MedPlus Health Services Ltd (NSE: MEDPLUS) Q3 2026 Earnings Call dated Feb. 02, 2026
Corporate Participants:
DRN Srinivas: — Sr. Manager Finance
Sujit Kumar Mahato — Chief Financial Officer
Gangadi Madhukar Reddy — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Gaurav Nigam — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the MedPlus Health Services Limited Q3 FY26 earnings conference call. As a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing Star then zero on your touchtone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Drn Srinivas from MedPlus Health Services Ltd. For opening remarks. Thank you. And over to you sir.
DRN Srinivas: — Sr. Manager Finance
Thank you, Rayan. Good evening everyone. On behalf of MedPlus, it’s my utmost pleasure to welcome you all to Med Plus Q3 FY26 earnings conference call to discuss the financial results of Med plus for the third quarter of FY26 which were announced earlier. We have with us today the senior management team represented by Mr. Madhukar Reddy Gangadi, Chief Executive Officer and managing director and Mr. Sujith Mato, CFO. Before we begin, I would like to mention that some statements made in today’s discussion may be forward looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties on Slide 1 of the Investor presentation shared with all of you.
Earlier. Documents relating to our financial performance were circulated earlier and these have also been posted on our corporate website. I would now hand over the call to Sujith. Thank you. And over to you Sujith.
Sujit Kumar Mahato — Chief Financial Officer
Thank you Sriniva and good evening everyone. On this call, we have opened 228 stores during the current quarter and there were 46 store closures. Out of 46 closures, 17 stores were relocated. Seven stores are in the process of getting converted into franchisee. Ten franchisees we saw withdrawals and 12 stores are closed for other reasons. We achieved a net addition of 182 stores during the quarter compared to 117 stores added during the last quarter. During the current financial year, we have achieved net addition of 400 stores. We continue with the outlook for adding 600 new stores in FY26.
Update on the network in terms of our store network age, around 23% of our stores have been operational for less than two years and the remaining 77% of our stores have been operational for two years or more. In terms of the network size, at the end of the quarter our network grew to 5112 stores with 2.6 million plus square feet compared to 4612 stores and 2.4 million square feet at the end of December 24th. The average store size is 527 square feet. Update on the revenue mix presently Medplus offers a large range of SKUs spanning across pharmaceutical and non pharmaceutical categories.
Private label sales for quarter three FY26 constitute 22.2%, pharma being 11.6% and FMCG being 10.6% of our total revenues on GMV basis. During the current quarter the share of the private label pharma sales stood at 18.9% compared to 7.9% prior to the launch of Med plus branded pharmaceutical products. That was in last year. Quarter one an update on Financial Numbers Our consolidated revenue for the quarter stood at 18,061 million. Our consolidated operating EBITDA for the quarter after considering the non recurring charge of 70.59 million rupees on account of the implementation of the new labor code stood at 96.8 crore representing 5.4%.
Revenue from pharmacy operations grew by 15.6% year on year. On reported basis the pharmacy operating EBITDA stood at 925 million representing 5.2%. An update on our stores performance Stores older than 12 months Revenue from these stores in quarter three was 16,300 million representing 96% of our pharmacy revenues. These stores had a store level ebitda margin of 12.4%. A word here on the store level EBITDA margin by age while stores greater than 12 months had a margin of 12.4%. This was 12.6% for stores greater than 24 months and 8.8% for stores in the 13 to 24 month age bracket.
On allocating all non store related costs, the operating EBITDA of stores greater than 12 months was would be 967 million which translates to a margin of 5.8% on working capital. Our net working capital for quarter three was 53 days. The inventory in our warehouse stood at 34 days in quarter three. The inventory level of a first year store was 103 days. In comparison, for a store older than 12 months the inventory was around 35 days. An update on our diagnostic numbers Diagnostics Revenue grew to 326.7 million in Q3FY26 compared to 274.7 million in Q3FY25. Diagnostics segment recorded an operating EBITDA of 50.7 million compared to 22.1 million in Q3FY25.
