Aster DM Healthcare Limited (NSE: ASTERDM) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Puneet Maheswari — Senior Manager, Investor Relations
Alisha Moopen — Deputy Managing Director
Ramesh Kumar S — Chief Operating Officer
Sunil Kumar — Chief Financial Officer
Varun Khanna — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Presentation:
Puneet Maheswari — Senior Manager, Investor Relations
For the first quarter of FY26 today with us we have the senior management of astadium healthcare, namely Ms. Alisha Mopin, Deputy Managing Director, Mr. T.J. wilson, Non Executive Director, Mr. Anoop Mopan, Non Executive Director, Dr. Zeba Mupen, Non Executive Director Mr. Ramesh Kumar, Chief Operating Officer, Mr. Sunil Kumar, Chief Financial Officer and Mr. Hitesh Dadda, Chief Investor Relations and M and A Officer. We are also delighted to have Mr. Varun Khanna Group MD of Quality Care. Mr. Khanna is here solely in the capacity of a representative of Quality Care to give insights into the business and future plans of Quality Care, the entity which is in process to get merged with Astadium Healthcare.
It is to be noted that the merger is subject to further regulatory approvals. All external attendees will be in listen mode only for the duration of the entire call. We will start the call with opening remarks by management followed by an interactive Q and A session. Certain forward looking statements may be discussed in this meeting are subject to certain risks and uncertainties like government actions, local political or economic developments, technological risks and many the factors that could cause actual results to differ materially. Asadium Healthcare limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances.
With this I will now request Ms. Alisha Mopin to start with opening remarks. Over to you Ms. Alisha.
Alisha Moopen — Deputy Managing Director
Thank you Puneet. Good morning and thank you for joining us today. I’m pleased to report that in the first quarter of FY26 Astadium Healthcare has delivered a market improvement over the software performance we saw in the last quarter. Revenue grew 8% year on year, operating EBITDA expanded by 21% and PAT rose 22%, a set of results that clearly show our momentum is back and our operating model remains both resilient and agile. With this strong start to the year, we are confident about sustaining growth and further enhancing profitability going forward. Before I move to the detailed performance, I’d like to start with an area that has been closely focused by both us and our investors, which is our Kerala cluster performance.
After a couple of challenging quarters, Kerala’s revenue grew 5% year on year, a sharp improvement from the 4% decline in Q4FY25 driven by a 6% sequential increase in patient volumes. This has been a combination of stabilized leadership, a sharper operational efficiencies and improvement in our medical value travel business which has enabled us to deliver this growth. In fact, MVT Revenues in Kerala has jumped 12% sequentially reinforcing Kerala’s standing as a preferred destination for international patients. Taking a step back, our performance this quarter builds up on a solid multi year trajectory. Over the past five years leading up to FY25, revenues have grown at a 20% CAGR while operating EBITDA has expanded at an even stronger 38% CAGRADE.
This long term growth has been powered by strategic capacity expansion, consistent RPOP improvement and sustained operational efficiencies, proof that we are scaling not just in size but also in quality and profitability. In Q1FY26 we achieved 1,078 crores in revenue up 8% year on year. This was driven by a strategic shift towards high value businesses supported by two key factors. There’s been a 14% increase in RPOP crossing 50,000 rupees per bed for the first time, a reflection of our specialty mix enhancement and focus on clinical excellence and a 4% reduction in ALOs which is the average length of stay improving care efficiency and capacity utilization.
ARP growth has been led by our continued push into higher value specialities like oncology and neurosciences. Oncology’s share of revenue is now 11% up from the 9% in Q1 FY24, showing our progress in building it into a key pillar of our clinical strategy. ALOS improvement comes from investments in advanced equipment, growth in minimally invasive procedure, better admission planning and faster TPA discharges, all of which helps us deliver better patient outcomes while using our capacity much more efficiently. Together these levers, specialty mix, the ELOS optimization and the pricing discipline form a sustainable growth framework that is helping us move further up the value chain.
Now moving to the bottom line performance, our operating EBITDA grew 21% year on year to 215 crores with margins expanding to 20% from 17.7% last year. This reflects the combined impact of care loss recovery, the RPOP gains, manpower cost optimization and steady lab business improvement. The normalized path rose 22% to 90 crores excluding one time merger related costs, highlighting the underlying strength of our core operations. Moving to our core segment, the hospital and clinics continue to perform well with EBITDA margins improving to 22.6% from 20.8% a year ago. The mature hospitals, those operational for more than seven years, delivered an EBITDA margins of 24.5% and an exceptional ROCE of 35%.
