Thyrocare Technologies LtdQ1 FY23Healthcare Services

Thyrocare Technologies Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

- Growth is expected to stabilize going forward; the high growth rates of the past are not anticipated to continue next year. - Two more non-operational centers (out of a base of 10) are expected to become operational in the second half of the year, potentially adding ~10% volume impact. - Pricing is largely stabilized with limited scope for further price increases in the current market. - The business is seen as more organic and annuity in nature, with anticipated pure scan volume growth around 10-12% annually. - Non-COVID volume growth has been strong (39% YoY), but this high growth rate is also expected to moderate. - International expansion is in early stages with Rs. 20 crores CAPEX allocated across 3 geographies; this is not expected to materially impact revenue in the short term. - Radiology business shows strong recovery and growth (47% YoY). Overall, expect moderate organic volume growth with stable pricing and gradual expansion.

Margin guidance

Category 3

→Growth expected to stabilize after recent expansion of 10 operational centers, with 2 more centers likely to become operational in H2 FY24.
→Volume growth expected around 10-12% annually from new centers and organic business growth.
→Pricing is largely stabilized; price increases are difficult in the current market.
→Nuclear business growth seen as more of an annuity, with fiscal '23 growth partially recovery-driven; similar high growth rates are not anticipated going forward.
→International expansion planned but small investments (around Rs. 20 crores across 3 geographies); no material EBITDA or P&L impact expected in short term.
→CAPEX limited, focused on international expansion and no large acquisitions planned.
→Dividend policy to be maintained barring major changes or acquisition opportunities.
→EBITDA margin stable (~29-31%) with improving operating cash flows (Rs. 129 crores free cash flow in FY23).
→Overall, expect organic growth with EBITDA and EPS growth moderate and steady rather than high double-digit expansion.

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Fundraise plans

→No indication of any immediate or planned fundraising through equity or debt was mentioned.
→The company is currently generating healthy operating cash flow (Rs. 129 crores last year).
→It prefers using debt financing for equipment purchases rather than shareholder cash.
→Cash deployment is conservative, focusing on prudent capital allocation without large CAPEX or acquisitions.
→International expansion is planned with a modest initial CAPEX allocation of Rs. 20 crores across three geographies.
→No mention of equity dilution or fresh share issuance; existing ESOPs are non-cash and non-dilutive in the short term.
→Management emphasizes returning cash to shareholders via dividends rather than retaining cash for aggressive growth or fundraising.

Order book

Yes

→Thyrocare has 10 operational centers currently.
→There are issues at some centers; management expects to get 2 more centers operational in the second half of the year.
→Growth from getting these 2 centers operational is expected to add approximately a 10% volume impact in H2.
→Pricing is largely stabilized, with no expectation of significant price hikes.
→The business moving forward is expected to be more organic with a steady 10-12% pure scan volume growth.
→No explicit mention of a large backlog or outstanding orderbook was given; focus is on stabilizing and organic expansion rather than aggressive scaling or order accumulation.

Capex plans

Yes

→FY23 CAPEX was Rs. 41 crores, mainly spent on setting up 6 regional labs (Rs. 5-6 crores each) and 2 new nuclear centers.
→FY24 CAPEX forecast is around Rs. 40 crores, including Indian operations (Goa lab and a couple of satellite labs) and some nuclear lab shifts.
→Rs. 20 crores allocated for international expansion in FY24, primarily for Africa, Middle East, and Southeast Asia markets, expected to be spent mostly in Q3 and Q4.
→International expansion CAPEX is modest (~Rs. 6-7 crores per geography), still at MoU stage; minimal material impact expected on EBITDA or balance sheet in near term.
→No plans for large acquisitions; company prefers debt financing for equipment to preserve shareholder cash.
→Dividend policy remains aggressive unless a lucrative growth opportunity arises.

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