This translates to 15.5% as an operating EBITDA margin In October we sold 506 gross plants per day. In November and December this was 529 and 528 respectively. As on 31st December we had a lakh and 80,000 active plans covering 368,000 underlying lives. As on 30th September we had 1,70,000 active plans covering 3,51,000 underlying lines. Our current observed on time renewal rate is 23% in Q3 versus 24% in the previous quarter. That concludes our update for the quarter. I request the host to open the line for questions.
Questions and Answers:
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Ridansh Chandak from Unifi amc. Please go ahead. Rajan, please unmute your line and proceed with your question.
Unidentified Participant
Hello, Am I audible?
operator
Yes, please go ahead.
Unidentified Participant
Yeah Hi team. Congrats on a stellar number. My first question is that Madhu, could you explain that 10% plus you know SSSG, we’ve seen that after some time now and you also spoke about in your opening Sujeet mentioned the 18.5% private pharma GMV sales. So could you give some more color about what’s driving that?
Gangadi Madhukar Reddy
I think it’s a great question. What we had articulated earlier, while we had seen a slowdown in the greater than 12 month stores, the company tweaked the incentive arrangement at the store level and we are seeing that paying off dividends and this is in the right direction. So at least there are two reasons for this SSSG growth. One, we started with a bit lower base of the previous quarter in the last year and two, the impacts of the changes in the incentive structure and a bit of availability improvement due to the implementation of the new warehouses.
Unidentified Participant
Understood Sudeet so you know you have alluded to the incentive structure change, but I thought that you know you had reached the desired level of private label private pharma sales and you were hoping that branded would again start to pick up. So did we make those tweaks in this quarter or the old or the revised incentive structure continues which is continuing to drive the private pharma sales?
Gangadi Madhukar Reddy
As we had indicated earlier, we have tweaked the incentive structure so as to Consider the total sales growth at our store level, which is paying off dividends. We are clearly seeing the improvement in the branded pharma uptake as well as the uptick in the private label non pharma, which is helping us to achieve these numbers.
Unidentified Participant
Understood. Second is, could you speak about the margin profile again, has been very strong this quarter. Congrats on excellent execution. So how do you expect gross margins to continue to trend for 4Q and next year along with operating EBITDA?
Gangadi Madhukar Reddy
I think we do not generally give guidance, but on the gross margin level, we expect it to remain at the same level.
Unidentified Participant
Understood. Thirdly, could you just speak a little bit about, you know, what’s happening on your franchisees that, you know, the expansion on that. Is this an opportune time to start speaking about it or should we expect more color after 4Q?
Gangadi Madhukar Reddy
Yeah, I think after the full year we would like to get into that. But as you rightly picked up, that initiative is ongoing and we are working with couple of models, couple of partners to see which is the right fit and how does it fit into our overall strategy. But that being said, that initiative is currently ongoing. These numbers include the impact of franchisee and distribution sale, which is captured in the presentation in the other segment, which currently, if you see the others, would be in the range of 5.7% of the total revenue and this alone is now 3.7%.
As a comparison earlier, this was 1%.
Unidentified Participant
Understood. So incrementally to understand the, you know, run rates of the franchisee, you will be reporting it under others so that we get more clearer sense. Is that, is that broadly correct? Yeah, understood. And could you just call out quantitatively, how many franchisees were there this quarter? How many? Any color on those things at least if you can quantify.
Gangadi Madhukar Reddy
I think going forward, we would like to do a comprehensive disclosure on that. But for the moment, I think we will continue with this. Yeah, we can connect offline.
Unidentified Participant
Okay, thanks so much and all the best.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. We take the next question from the line of Umakan Sharma from Van SH Venture. Please go ahead.
Unidentified Participant
Yeah, hi chief. Thanks. Congratulations on fantastic set of numbers. Couple of quick questions. Could you just talk a little bit about the GMV growth that we have seen in the quarter on a consolidated basis.
Gangadi Madhukar Reddy
To take it offline? I do not have it handy.