Our lab margins have improved from have improved to 7.6% from 3.4%, so supported again by efficiency gains and in pharmacy, our strategic exit from certain loss making wholesale segments have helped the business achieve EBITDA break even as well this quarter. Moving to our capex and expansion, our growth story isn’t just about performance and it is also about preparing for the future. Over the past year we have added more than 300 beds, bringing a total capacity to 5,197 beds as of June 30, 2020. In the coming years we plan to add another 2,600 beds, both greenfield and Brownfield projects taking our capacity beyond 7,800 beds.
Bengaluru is a prime example of this strategy in action. We’re adding 1439 beds in the city, including a newly announced 500 bed hospital in Yeshwantpur. Once complete, our total capacity in Bengaluru will will exceed 2,580 beds, firmly positioning us among the top three healthcare providers in this very high growth market. Moving to the Update on the Merger with the QSIL One of the most transformative steps in our journey is the proposed merger with Blackstone backed Quality Care in their limited QSil. This is much more than just a transaction. It is truly a strategic leap towards creating one of the most comprehensive integrated healthcare networks in India.
We have already achieved some significant milestones towards the merger. Shareholders have approved the preferential share issuance. The Competition Commission of India has granted its approval. We have completed a strategic share swap, acquiring 5% stake in QSil in exchange for a 3.6% preferential allotment in Aster. These shares are now listed on the stock exchanges. The combined entity, with a scale of over 10,350 beds across 38 hospitals in 27 cities, delivered a 12% growth in Profoma revenues to 2,157 crores and 20% growth in operating EBITDA to 442 crores for this quarter, delivering a healthy EBITDA margin and roici of over 20%, a very solid indicator of the strength and the potential of the merged platform.
Both QSIL and ASTER delivered strong complementary results this quarter, giving us confidence in the ease of integration and the value creation potential up ahead. The merge platform will significantly expand our geographic footprint, deepen our clinical capabilities and broaden our patient reach as we move towards operational integration. Our focus is clear unlock synergies, optimize resources and deliver consistent, high quality care at scale. Moving to our Digital Initiatives While physical expansion is critical, the future of healthcare will also be shaped by digital integration and here we are making strong strides. The Asta Health app has now crossed 100,000 downloads.
With the launch of its Malayalam version, we have become Kerala’s first regional language healthcare super app. Our Astacare platform, designed to personalize patient journeys, is delivering 79% engagement at our flagship hospitals. The next step is even more exciting, integrating diagnostics, pharmacy and home care services into the app, creating a seamless end to end ecosystem. This will not only elevate the patient experience, but also deepen loyalty to our Asta brand. We’re also proud to share that Q1FY26 has been a quarter of notable recognition for both our leadership and our institutions. Our founder chairman Dr. Azad Mopin was named Healthcare Leader of the Year at the Financial Express Awards 2025 recognizing his visionary leadership and lifelong commitment to accessible healthcare.
I was also humbled to receive the Women Entrepreneur of the Year award at the same event. On the institutional front, ASA Med City, Asta CMI and Aster Mims Calligan ranked among India’s top 10 hospitals by times of India, Outlook and Fortune India, while RV and Asta prime joined them in Newsweek’s Global Best Hospital rankings. As we move forward, our stadium healthcare stands at an inflection point. Our core markets are performing strongly, our Care cluster has delivered healthy growth and our specialty mix is moving us higher up the value chain. The merger with QSIL is a transformational milestone, one that will create an unmatched healthcare network in India and will drive operational synergies, expand our clinical depth and significantly extend our patient reach.
We are investing in scalable integrated care, combining physical infrastructure, digital platforms and specialty depth with an unwavering commitment to excellence. With these strategic levers in place, we’re not just poised for sustained growth and market leadership. We’re truly reshaping the future of healthcare delivery in India. I will now invite our Chief Operating Officer, Mr. Ramesh Kumar to elaborate on our clusterwise performance.
