💰 Financial Performance

Revenue Growth by Segment

Overall revenue grew 11% YoY to INR 206 Cr in Q2 FY26. The retail/D2C segment showed a significant 60% QoQ growth, contributing 8% to total revenue in H1 FY26. B2G (Business-to-Government) growth was relatively flat at approximately 2% due to seasonal factors and temporary service suspensions.

Geographic Revenue Split

While specific regional percentages are not disclosed, the company is expanding in Rajasthan, Maharashtra, Assam, Uttar Pradesh, Odisha, and Delhi. Stretched receivables are noted specifically from Himachal Pradesh and Karnataka, impacting working capital.

Profitability Margins

Operating Profit Margins (OPM) were 25.1% in FY2023 and 22.2% in 9M FY2024. However, margins improved significantly to 29% in Q2 FY26 due to operational efficiencies and manpower optimization.

EBITDA Margin

EBITDA margin stood at 29% in Q2 FY26 (INR 60.2 Cr), representing an 18% YoY growth in absolute EBITDA. This improvement is driven by structural efficiencies and better operational leverage as new centers ramp up.

Capital Expenditure

The company planned and executed capex of over INR 150 Cr each in FY2024 and FY2025 to set up new diagnostic centers. Expansion is partially funded through asset-light models like pay-per-use or deferred credit from OEMs.

Credit Rating & Borrowing

ICRA reaffirmed [ICRA]A (Stable) for long-term and [ICRA]A1 for short-term ratings. The company maintains a net debt negative position with cash and liquid investments of ~INR 225 Cr as of September 2023. Borrowing limits are capped at INR 350 Cr.

⚙️ Operational Drivers

Raw Materials

Diagnostic reagents, chemicals, and medical consumables represent the primary variable costs, typically accounting for 15-20% of revenue in pathology-heavy segments.

Import Sources

Medical equipment and specialized reagents are sourced globally from countries including Germany, USA, and Japan through multinational OEMs.

Key Suppliers

Major suppliers include global medical technology OEMs such as GE Healthcare, Siemens Healthineers, and Philips for radiology equipment, and various diagnostic reagent providers.

Capacity Expansion

Current capacity includes 186 CT/MRI centers and 120 pathology labs. Expansion is underway in Rajasthan and Maharashtra, with new centers expected to be operational by Q4 FY26.

Raw Material Costs

Raw material and consumable costs are managed through bulk procurement for the nationwide network. Costs fluctuate based on test volumes and the mix between radiology (lower consumable cost) and pathology (higher consumable cost).

Manufacturing Efficiency

Efficiency is measured by 'scans per machine' and 'tests per lab'. The company is leveraging existing 'kitchen' labs to process retail samples, improving unit economics.

Logistics & Distribution

Sample collection logistics for the retail segment involve a network of touchpoints and phlebotomists, which currently impacts the retail bottom line during the scale-up phase.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by increasing retail revenue contribution from 8% to 20% by FY27, operationalizing the large Rajasthan contract, and expanding the footprint in unpenetrated markets through the PPP model. The company aims for a retail exit run rate of INR 100 Cr by Q4 FY26.

Products & Services

Radiology services (CT scans, MRI, X-ray), Pathology tests (blood tests, biopsies), and Tele-radiology reporting services.

Brand Portfolio

Krsnaa Diagnostics

New Products/Services

Expansion of D2C/Retail health packages and home sample collection services, expected to contribute 15-20% of total revenue by FY27.

Market Expansion

Targeting deep penetration in Rajasthan and Maharashtra by the end of FY26, moving beyond existing clusters into new states like Odisha and Assam.

Market Share & Ranking

India's leading quality-driven diagnostics company in the PPP segment with a high bid-win ratio for government tenders.

Strategic Alliances

Strategic partnerships with state governments under the PPP (Public-Private Partnership) model for 3-12 year tenures.

🌍 External Factors

Industry Trends

The diagnostic industry is shifting toward integrated models (Radiology + Pathology) and increased D2C digital access. The PPP model is becoming a benchmark for public healthcare delivery in India.

Competitive Landscape

Faces competition from established national chains (Lal PathLabs, Metropolis) in the retail segment and regional players in the PPP segment.

Competitive Moat

Moat consists of a high bid-win ratio, long-term contracts (3-12 years), and captive patient footfalls in government hospitals. These are sustainable due to the high capital intensity and operational complexity of radiology.

Macro Economic Sensitivity

Healthcare spending is relatively resilient to GDP fluctuations, but high inflation can increase manpower and consumable costs, squeezing the fixed-price PPP margins.

Consumer Behavior

Increasing preference for branded, quality-accredited diagnostic services and the convenience of home collection in the retail segment.

Geopolitical Risks

Supply chain disruptions for medical components and reagents sourced from international markets.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Clinical Establishments Act and NABL/NABH accreditation standards for quality and safety in diagnostics.

Environmental Compliance

Complies with bio-medical waste management and radiation safety norms (AERB) for radiology equipment.

Taxation Policy Impact

The company is subject to standard corporate tax rates. It received assessment and demand orders for FY2022 following an Income Tax search in July 2022.

Legal Contingencies

Income Tax Department demand orders for FY2022 are pending. The company has issued statements to stock exchanges regarding these material events.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timely collection of dues from government partners, with a potential 10-15% impact on liquidity if debtor days continue to stretch beyond 125 days.

Geographic Concentration Risk

Significant revenue and operational dependency on states like Himachal Pradesh, which are prone to natural calamities (floods).

Third Party Dependencies

High dependency on medical equipment OEMs for maintenance (Uptime) of CT/MRI machines.

Technology Obsolescence Risk

Rapid advancement in imaging technology requires periodic heavy capex (INR 150 Cr+) to remain competitive.

Credit & Counterparty Risk

Counterparty risk is concentrated in state government health departments; while default risk is low, payment delays significantly increase working capital intensity.