I just have one question.

Am I audible now?

Yeah.

Perfect. I just have one question.

If you could explain a bit about the changes proposed in the National Medical Commission with respect to you guys setting up the medical colleges, what is the kind of capital commitment or what are you seeing in this area specifically?

Basically, there's been draft notification to say that now even for-profit companies can open medical colleges. Before that, the regulation was that it's only not-for-profit enterprise which can get into medical college.

I think with that draft change, which we assume will also become the law, for-profit companies can also open medical colleges. Now we've done some back-of-the-envelope calculations and our take is that for a 150-bed 150-seat medical college, you need around ₹300 crore of spend, right?

This is what is the kind of capital to add. This will be generally in the existing hospitals, right?

For example, we have a 27-acre campus in Lucknow. Our plan is to start one at Lucknow and then maybe come to the other hospital where we have vast pieces of land and try and create these infrastructure there.

Just for understanding perspective, what would be the kind of margins which one can make via this for-profit medical area?

We are seeing ROCEs of more than 25%. You've been following the recent NEET and this thing.

You're aware that less than 2% of students who qualify for NEET exams find places in medical colleges. I think this is a government's impetus to increase seats in medical colleges.

Previously, for-profit organizations were kind of curtailed from doing so. Also, there were restrictions on the sort of charges which could be applied to hospitals attached to medical colleges, as well as the kind of wards and places, there were some infrastructure limitations as well that were there in the previous this thing, and all of that has been removed.

Now effectively what that means is that if you have a hospital, you're permitted to have a certain amount of seats for medical education attached to it. The prerequisite for this business becomes to have a hospital because the students have to train in the hospital, right?

The second this thing is that at the back end, we're already training DNB students, we're already teaching MBBS students. Sort of we already have the faculties, we have the curriculums, and so on.

For us, it's very natural, it's almost backward integration for us to get into medical education. We have the campuses in multiple locations in Delhi, in Lucknow, in Bhubaneswar, in other places because we have the campuses, we have the lands, and we intend to sort of get into this business.

We are seeing a more than a 25% to 30% ROCE at present,

and

we intend to do this at scale.

Understood, understood. Great.

Thanks a lot. That's it from my side.

Hi, good morning. Just couple of quick questions.

One, we have taken this board approval for additional tower and 200 beds in Vaishali. If I look at your earlier presentations, there were already 200 beds scheduled for FY29 in Vaishali.

Is it the same or is it a fresh tower?

That's the same one.

Same. Okay.

Second, you made this acquisition in Bhubaneswar, Kalinga. After that, we have seen some litigations started immediately after that with the previous promoters.

Could you briefly describe what this is about?

They were not the promoters. These are the minority shareholders of 39% equity.

This is the group that sits outside of India. They have their own issues.

They have the liquidation proceedings going on against themselves in the parent setup in UAE market. Their shares, as per our legal counsels, are not transacting.

Their request or suggestion and plea is to buy their shares also as part of the transaction, which we are very okay to, and they have gone to the court that we should buy their shares. Our counter is that your shares are, as of now, untouchable.

Please get us a court order to buy them. That's the discussion going on.

They want to force it to us. Promoters is not an issue party.

We have bought the shares from promoter only. We have the full control of the company.

Understood. Thank you very much.

Thank you for taking my question. The first one is with respect to the educational institution.

We have highlighted in the past that doctors or availability of doctors is not an issue, but is getting into medical education coming from the fact that maybe 5 years or 7 years down the line when all the large chains would have expanded meaningfully, we might see a shortage of doctors? Is that a response to that so that in the future we don't face such an issue?

Also this whole thing will be a part of the consol listco, right? The whole medical college setup?

That's the first question.

No, absolutely, it is going to be all a part of the listco. There are no leakages over there.

It's 100% all the economic interest is going to be sitting here. I think that's one.

Secondly, unless one was to do a private equity round or something else outside of that, if that may be different, but yeah, this is going to be 100% sub of the listco, so that's one. The second thing is with respect to what was the first question?

The supply of doctors.

Supply of doctors. No, this is a little too far out for that.

What happens is that you get a good stream of resident doctors, DNB doctors to start with. Obviously, there is no bond which makes them sort of continue at a later stage if they get better opportunities somewhere else, if you're not growing.

For us, growth is a imperative, okay, because if you don't grow tomorrow, you don't give opportunities of career growth to your clinicians as well as management, then you're going to have a problem. People will move out, right?

I think all those things are bound to happen, but yeah, it gives you a good base of quality resident doctors who and DNBs who come to your fold.

Got it. The second question is with respect to CGHS benefits.

Are we on track to that ₹140 crore number for this year and how much have we realized in Q1? No,

we are on track in the sense that that's number is flowing ever since, right? There was some left-out part which was the superspecialty rates, that also have started to flow from I would say June onwards.