Unidentified Participant
Okay, sure. I can take that offline. Paranile, just from a thought process standpoint, this quarter we saw substantial growth in your branded non pharma business, right? We saw growth of about 48% could you just walk us through how does the margin profile look along the branded pharma versus the non pharma on the branded side and parallel the unbranded pharma and the unbranded non pharma? What does the margin profile across the spectrum look like on a net basis?
Gangadi Madhukar Reddy
Sure. So on the reported basis, branded pharma would give us around 13 to 14% gross margin. Branded non pharma would be more or less in the similar range. For us, the private label pharma, the old as well as the new Med plus brand put together would anywhere be between 65 to 70% and the private label non pharma would be around 25 to 28% gross money.
Unidentified Participant
Wow, 25 to 30% you said?
Gangadi Madhukar Reddy
Yes.
Unidentified Participant
Okay, great. And you know, after a very long time, we are seeing a very good growth in terms of the store expansion side. Could you just throw some color on what the guidance could be for next year on F27 as well? Should we take the first one target of the thousand number on a full year basis for F27?
Gangadi Madhukar Reddy
Sure. Currently we are not guiding, but yeah, once we finish our internal AOP process, maybe at some point in time or next quarter or beyond that we will definitely let you do.
Unidentified Participant
Okay. But any, any ballpark numbers that we are looking at for next year.
Gangadi Madhukar Reddy
It. Should at least be the similar numbers of this year.
Unidentified Participant
Okay, got it. Structurally for next year, do we have any guidance in terms of the top line that we expecting? How should we be seeing the mix change between the four key areas between the branded and branded side?
Gangadi Madhukar Reddy
We do not provide such guidance. I’m sorry. Actually.
Unidentified Participant
Okay, sure, no worries. Thank you so much.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. We take the next question from the line of Sudarshan Agarwal from Access Capital. Please go ahead.
Unidentified Participant
Yeah, hi. Thank you for the opportunity. Congrats on the great set of numbers. So one of my questions is regarding ssg. So you mentioned that base year growth was kind of low. So just kind of extrapolating, Q4 was actually a decline for you in SSG. So that should mean that SSG, at least for the near three to four quarters will remain at current levels or kind of improve also. Is that the right kind of conclusion to be taken away?
Gangadi Madhukar Reddy
I think, Sudarshan, your observation is right. At least for the next one quarter. I have a very clear visibility. But we will see as we move forward.
Unidentified Participant
Okay. And on the gross margins I understand. So on the gross margins, I understand that the private label pharma has kind of gone down a bit. But on the other hand you have your non pharma private label that has gone up. So the delta and gross margins I think we used to allude that every 50 basis points adds around 10 to 20 basis points of gross margin. That is relative to pharma private label or overall private pharma label also add that kind of level.
Gangadi Madhukar Reddy
Pharma private label. But you are right, since there is no substitution being done on the private label non pharma the overall increase in the sales and the gross margin will be accretive to that extent pharma there is a possibility that there could be a switch from the brand to the private label. But in non pharma we see that very low. That could be only incremental sales and incremental margin. However, from an optics the gross margin stood at the similar level. But that had a small impact of our franchisee as well because we sell to the franchisee at a lower margin.
And that after netting of that and the increase in the private label non pharma we were able to continue with the similar gross margin level.
Unidentified Participant
Got. Got it. One more request. So on the private level I understand that you are still kind of working around with the incentives etc but let’s say two, three years out the line. Do you have a visibility right now you would want it to be, you know, let’s say 25 or 30. Is there some number that we still are looking to kind of get to either pharma or non pharma.
Gangadi Madhukar Reddy
As this is a growth journey. Sudarshan, you’ll also agree numbers will be aspirational but we are not giving any guidance at the moment. Because non pharma by design there is no cap because at least on the pharma there is a cap theoretically because there is a doctor’s prescription which we need to fill. But on the non pharma if the experience is good, the product is good, the availability is good and the quality is good, there is no cap per se in terms of how far this could go. And the company continues to add new assortments, new categories which is helping the sales and the gross margin.