Ramesh Kumar S — Chief Operating Officer
Thank you, thank you. Thank you Mr. Lisha and a very good morning to everyone. So I’m pleased to provide an update on our cluster performance for quarter one FY26. We have seen sustained growth and improvements in operational efficiency across all our regions. Let me walk you through the key highlights, starting with the Karnataka and Maharashtra Cluster. With a total bit capacity of 1497 beds and 1027 operational census beds, the cluster has demonstrated continued growth. Revenue grew by 13% year on year, reaching 372 crores in quarter one FY26, up from 329 crores in quarter one FY25. Operating EBITDA surged by 23%, amounting to almost 86 crores in quarter one FY26.
Resulting operating EBITDA margin expanded to 23.2% in quarter one FY26 from 21.2% in quarter FY25. The performance was driven primarily by ramp up at ISO Whitefield and also exit of some low margin businesses and improved operational efficiencies. Moving on to the Kerala cluster with a bed capacity of 2,653 beds and 2014 operational census beds, we are encouraged to see an early sign of growth recording a 5% year on year revenue growth this quarter and 11% quarter on quarter growth regaining earlier revenue levels. This improvement reflects the positive impact of leadership enhancement and operational measures initiated over the past few months.
While the domestic volumes are stabilizing, we remain optimistic about the growth in the medical value travel through enhanced digital outreach and targeted enhancement and high potential market now moving to Andhra and Telangana cluster which compromises a total of 1047 beds with 91 currently operational beds, this region saw a revenue growth of 7% year on year reaching 218 crores in Quarterman FY26. Operating EBITDA stood at 9 crore in Quarter 1 FY26 with the margin at 7.9%. Looking ahead, we are confident on our ability to accelerate the growth momentum, our commitment to operational excellence, expanding our reach and delivering exceptional care.
Our opposition as well as continue to build on this positive trajectory. I will now hand it over to CFO Mr. Sunal who will provide further insights into our financial performance.
Sunil Kumar — Chief Financial Officer
Thank you Ramesh Good morning everyone. For the quarter ended 30th June 2025 revenues have increased to 1078 crores up by 8% from last year. Quarter on FY25 and operating EBITDA has increased to 215 crores with a margin of 20% compared to 177 crores in quarter 1 FY25 with a growth of 21%. Normalized PAT post NCI for quarter 1 FY26 is at 90 crores compared to Rupees 74 crores in quarter 1 FY25, with growth of 24% year on year. For the quarter ending 30th June 2025 our operating EBITDA margin expanded over 230 basis points increasing from 17.7 to 20% year on year.
The significant improvement has been driven by combination of strategic initiatives, disciplined resource management and operating leverage across the business. In quarter FY26 the ARPA registered a strong 14% year on year growth sustaining the double digit momentum from FY24 and FY25. This performance was driven by mix of strategic initiatives including a reduction in average length of stay from 3.2 to 3.1 days contributing a 4% uplift in RPAP. Astro Whitefield played a key role with a 31% increase in total revenue and 21% rise in ERPP fueled by higher contribution from oncology and neurosciences. The discontinuation of low scheme business in one of our hospital also improved our oral outpop by eliminating a drag on averages.
Additionally, oncology grew by 16% across the group further enhancing RPAP due to its high ticket size. Price revision in both cash and TP segments and favorable case mix further contributed to the RPAP growth. Astrolabe has delivered a turnaround since the beginning of FY25 with EBITDA margins improving from 3.4% in quarter on FY25 to 77.6% in quarter one FY26. The margin expansion has been driven by robust 46% YoY growth in external business alongside enhanced operating leverage and significant material cost efficiencies reflecting in strengthened financial performance. Astrolab now operates at a healthy ROCE of 13.7%, a notable recovery from a negative ROC a year ago.
As part of a focused strategic shift, we exited loss making unit within the wholesale pharmacy business effectively eliminating a key drag on the overall performance. This move has resulted a successful turnaround with the segment now delivering positive margin of 1.7% in Quarter 1 FY26. With the foundation reset, margins in this segment are expected to expand further in the coming quarters reflecting a more sustainable and profitable growth trajectory. We have optimized our manpower cost by approximately 100 basis points across key function areas by enhancing span of control, enabling leaner team structure and reducing supervisory layers. In parallel, we undertook targeted initiatives to rationalize overhead expenses including the central price, procurement of services on non medical consumers and adoption of renewable energy.