Got it. Are we ₹140 divided by 4 kind of a run rate?

From June onwards, yes.

Got it. The last thing is maybe one request.

Till last quarter we used to give the regional disclosure, so that used to be really helpful to understand what's happening in different states for us. Maybe if we can reinstate that from the next quarter would be helpful.

That's just a request. Also if possible to share for this quarter as well.

The reason that we sort of pulled it out, and we're happy to discuss that, because lots of reasons. If I gave East, then you know it's Bhubaneswar.

There's one hospital that we have over there. We can...

That concerns. There was too much tactical information at the hospital level because some states had only one setup as of now, and given the competitive data that gets used there, we...

Maybe we can give it as others. Some part of it as others.

We have to think and react. We can do that.

Yeah. I want to avoid giving solo hospital data, as you can well imagine.

Sure, that's fine. Maybe others is a good idea.

Yeah. That's right,

that's right.

Thanks for the opportunity. In IP revenue growth, actually if you look at non-onco business has done well, but onco business continues to remain under pressure and some kind of challenges.

Just want to understand when are you expecting the growth of onco segment back to earlier level or maybe let's say the industry peers? Thank you.

Second part is that why we are seeing a significant issues only in Max while the peers are reporting healthy numbers, especially in onco? Thank you.

No, our point is that oncology will start to level from quarter 3 onwards. That means mid of quarter 3 is when we took this action of not using the OAC drugs for the CGHS, after this new MoA was signed in October.

I think that means quarter 4 onwards will be fully normalized and quarter 3 will start to normalize. That's one.

The fact is that our franchise from oncology was the largest. We had 25% plus revenues coming from oncology.

To that extent, the impact was higher on us. Also...

Highest amount of CGHS. Highest amount of institutional business was us, you have a...

We also had the largest share in terms of CGHS, I think that is because of our presence in Delhi, etc. I think that's the reason you see more impact here in Max.

Perfect. Second question is related to your payor mix.

We have seen that again, institutional share has came down this year. Going forward, how we should look at the share of institutional revenues?

Is it going to go back to let's say earlier level, 22% or so, or is it going to come down meaningfully even from here on? Thank you.

No, it is coming down and we believe it to come down.

It's a result of a concerted effort. We've obviously put something in play.

Understood. Thank you.

That's from my side.

Hi, and thank you for the opportunity. First is a follow-up on the CGHS question.

With the reimbursements now other hospitals are also talking about that not being profitable, have you guys along with other hospitals started to approach the government and the CGHS guys to roll this back to the previous levels? No,

look, I think the institutional business has never been profitable, right? It contributes to fixed costs.

That's where we are. If you're going to continuously only rely on this business, then you will have a continuing issue in any case.

A little bit of look, up, down keeps on payments, this lumpiness and stuff like that keeps happening, but this is a to and fro.

Okay.

It's part of the business, right? I'm not particularly concerned about that.

The issue is that on an overall basis, it is not a profitable business. This is a loss-making business.

It contributes to fixed costs.

Understood. Understood, got it.

There was certain media articles highlighting that the insurance companies have been now trying to dictate the terms at which patients get admitted and the kind of care should be offered. With our interactions with the insurance companies, are they kind of pressing a little harder on this aspect?

If at all, especially in the seasons of fever and flu, which might happen in this quarter, has there any kind of an occupancy impact which you've seen so far?

Firstly, we're not seeing occupancy impact, but more importantly, you have to understand what the role of a hospital is, right? A hospital does not admit a patient.

A doctor admits a patient, right? This is a matter between insurance companies and clinicians.

If a doctor says admit the patient, we admit the patient. If he says admission not required, we cannot admit the patient.

There's a protocol. Eventually, we're only providing the logistics and infrastructure for it and the services.

Once the patient is admitted, the triage, the call, okay, to admit the patient or not to admit the patient lies solely with the doctors. Look, eventually, if the insurance companies are able to kind of standardize that in some manner with the doctors, etc., be it.

Eventually, the IMA, the Medical Council has to agree, right?

Got it. Got it.

Sir, just on a bookkeeping question, between say quarter one of this year versus last year, would it be fair to assume that the overheads of the new hospitals along with the onco drugs getting discontinued may have say close to ₹100 crore to ₹150 crore kind of an impact on your EBITDA?

No, I haven't really looked at it in that fashion, but what happens is let's say if you're opening a 400-bed hospital, right? You're going to staff that hospital, and when you open the first 20 beds, obviously, the 20 beds is not absorbing it, but it's a brownfield.

Maybe the first 50 beds or 100 beds absorbs it, and then as you sort of go further, okay, all of it drops to the bottom line. Of course, your breakeven for a brownfield is much lower than a greenfield, but your cost will sort of move up in line with that.