Unidentified Participant
That’s it. My side. Thank you.
operator
Thank you. We take the next question from the line of Gaurav Nigam from Tunga Investment. Please go ahead.
Gaurav Nigam
One question. When I was looking at non store expenses, they seems to have gone up. Materially and not only on year on year but also on the quarter on quarter basis also. Please explain. And is this run rate in inching up going forward? How should we think about that?
Gangadi Madhukar Reddy
So in corporate expense line there includes a one off non recurring expense. Also we’ll have to be mindful of that 70 million or 7 crore which was the impact of the past service cost post the implementation of the new wage code. So that’s a one off going forward. It should be more or less in the same range because one we will have to be mindful of what could come. Those notifications and the rules are still not yet final. So we are looking like others, we are keeping closely monitoring the space and maybe by end of March, end of April we should have more clarity.
But as we speak we are on a very good footing.
Gaurav Nigam
This seven crores is one time or. Is it expected to continue?
Gangadi Madhukar Reddy
It is one time, you’re right.
Gaurav Nigam
One time. Okay. And sir, all the warehouses and the. Other logistics improvement that we were doing. Is that all open and that cost is in the base now.
Gangadi Madhukar Reddy
At least 60 to 70% of the new warehouses have been operationalized. The rest will also get operationalized in the next two quarters. The manpower recruitment for all these warehouses are complete. So we do not expect any significant ramp up on the expenses on those lines.
Gaurav Nigam
Understood? Got it. Thank you. Thank you sir.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. We take the next question from the line of Madhav Marda from Fidelity International. Please go ahead.
Unidentified Participant
Good evening. Thank you so much for your time. On the FMCG side, could you give a little bit more color in terms of what are the new assortments or categories that we’re adding and yeah, what’s sort of helping this growth which can sustain in the coming days?
Gangadi Madhukar Reddy
I think Madhav will take this offline. But yeah, what we have been adding now is more of the food category, the wellness category, some cold pressed oils which are again in the wellness category. So these are the few categories we have started adding and we are seeing good traction.
Unidentified Participant
And just in the margin side for us, I think this quarter, if we adjust for that one off of the 70 million pharmacy operating margins are about 5.5, 5.6%. Like you said, a lot of the cost of the warehouses is already in the base now. So are we sort of within striking distance of getting to 6% in the next couple of years? Is that a fair way to think about it given some of the operating leverage plays out with the sales growth and given SSSG is sort of now improving at a good pace as well?
Gangadi Madhukar Reddy
So Manav, our margins, whatever we actually. Start improving on will be largely a function of the private label. And on private label I actually am now, you know, equally bullish about the Non pharma side. Non pharma is just a matter of adding categories out there. We are using, let us say getting the full benefit of the Phyton stores, which basically means we have the minimum order quantity for almost any product. So as long as the product is something which people will buy in the regular, convenience or wellness category, we are more than happy to actually put it out there. And I feel, at least given the last couple of quarters performance, I see no reason why we should not get to that number.
But yeah, again, on the pharma side, while we fully expect this to continue to grow up, I expect that to happen as a result of, let us say, the quality of the product as a result of all the positive publicity we expect to get from customers who are already using it. So we have significantly reduced the push on the private label pharma, but we continue to be, let’s say, bullish about the non pharmacy.
Unidentified Participant
Okay, okay, sorry. When you said we can get that as in you talk about the margins that there is potential for us to reach the 6% over a period of time.
Gangadi Madhukar Reddy
I see, I, I don’t see any reason why not. It’s a little bit early to say. You know, there are a lot of data on the ground, but you know, given that only 20% of our sales now come from general boards and most of our competitors are in the range of around 30 to 40, even 50%, even a slight jump in the general goods side and most of it coming from private label will not only will definitely increase the top line and will improve the profitability. Yeah, I feel confident about that, but I can’t really give you an exact timeline in which this will happen.