Combined with the benefits of operating leverage, these efforts have Resulted in additional 110 basis point reduction in overhead costs reinforcing our commitment to operational excellence and margin expansion. As of quarter one FY26. We maintain a strong liquidity position with cash and cash equivalents totaling 1455 crores while our gross trade remains lower at 643 crores. Additionally, we are pleased to report a significant improvement in ROCE which has increased by over 400bps from 16.5% to 20.7% demonstrating enhanced capital efficiency and disciplined financial management. With this we have laid a solid foundation for Future Growth. As we move into the future, we are confident of building on this momentum with the same discipline and focus.
On that note, I conclude my remarks now. I request Mr. Varun Khanna to take you through performance of UCIL. Thank you.
Varun Khanna — Managing Director and Chief Executive Officer
Good morning and thank you Sunil. As you’re all aware, we began this journey together a few months ago, united by a shared vision to transform the Indian healthcare ecosystem. In my previous address I outlined how QCL is evolving, touching upon our vision, leadership, performance and strategic initiatives. I’m excited to share that strategic interventions we implemented last year are now yielding outstanding results, driving a significant turnaround across several of our units. This momentum has positioned us among the top quartile performers in the industry this quarter. Most importantly, these initiatives are being embedded as long term performance enablers, further strengthening our confidence for the quarters ahead.
So let me give you a sense of what the quarter one financial performance is like. In Q1FY26, QCL reported a revenue of 1,079 crores reflecting a strong YoY growth of 16%. This performance was driven by both ARPA and volume led growth, further supported by an improved pair mix. Our pair mix actually moved almost 2 percentage points or 200 basis points to about 80% so cash and insurance is now 80% of the total. Business R pop rose by 15% year on year reaching approximately INR 45k. In Q1FY26, QCL recorded a 4.2 yoy increase in inpatient volume and a 12% increase in OPD volumes.
EBITDA post index stood at INR 227 crores reflecting a 19% yoy growth and the margin profile improved from 20.5% to 21.1%. We continue to witness strong momentum in our mature units and mind you, these mature units contribute more than 60% of our business which delivered 16% YoY growth and a healthy EBITDA margin of 31%. Our cash conversion cycle remained healthy at 10 days as of end June while strong cash generation in Q1 drove a significant reduction in net debt from 410 to 308. Our ramp up of initiatives in emerging units also showed encouraging results with revenue growing by an impressive 87.5%.
Yoyo. Notably Nagar Coil, operational since October 2024 has already achieved EBITDA break even and is showing strong growth potential. Further, emerging units recorded a 24% revenue increase over the previous quarter underscoring the effectiveness of our expansion and operational strategies. In parallel, our focus units posted 10.3% revenue increase compared to Q4FY26 reaffirming the positive trajectory and potential of these assets. Let me give you a quick update of some of the key changes that have driven this turnaround. Foremost is leadership hiring. Our ability to attract diverse leadership was clearly demonstrated last year with the successful hiring of 10 CXO level leaders, each bringing unique and complementary skills to the table.
Building on this momentum this quarter we welcomed our group chro, further strengthening our leadership team. To enhance our execution capabilities, we introduced a regional structure aimed at ensuring effective strategy deployment down to the last mile. As a part of this initiative, we have appointed two regional Chief executives to oversee operations outside of Hyderabad and outside of Trivandrum, bringing sharper focus and stability to our emerging growth regions. Clinical Augmentation While last year our clinical talent in key markets faced some challenges, our doctor hiring efforts over the past two quarters have delivered strong turnaround in quarter one resulting in a positive net revenue contribution of around 10 crores in monthly run rate for Q1.
The newly onboarded doctors have driven a significant shift towards high acuity care with our Congo share increasing 210 basis points to 58.4% for this quarter. Key specialties include Ortho, Neuro, Cardiac sciences. Additionally, our average length of stay improved by 3% decreasing from 4.0 to 3.9 with the launch of new clinical programs. We’ve also invested in advanced technologies. This quarter we added two robots, two cath labs and three MRIs. A lot of Initiatives to accelerate growth, we’ve launched the first phase of World center operations, partnering with Tech Mahindra to lead this transformation. As a complementary initiative, we’ve also introduced a new CRM based patient enrollment system currently in its beta launch phase.
