Krsnaa Diagnost. Q2 FY26 Earnings Analysis

- Volume growth currently subdued (~4-5%) compared to industry (~10%) due to suspension of some projects like BMC, but expected to improve with initiatives and awareness campaigns. - Management expects volume and revenue growth to be higher than industry averages going forward. - Rajasthan PPP contract rollout underway; full implementation of labs and collection centers expected over 6-9 months, with meaningful revenue from next financial year. - Retail diagnostics (RPL) rapidly scaling, contributing ~6% of revenues; expected to grow to 5%-8% by FY '26. - Retail business targeted to breakeven by FY '26 with 18%-20% revenue contribution anticipated within 1-1.5 years. - Expansion in Maharashtra, Punjab, Assam, and Odisha, leveraging PPP backbone to accelerate retail growth. - Long-term strategic partnerships (e.g., with Apulki) provide 30 years revenue visibility. - Overall outlook indicates sustained growth fueled by PPP contracts, retail expansion, and operational improvements.

- EBITDA grew by 19% YoY to INR 524 million with a 120 bps margin expansion to 27%. - Profit after tax increased 15% YoY to INR 205 million with an 11% margin. - Earnings per share rose 14% YoY to INR 6.25 in Q1 FY '26. - Retail revenue expected to contribute 5% to 8% of total revenue by FY '26, driving growth. - The Rajasthan PPP contract will add INR 300-350 crores revenue starting FY '27, supporting top-line growth. - EBITDA breakeven for retail venture expected by end of FY '26. - The company targets revenue growth better than industry average (~15-16%) going forward. - Working capital improving, with overdue payments being collected helping cash flow and profitability. - Broad strategic focus on expanding retail and PPP businesses to drive sustainable revenue and margin growth.

- Rajasthan PPP project: CAPEX increased to around INR 200-250 crores, involving 42 mother labs, 135 satellite labs, and 1,335 collection centers; rollout phased over next 6-9 months, with revenues starting FY '27. - Apulki partnership: Investments in MRI, CT, and pathology equipment (likely INR 10 crores+), with strategic intent for long-term (30 years) revenue visibility; no change in stake currently discussed. - Maharashtra radiology expansion: Completion of major portion (75%) of 73 centers including CT and MRI by end of Q3. - Equipment acquisition strategy: Preference for purchase over lease to align with tender requirements and strategic needs. - Funding strategy: Combination of internal accruals, debt at efficient cost, leasing/reagent rental models being explored for Rajasthan CAPEX. Overall, investments focus on scaling PPP contracts and retail diagnostic infrastructure, targeting profitable growth.

- For the Rajasthan project CAPEX of INR 200-250 crores, Krsnaa Diagnostics is evaluating multiple funding options. - Funding sources being considered include a combination of internal accruals, debt at efficient cost of capital, and leasing or reagent rental models. - There is no explicit mention of a new equity fundraising currently. - On previous PPP projects, the company aims to use the best available capital resources to maintain margins. - No detailed fundraising timelines or confirmed debt/equity issuance plans are disclosed; information is being assessed as projects progress.

- The company is actively pursuing tenders but it is too early to provide specific details about the current tender pipeline. - As tenders come up, the company will share details accordingly. - The Rajasthan PPP contract is a major new order with CAPEX estimated around INR 200-250 crores, expected to start generating revenues from FY 2027. - The Rajasthan project includes 42 mother labs, 135 satellite labs, and over 1,300 collection centers targeted for full operations by FY 2026. - There is ongoing implementation and expansion of radiology and pathology centers in Maharashtra, Madhya Pradesh, and Uttar Pradesh within the current order book. - The company has a large radiology footprint with plans to operate over 200 CT and MRI centers post current order book completion. - Overall, Telangana, Himachal Pradesh, and Karnataka show some recovery and normalization in payments and operations.