Unidentified Participant
Fair enough. Great, thanks.
operator
Thank you. We take the next question from the line of Raman KV from Sequence Investment. Please go ahead.
Unidentified Participant
Hello sir, can you hear me?
Gangadi Madhukar Reddy
Yes.
Unidentified Participant
Sir, I just want to understand, you have mentioned that you have to tweak your incentive structure which help your SSG growth to be in the range of 10.5%. Can you throw some light on what are the incentive structure that you tweaked?
Gangadi Madhukar Reddy
So earlier the incentive structure was predominantly working around the private label sales. What we have tweaked is we have now included a component of total sales at the store level, which means the branded as well as the private label sales. If the total sales are not achieved, or let’s say there are targets linked to that, then the achievement percentage on the private label goes down by certain basis points and that keeps motivating the store level employees to achieve both. The private label as well as the branded total sale growth at the store level and this is helping us in the overall journey as well.
Unidentified Participant
Understood sir. And so I just want to understand the nature of goods or basket of goods under the non pharma business like branded as well as private non non pharma business. What are the products which that you are launching and is it the growth in this business is reapering or is it because you are introducing new product hence your total addressable market is expanding.
Gangadi Madhukar Reddy
So the product range in the non pharma, both branded as well as private label is a large assortment of all our daily needs. Right from your early morning, let’s say the needs of toothbrush, toothpaste, hair oil, cream, toilet cleaners, soap, shampoos. So there’s a large assortment of I would say 1300 plus SKUs which we offer to the customers. Great quality and great affordable price. So that is helping us and to it what we mentioned earlier, we keep on adding new categories depending on what the needs are, what we identify at the store level where there is a regular need and a good product available.
So that is what is helping our incremental sales on the non pharma products.
Unidentified Participant
Okay. Understood sir. Thank you. Thank you.
operator
Thank you. We take the next question from the line of Sanjay from Bastion Research. Please go ahead.
Unidentified Participant
Yeah. Hi. Thank you so much for the opportunity sir. So I just wanted to have a bookkeeping. We have stopped giving store level MRP growth for stores other than 12 months. Could you please share that data?
Gangadi Madhukar Reddy
So it was not making sense Sanjay, because you would agree that since the change in the GST rate there is a flat reduction of the GST by around 6.57% which makes comparability a big issue. That is the only reason we remove that. But otherwise we would have to, you know, do a manual adjustment and then give you a number which is not directly comparable.
Unidentified Participant
Understood sir. Okay. So also wanted to understand that we are going much deeper into the states which we are already present. So I see the store expansion are largely into our stage which we are present and have enough present on that specific. Do we plan on that side or going forward? How is the school expansion? We are looking forward. I understand that we follow cluster based approach so but wanted to have your sense on how we are planning to, you know, a new store or new geography or new city so to say.
Gangadi Madhukar Reddy
The priority always would be going deeper into the existing state and then sweating the warehouse assets which we have created for these states and then slowly getting into adjacent states. We had Started Chhattisgarh. We had started Kerala. But yeah, the main new stores where you can see now is part of the densification of the existing presence what we have. So it’s an ongoing strategy.
Unidentified Participant
So you also shared in the in your opening remark or somewhere you share the revenue for stores greater than 12 months. Did we share overall you know, for the last quarters as well? Because I’m not saying that. So if you can elude for the quarter on quarter and y that revenue for greater than 12 months it would be really helpful. Thank you.
Gangadi Madhukar Reddy
So at the overall level we have given but if you are only on the specific thing we have added is for greater than 12 months as a bucket. But overall we have anyhow given you both in the investor deck as well as in my call. But I did not get your question If you’re asking cohort sir, .
Unidentified Participant
I’m asking. For greater than 12 months only. So because you know in the previous comments of previous Concord we did not spoke to revenue greater than 12 months tools. So just wanted to have your you know yoy and quarter quarter numbers on that side.
Gangadi Madhukar Reddy
So we’ll look at it. I’ll take this offline.