This combined effort is projected to generate 18 crores in incremental revenue over the current fiscal. Our broader objective is to establish a centralized workflow driven call center to manage the entire patient lifecycle, ultimately enhancing our ability to influence patient lifetime value. As a part of our sales transformation we we onboarded 11,800 doctors to our CRM system, we revamped our MBT organization structure and Q1 has already shown a revenue growth of 80% indicating early success of these efforts to drive operational excellence. Let me give you a couple of initiatives that have scored very well. Our initiative to drive sustainable procurement savings through formulary compliance and platform led operations and has delivered 20 crores of saving in quarter one.
We’ve also launched a new company focused on food services. This venture contributed to 2.1 crores in net revenue and 0.6 crores in incremental EBITDA for this quarter. In addition, we have initiated Revenue Cycle Management which will be instrumental in driving operational efficiencies in the coming quarters. As Alicia mentioned, there are a lot of awards that we’ve received this quarter and let me mention a few. Firstly, QCL brands were honored by Economic Times as the best best healthcare brand in the country. In recognition of our ongoing dedication to sustainability, we were awarded the Best Sustainable Initiative of the Year by UBS Forums at the 2025 Green Sustainability Summits and Awards.
Thank you and it’s a pleasure to be here. Sunil. I pass it on back to you.
Sunil Kumar — Chief Financial Officer
Thanks Varun Dear participants, during the Q and A session you will get a chance to ask a question by raising your hand through the raise hand icon in the Zoom application at the bottom of your window. We will call out your names after which your line will be unmuted and you’ll be able to ask a question. I would also like to request to all the participants if you can introduce yourself with your name and the company with you are associated with before asking the question. If you’re not associated with any company and you’re an individual investor, you can highlight that as well.
Now moving on to the Q and A session, the first question is from Mr. Toseif to you. Please unmute yourself and ask the question.
Questions and Answers:
Unidentified Participant
Hey thanks. I’m audible Puneet yeah.
Puneet Maheswari
Can you please introduce yourself and company as well?
Unidentified Participant
Yeah. Hey. Hi. Exient Research. My first question is to Ramesh sir on the Kerala business. Can you provide some qualitative color on the business such as what are the changes we have seen on the medical tourism on a quarter quarter basis and what’s the Directional trend for Q2?
Ramesh Kumar S
Thank you Tosef. I think overall the as you see the Kerala cluster has grown pretty well. The the way the growth has been around 5% year on year in the revenue and volume growth has been 6% overall. The performance of Kerala I think as we mentioned about the the change in leadership has made the whole difference there. The the team is stabilized, they are able to deliver. We are, we are focused on we have hired some of the good able marketing team leadership team there and they are able to also deliver as far as the go to market strategy what we have laid out.
So some of these strategies has really helped us to really increase the volume quarter on quarter as well. So coming to MBT back to the business we have focused back again on Oman business as well as Maldives cases. It is really doing well now. I think most of the patients in between again it was the the leadership concern. Now I think we have again a good leader there to take care of the mvt. So overall it has been and you can be rest assured second quarter performance is going to be much better than compared to the the quarter one FY26.
Unidentified Participant
Anything on the margin front I think we have delivered a healthy 25% EBITDA margin for this quarter means do we expect this trend to continue?
Ramesh Kumar S
No. Can you come again?
Unidentified Participant
Sorry for the Kerala business we have reported a healthy EBITDA margin. So do we expect this trend to continue? I think we have done some cost saving during this quarter.
Ramesh Kumar S
Yes. Yes. So this is definitely going to continue the way especially operational efficiency is brought in. There is manpower optimization which has happened and overall there is even the the as far as the the cost of the admin costs are also been under control. So I think overall this efficiency will continue the second quarter aspect also.
Unidentified Participant
Thanks Ramesh. I think my next question is to Alicia Matham. Recently we have seen exit of one of the CEO who has been with Astra for several years. Means how one should look at this. Exit means whether it’s a part of restructuring which is ongoing before the merger and whether Esther is looking for the replacement of the CEO.