It's a matter of a quarter here or quarter there. You can't look at it as cost going up.

If you don't have the cost going up going forward in the next quarter or so, you're not going to have the revenues coming through either.

Sure, sir. Got it.

If I have to open a hospital tomorrow, okay, I have to staff it today. I'm carrying that cost.

Right.

Right?

Got it.

Got it, sir. You shouldn't look at it.

This is not an extra cost. This leads and you'll see it yielding now.

Sure, understood. Thank you.

Hi, sir. I just had a question around the bookkeeping of free cash flow.

The EBITDA seems to have grown by 15%, however, free cash flow, operating free cash flow seems to have grown by 3%. A similar trend is observable at the EPS level.

Can you just explain what is the bridge between the two that is causing this gap?

Basically there has been a movement in the AR. There is a lumpiness in the collections when it comes to CGHS and other PSUs, right?

DSOs are gone up from 87 days to 95 days. In a way there is a build-up of AR of around ₹250 crore in this quarter compared to quarter 4.

That's in a way eaten into the free cash flow from operations, plus this absorbs the working capital changes also, right? Also you would have seen that the ETR has gone up a bit.

The tax outflows has also gone up compared to last quarter. That's the reason why you find this cash flows to be lower.

Typically, you find we generally like it to be in the range of 60% to 65%. This time it's around 56%, and it's mainly because of the AR.

Understood, sir. Do we expect this to normalize in the coming years?

It should because the CGHS had a new portal, and the new portal they were not processing bills. Now we've started to see collections from the new portal.

We do think that this should come down going forward, right?

Thank you, sir. That is all from my questions.

Hi, thanks for the opportunity. Just two questions.

How are you looking at the viability of your expansion plans in light of the Parliamentary Committee's report? Does that sort of bring anything back to the table?

Does that require you to reassess any of those? On the college business, when do you also expect to start postgraduate colleges given that onco specialties are really a big source of revenue for you, and how are you planning to fund this and when can we see this sort of start commercial operations?

Those are my questions.

I think you'll see starting of commercial operations over the next few years. We will obviously be open to doing any meaningful acquisition if it's available to kick-start our process sooner than that as well, but we intend to fund it entirely through internal accruals.

Yes, we intend to start PG courses, no doubt on that front. What was the other question?

The Parliamentary Committee... Any thoughts on viability.

The Parliamentary Committee report does not put any thoughts or reassessment of expansion plans. My belief is that eventually you have to believe any sort of policy will be rational.

We are efficient providers of healthcare. If there is going to be any sort of risk-free return available and it's going to be a viable proposition for anybody to set up hospitals, we believe we will have superior returns relative to that, and therefore, if tomorrow, God forbid, you have a situation, hopefully it'll become an opportunity for consolidation for us.

I'm focused on providing best of healthcare and being the most efficient. Eventually, any policy has to cater to the medium, to the mean, not to the outliers, and I believe as far as efficiency is concerned, we are outliers.

Got it. Just one more thing on the direct costs.

Are most of the direct cost increases, while that's a very marginal one, are most of those because of the increase in crude and hence the possible increase in your consumable prices, or is this not giving you any significant impact on the direct costs?

No, there's been

Not much of an impact, no. Not much of an impact, no.

We've seen some impact in the indirect costs, but not much on the direct cost

side. Look, it's contributed historically to some delays in materials, if you're importing furniture for hospital from overseas and so on and so forth, but the delays are behind us, right?

It's coming from the point that net revenue has grown by 15% and direct cost has gone by 16%, that 1% is the clinician cost, right?

That 1% is the increase in clinician cost really.

No impact on account of all the crude prices and therefore the consumable price increases, etc. That's not really happening much.

That's right. The good part about increase in clinician cost is over a period of time as your revenues ramp up, they kind of normalize.

Sure,

sure. Thank you so much.

This is helpful.

Hello. My question is in regards to the opportunity in the market, right?

You previously alluded there is a long runway to growth in the next few decades, right? We also see in the market there's a huge supply-demand gap for private hospital beds and the consumer preference as well as towards private hospitals.

Given that context, right, what's your view if we look at let's say two decades from now, 15-20 years, do you think the top 2-3-4 hospital chains in India, they can each be a size of 100,000 beds? Is that something which is viable according to you?

The total in how many years?

In 20 years, two decades.

No. I don't think that would be the case because what that would mean is you have at least for top three players, you will be building about 300,000 beds.

The total number of beds in India right now are 100,000. You're not going to have complete consolidation.

That means building 300,000 beds over two decades, my belief is that that kind of execution capabilities, that kind of capital which is required, it's going to be a big, big, big, big challenge. I don't see any player becoming 10x in two decades.