Unidentified Participant
Okay, thank you. Thank you so much.
operator
Thank you. We take the next question from the line of Divyan Gupta from Leighton pms. Please go ahead.
Unidentified Participant
Hi sir, a couple of questions. With the change in the incentive structure, the previous guidance that we used to give that every 50 pips increase in private label will lead to certain margin accretion. Does that still hold or that will that should also is there any new reference point you want to share?
Gangadi Madhukar Reddy
I think we can continue with the same assumption. There’s absolutely no change on that.
Unidentified Participant
Got it, got it. And the second question was I think in the last con call we had mentioned with for that employee retention we had introduced a scheme and probably this quarter would be the first quarter where we would actually see the results of exercise. So if you can share some insights on that part. Is it working as per plan or.
Gangadi Madhukar Reddy
So it’s an ongoing scheme which is going to run for three years which when we launch for only three fittings. So that’s again one initiative which are very closely monitoring to see the effectiveness basis that the company would then take a call whether to extend that across all the regions or curtail that further.
Unidentified Participant
But my question was that has it given that there was a the exercise timeline was in this quarter. Has it panned out as per our expectations even in the pilot?
Gangadi Madhukar Reddy
I’ll explain to you. The first exercise was post 12 months and employee getting into this plan. And we had the first exercise last quarter wherein we saw a segment of employees exercise their right to claim that first 18,000 and the segment of employees who have postponed their right to claim 50,000 in year two. And we are seeing improvement in attrition rates in the three cities which we have implemented. I also mentioned that the company is closely monitoring this initiative to see whether it would make sense to continue this, expand this or further curtail this. So all these are still open.
Unidentified Participant
Got it. Understood. And so you had mentioned the gross margins for the various product categories on a gross basis. What would be the what can be the margin on a net basis?
Gangadi Madhukar Reddy
Any whatever I mentioned is on net basis. It’s all on net basis.
Unidentified Participant
I thought private fab. It’s on netbus. Got understood. That’s all right now. Thank you.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. We take the next question from the line of Lakshmi Narayan from Tunga Investment. Please go ahead a few questions.
Unidentified Participant
Just want to understand what is in what’s the kind of mix of therapies you have in your pharma site? And the second question is that in your old stores in the pharma, what kind of repeat business you actually get in a sense that let’s say the customer comes back and buys in the last one year or whichever way you qualify or quantify. And the third, since we have a significant amount of private, non pharmacy, also private label, what kind of inventory write off or damages you actually occur every quarter and how you plan to bring it down.
These are three questions.
Gangadi Madhukar Reddy
Sure. Thank you. Thank you for your question. To start with, in both, the entire private label pharma portfolio consists of both the acute as well as the chronic segment. I would say we are more to 55 chronic and 4045 on the acute. All the top five therapeutic areas as listed by who we are all in all those top five categories you can take a diabetic, cardiovascular and hypertension. So all these areas are completely covered by our chronic range and the acute. As you are aware again around 40 45% of our sales comes from the acute range coming to the private label non pharma.
Absolutely. There’s a large assortment. And you also mentioned about the inventory risk. You’re absolutely right. On the private label the inventory risk is completely on our book. As a trend. We have been providing close to 0.9 to 1% of our sales of private label as a provision for deterioration in inventory.
Unidentified Participant
Got it. And in terms of repeat business, can you just give some views on that.
Gangadi Madhukar Reddy
As we speak? We have more than 46 to 47 lakhs of members on the pharma side itself. That actually gives us a very strong conviction of our repeat business. Customers become members to access the discount which is offered by the company on the private label product, well as a higher discount on the branded pharma product. And once they become members, they get full access to these discounts for one year. What we are seeing is on the both private label pharma and non pharma, a very good repeat business every once in three months. This is the exercise what we do internally, we are seeing complete repeat business of close to 90%.
Unidentified Participant
Got it, got it. And last one more question. I see that these days you are able to provide us or service the online pharma very quickly. Can you just help me understand whether this is like a one off or you have actually consciously improved your serviceability in the online purchases.