Alisha Moopen
So thank you Taser. Thanks for that. So of course as I had mentioned, the end state organization is going to be a very significant and very large organization. So we are looking at it very holistically on what would be the right structure. How should we be doing the cluster by CEOs I mean we had Kerala as one cluster, we had Andhra, Telangana as another customer cluster, Karnataka, Maharashtra’s one cluster for Aster until now Varun obviously alluded to a structure that he’s putting in place at Quality Care as well. But of course once the NCLT approval comes, we do have some thoughts around what that structure will look like eventually.
So we are being very mindful and conscious of how we are hiring on account of that end state of the organization. So I hope that answers so we are definitely adding a lot of bandwidth across organization. And as Ramesh also spoke about, there’s been extensive leadership hiring that has happened at different units and very key resources who have come on board in the last three months and a few more who are coming on board this quarter. So the whole idea is to strengthen Aster as a whole for a combined strength of this 10,000 bed entity that we’re going with.
Unidentified Participant
Thanks Ram. That answers my question. I’ll get back in the queue.
Puneet Maheswari
The next question is coming from Mr. Amay. Mr. Amay, can you please unmute yourself and ask the question? Amir, can you hear me?
Alisha Moopen
Maybe you can move to the next person.
Unidentified Participant
Hello?
Puneet Maheswari
Yeah.
Unidentified Participant
Hello. Yeah. Yeah. Thank you. So the first question I have is on the low volumes. I believe you explained the part on the Kerala side. But I guess during this quarter even the Karnataka volume seems to be on the lower side. I guess you mentioned in the opening remark that there was some discontinuation of the contract. Is it the only reason for the lower volumes in the Karnataka or is something else also we should look.
Puneet Maheswari
Sunil, would you.
Sunil Kumar
Yeah, thanks. Yes, in case of Karnataka, I think we had posted around 5% negative volume. That’s basically driven by, you know, Astra Aadhar in the Maharashtra. We can discontinue the schemes. So this is a 240 bedded hospital census beds wherein opera occupancy was a little higher. And you know, the scheme business was occupying more than 20% of our, you know, beds. So we had to cut down that to make space for the other patients. So accordingly that has also resulted in a good RPAP growth in the unit and also giving a good RPAP drive in the Karnataka and Maharashtra cholesterol.
You can see that in the Q4 we had a RPAP of approximately 15%. It has moved to almost 17% in the current quarter. At least 3% upside has come because of this discontinuous. I think already we have seen that we had a. Once we had discontinued sometime in April we saw a dip of approximately a crore or so. But we were able to bring it back through walk in and TP patients in May and June.
Unidentified Participant
So we should consider this occupancy as a base going ahead for next three quarters as well.
Sunil Kumar
See, I won’t give a, you know, guidance on the occupied occupancy percentage because the occupancy percentage has got multiple impacts. For example, you look at the ALOs reduction. If ALOs gets reduced, occupancy percentage is reduced and even the occupied beds also reduce. If I add more beds. Right. Then also the impacts occupancy percentage. I would suggest better to look at the volume growth.
Unidentified Participant
Sure, sure. Second question I have on the Bangalore hospital strategy. This is the fifth hospital we have announced in Yashwantpur. How are we going to think about this particular Bangalore city? Like is it because of the aggressive competition which is expected in future? That’s how, that’s the reason why we are becoming more Bangalore focused. Or like what, what. How are we thinking about Bangalore as A city and how. And also considering Bangalore already has a good bed density. If you can elaborate more on the Yashwantpur locality as well. How does it fare in terms of bed density versus the city?
Puneet Maheswari
Yeah sure, go ahead.
Sunil Kumar
So yeah, I may see what is attentionpur. This, this is definitely a one of the right locality to come up the multi specialty hospital of 450500 bedded hospital. The reason being is this is one a micro market which is not catered to especially it is an affluent market and there is a requirement if you know the geography of Bangalore very well. Malaysia, Vijayanagarajanagar is towards that side and there are not many bigger hospitals of this size. So one we would like to serve to that class of population. Second on NH4 we have a good traction coming in especially from the interior markets like Tumkur and the entire belt till Bellari there is a whole lot of not many big hospitals.
So again those patients would drain into this hospital. So there is a huge potential out there. Despite all of the smaller hospital, the largest hospital competition is having is just a 200 bedded hospital. So looking to that we will be able to serve to that class of population. Then strategy wise we are looking at a different concept altogether. We wanted to create a center of excellence for our transplant program. We want to create a neuro sciences center and also oncology would be a key strategy in this hospital. Not many holistic approach to oncology. I’m talking of the radiation and bunkers and others.