That means we always have this demand-supply gap between what the consumer wants and the availability, right? Because they are not going to supply like this.

That's right. The largest hospital chain is 10-11,000 beds.

For them to be 100,000 beds, they need to be 10 times their size. That means I need to be 15 times my size.

No, sorry, 20 times my size. I don't see building 20 times my size.

You need all the FDI, you need all the investments, you need it to be viable for the next person who's setting up a hospital. He's buying land, he's doing construction cost at that point of time, and so on and so forth, right?

Yeah.

Yeah.

Your growth rate, right, you're on a trend of doubling capacity every 4-5 years. At least do you foresee this continuing for next 15-20 years?

No. That absolutely.

You look at them from 5,000, I'll get to 10,000, 10 to 20, 20 to 40 at best, right? Anyway, I'm just crystal ball gazing.

We have no such this thing etc. We are looking at increasing capacity as much as we can and investing in whatever cash flows we have in the sector.

In terms of your ARPOB growth, right, we've seen 7% to 8%, which is like you say couple of percentage points above the rate of inflation. Again, that trend, you see going forward for the next 10-15 years, that trend continuing?

Look, hospital growth, top line, ARPOB growth will always be superior to inflation because whatever real growth happens in terms of novel treatments, etc., okay, that is a part of ARPOB, right? ARPOB is not only inflation.

If inflation continues at this, hopefully innovations will continue in the sector in years to come, and like it has for the past century, then you should have the same outcome.

Thanks for the opportunity. Just one question on the institutional patient bed share which has now come off this quarter versus previous quarter.

How we should look at this number given upcoming capacity additions that we are doing?

You add capacity additions, you've seen it come down. I think trend-wise that should continue unless we acquire significant capacities, then that's a different ballgame.

As far as this present infrastructure is concerned, I think this trend of reduction perhaps will continue.

Thank you.

Hi, thank you for the opportunity. Sir, we have seen a sharp sequential increase in operating expenses even if we adjust for Bhubaneswar.

While you will be adding incremental beds at Nanavati and Smart, would it be fair to say that we will not see any material increase in opex till Gurugram comes up?

That's right. Rather than Max Bhubaneswar, the large increase in indirect cost is due to the new capacities, whether it's Mohali, whether it's Nanavati, whether it's Smart.

That along with Bhubaneswar has caused the big increase in indirect costs. Yes, I think you will not see any significant increase and you will see increase in revenue, and therefore, you'll see a higher amount of EBITDA through flow.

If that's what your point was.

That was the point. Similarly, Abhay, if you can comment on net debt as well.

Would it be fair to say that net debt has peaked out at current levels?

It is still lower than one in terms of net debt to EBITDA. If I can get to two and a half by doing acquisitions or whatever else, I'd be happy to go to two and a half times the net debt to EBITDA.

Barring any acquisitions, it should come down from current levels. Would that be fair to say?

Often we have the ongoing capex plan, right? We are spending money on the Shaheed Path, this ₹475 ₹424 crore approvals, etc.

I would say whatever cash we generate, we will obviously consume that and maybe we'll also take some loan to finance the projects, right? This net debt will largely go up if you ask in end of the year.

Really depends on and what kind of cash flows we are throwing out and so on and so forth, okay? At present, if you look at three years down the line, effectively you should have funded your capex and paid down the debt three, four years down the line.

Fair enough. The second question was can you provide some color on how the three acquisitions have been doing?

It's been almost two and a half two, two and a half years now for Lucknow, Noida, and Nagpur. Any qualitative insights there would be helpful.

I think the first and foremost is the fact that we are expanding these capacities because what we acquired, if you recall, were operating at low sort of occupancy levels. You've seen very higher ramp-up in occupancy, obviously very higher ramp-up in revenues and profitability, and now we're moving towards capacity expansion in all three.

That brownfield capacity expansion leads straight to the bottom line. I think qualitatively, all three have been successful from that standpoint.

It's been to playbook, honestly, I think. Yeah.

Got it. One final one.

Can you update us on the status of Shaheed Path as well as Thane?

For the Thane, the regulatory approvals are coming in. We have got Stage 1 approval for the overall master plan for the site, and we have to submit specific building plan drawings now.

For Shaheed Path, we have prepared the drawings. We're discussing with the authorities, and we'll submit them after we have the broad clearance on the concept.

Broadly, Keshav,

after we have the approval for both projects, which is another six months from now, after that, they'll take about 30 to 36 months for delivery.

Got it. That's helpful.

That's it from my side. Thank you.

Yeah.

Thank you, everyone, for joining us today. We appreciate your time and look forward to interacting with you again next quarter.

Appreciate it. Thank you.