Gangadi Madhukar Reddy
We are also looking at this space very carefully because you would appreciate the competition or the offerings by the quickcommerce. So we have also ramped up our offerings on this space, but as and when needed we can further improve it. But I think what you have experienced is a positive story for us if you have seen that improvement. We are also consciously working on that.
Unidentified Participant
All right, thank you.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. We take the next question from the line of Madhav Marda from Fidelity International. Please go ahead.
Unidentified Participant
So just one other question. Our working capital has come down a fair bit, almost 10 days year over year. Could you explain why that has come down? Is it sustainable at these lower levels going ahead?
Gangadi Madhukar Reddy
See, I think couple of things. One, wherever we have opened the franchisee model stores, we are not carrying inventory on our books. It is sale on first day to that extent, roughly 15 to 18 lakhs of inventory per store. That’s the reduction which we have. Otherwise we were carrying on our book. That’s one. And on the second hand, we have been mindful of the inventory what we are carrying both on the store level as well as at the warehouse level. And that those improvements are very clearly getting reflected on the number of days on top.
We have added only 400 stores to that extent. A year on year comparison shows you a better benefit because cash has been conserved.
Unidentified Participant
Okay, does the higher private label mix help as well? Because I remember in one of the earlier commentaries you mentioned privately, but structurally we need to carry lower inventory at the stores because the SKUs come down. So is that helping at all or not really?
Gangadi Madhukar Reddy
So currently we are carrying both the inventory mother. So we have not yet. You know what we had discussed earlier that at a certain point we can then cut the tail or the long tail of the brand, but for the moment we have not so that we ensure full availability to our customers.
Unidentified Participant
Understood. This last question. On the gross margins for the pharmacy business, I think it’s at about 25% or sort of. This should keep gradually moving up as the private living mix goes up. Right? That’s just the way to think about this line item.
Gangadi Madhukar Reddy
Absolutely. That’s what Madhur explained. You’re right.
Unidentified Participant
Okay, thank you.
operator
Thank you. We take the next question from the line of Akhil Padek from BNK Securities. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity and many congratulations on excellent set of numbers. My first question is, I know you’re not guiding for next year but for. Our business model, what is a sustainable SSG growth rate now given that we are at 5,000 plus stores and our private load business has fairly stabilized. Any guidance or any ballpark thing Basically. Which one should look at? Basically whether it’s high single digit or low double digit SSG is sustainable. That’s my first question.
Gangadi Madhukar Reddy
I think that’s the aspiration which we are internally working with. But we do not give any such guidance because again we have seen the store network getting matured over period and that’s where we are also looking at what measures we can take at our store level including the back end efficiency so that we can continue this healthy SSSG and aspire for much more. So at least for this moment we are not giving any guidance.
Unidentified Participant
Okay, sure. Second and last question. If I look at sales contribution from metros. Right. Has continued to decline over last many. Quarters and non Metro and tier 2. Tier 3 has gone up. Is it largely to do with the private label story? Because what I understand is the adoption of private label is much better in tier 2, tier 3, tier 4 downs. And hence as we kind of increase our sales contribution from private label kind of, we kind of continue to see. That expansion more into the non metro cities. So is that understanding correct?
Gangadi Madhukar Reddy
I think it’s not a straight answer. But what we could also keep in mind, we need to be mindful of the net realization on our private label pharma. Especially earlier we were able to realize around 80300 -17 of blended discount. We were able to realize 83 vis a vis now 45, 46. So that has to play out for a couple of quarters to have a like to like comparison.
Unidentified Participant
Okay. What? That’s all from my day and best luck performing quarters.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you, ladies and gentlemen. With that, we conclude the question and answer session. I now hand the conference over to the management for their closing comments.
DRN Srinivas:
I thank all participants on this call for your interest in the MedPlus journey. Our Investor Relations team can be contacted@iredplusindia.com thank you.
operator
Thank you on behalf of MedPlus Health Services Limited that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.