Not many in that micro market. So we definitely would like to have this. And there’s a huge potential there.
Unidentified Participant
Yeah, go ahead.
Ramesh Kumar S
Sorry to what Ramesh was talking. Of course this is just in the last 10 years that we’ve kind of started in the Bangalore market. We’ve been seeing very good traction for Aster brand in Bangalore. And with the traffic in Bangalore, care is becoming extremely localized. Right. People don’t want to go beyond one hour to access care. And like Ramesh said, most of the hospitals in this area are 150, 200 max, 250 beds and their limitations on the provision of services when you are at that size. So for us when we strategically look at the Bangalore map, it was to make sure that we are pretty much covering the entire city as the city is expanding.
So to your point on yes there are a lot more, a lot of beds coming up, a lot of competition. But even then when we did the supply demand scenario we saw that there is a gap. And as the city is expanding and as a population is Increasing and with the connectivity that Ramesh was talking about with Mysore and the adjoining states and stuff, we think that this would be a great asset to kind of complete our story for the next at least 3, 4 years in Bangalore.
Unidentified Participant
Thank you so much. Just last question. I have on the Ramesh acquisition. The stake which we have increased, this increasing stake is going to increase our control over the asset. That’s how should we look at it? Or we would need a hundred percent controlling stake to, for us to see a visible changes in these particular assets.
Alisha Moopen
Sunil, you want to go or.
Alisha Moopen
Go ahead, Alicia.
Alisha Moopen
So I may. I mean Ramesh, we don’t go into operating control with this. This was part of the initial agreement with, with the group and with Dr. Ramesh on having a put option over the course of the three, four years. So we are honoring that commitment. There is a larger discussion on how we want to look at Vijayawada Guntur and Uncle and the market. And those discussions are going along quite healthily. And we hope that we’ll have a update on how we think about the market in the next three to six months.
Unidentified Participant
Sure, I will join. Thank you so much.
Puneet Maheswari
The next question is from Mr. Part. Agrawan Parth. Can you please unmute yourself and ask the question?
Unidentified Participant
Thank you for the opportunity. So I just wanted to take an update on the contingent consideration that was attached with GCC divestment. Any update on that? Part, can you give a more clarification on this?
Ramesh Kumar S
So at the time of divestment, I think we did not receive the entire consideration. Right. I was. There was some consideration contingent on the performance of FY24 or 25 for the GCC unit, if I remember correctly. You want to come in? So part, thanks for the question. That one already got closed. That was dependent on FY24 performance, I believe. And that got closed with a certain portion of that deferred consideration we got. And that got closed probably a couple of quarters back. I would say we got roughly $30 million overall on the deferred consideration and. Overall. Number, you know, that got closed at that point of time.
Unidentified Participant
Okay.
Ramesh Kumar S
It was during, during the period when we finally announced the closure of the transaction is when that EBITDA was to. Be looked at and you know, closed upon.
Unidentified Participant
Sure. And also considering, say we are, you know, going for a greenfield expansion in next few years. So how do you see your, you know, occupancy numbers and entire ROIC and margins shaping up in the next few years? And also on the same point, you know, when you do a greenfield expansion versus a downfield expansion. What does a payback period look like?
Sunil Kumar
Yeah, Parth, thanks for the question. Let me answer the first, the second question. What you have see payback period. You know, see if you ask me, you know, if you do going to do a own hospital in a metro like a Bangalore, it’ll cost you somewhere between two to two and a half crores per bed. And in our case, you look at the numbers, we are doing between 1 point to 1,1 to 1.1 crore per bed. If it’s a asset, you know, leased asset. In this case, what happens that I’m not investing on the land, I’m also not investing on the warm shell.
It’s not a just a cold shell with the warm shell including the high end MEP and everything. I’m only investing on the interiors and medical equipment. Right.
Unidentified Participant
Okay.
Unidentified Participant
So you know the question is that. And also the thing is that another day it gets evened out because in my case I’ll have the cash flow to be paid out in terms of rent. Right. So if you ask me on a lease basis, on a cash, you know, the payback period, it’s approximately within nine to 10 years. And going back to your other question, sorry, the first question was with respect to the EBITDA margins, right?
Sunil Kumar
Yeah, margins and in general blended occupancy when you know, go for the greenfield because you know, painful takes longer time to get ramp up. Yeah. See with respect to the occupancy, I would not like to give occupancy percentage guidance because I informed in the previous answer also is that because in always occupancy percentage gets diluted because when you add more beds it get diluted. And also we are also being very efficient in reducing a loss. So I don’t think so. That’s a great parameter to look at. Better to look at the IP volumes. That’s a better way to look at and see the growth. And what we always say, I think even the previous sessions I called out is that on a midterm period, basically between three to four year horizon we as to look at a growth of between three, you know, mid teen growth.
In mid teen growth approximately volume should give a driving force of approximately 78% and balance 78% should come from RPAP. I think that’s a broad thing. In terms of EBITDA margin dilution maybe three, four years back when you start beds the dilution used to be major because the capacity or the initial size was lower. But in current case we are more than 5,000 beds and also you see that whatever the capacity which you are operationalizing is less than between 5 to 10% every year. We will have some basis points impact, but there will be no material impact on the EBITDA margins.
Unidentified Participant
Got it. Just one thing I understood. The payback period for greenfield is nine to 10 years. What about brownfield, is it four, five years or it’s less?
Sunil Kumar
In case of brownfield, what happens is that, you know, for example, we have two examples. In Kerala we added 100 bits in mastermind city and 100 bits in Kannur. I think initially someone had asked Mr. Ramesh about the EBITDA margin expansion in Kerala cluster, why it has gone to 25%. See, there is no, literally no drag in brownfield expansion. For example, in Kannur we used to have occupancy of more than 90 to 95%. So when we added 100 beds, the capacity got expanded and we were able to basically operationalize the additional beds with your existing resources.
So literally there is no negative EBITDA impact. It’s more of an EBITDA accretive. So immediately it starts flowing in, you will have a positive EBITDA growth, also at an absolute number. And also EBITDA margin will expand. Same thing happened in Astromet City. Also you can see that the growth what we talked about in Kerala overall last quarter we had shown a minus 4% growth. Now we moved to more than 5% positive. That’s almost a 9% movement quarter four to quarter one that has happened because of the capacity expansion. So in Brownfield I don’t like to say it’s all about payback period because you have to look at asset as a whole.
So what I’m trying to say in brownfield expansion, it is EBIT accretive and margin accretive.
Unidentified Participant
Got it? That’s all from my side. Thank you so much and best of luck for the future.
Puneet Maheswari
Thanks. Path. The next question is from Mr. Dr. Binu. Can you please unmute yourself and ask the question.
Unidentified Participant
Hi, good morning. Couple of questions on the QC IL side. I believe most of the growth seemed to have come from the Kerala cluster. What is driving this growth? And on the other hand, what’s holding back growth in the Hyderabad area?
Alisha Moopen
Hi Binu, thanks for the questions. So, okay, so the way we look at our business, I think geography is one aspect and the maturity of assets is the other. Right? And we gave this color last time as well in terms of how we categorize, because each of our geographies will have different kind of units and Instead of getting into just the geography, I think I want to give you the color. So first, if you look at quarter on trailing water, even our hospitals in Hyderabad have done extremely well. It’s a very competitive market. But even in that market we’ve seen a growth rate which is really double digit over the trailing water.
So volumes have really picked up. In fact, if I was to give you some highlights, one of our units which used to do in the third quarter last year 1415 crores has started to deliver in excess of 20 crores on the top line on a monthly basis. So there is a significant ramp up that’s happening there as well. If I look at the four categories that I defined earlier, let me give you some color on YOY as well as quarter and trailing quarter. So our mature units, which is a bulk of our business, grew 16% and 27%.
16 on the top and 27 on the bottom for this quarter. And what’s interesting is that these units actually grew five and a half percent on the top quarter and trailing quarter as well. And while you know, sometimes we see the impact of seasonality and this is a quarter where we haven’t seen any seasonality, which is where our complexity of work has gone up, our Congo mix has gone up and, and that’s reflecting in our RPOB as well. So the other categories that we’ve put together is the emerging units, which is Vizag, which is Chattogram, which is Nagar Coil, the new hospital that we opened, I mentioned in my talk, that’s grown 87 and a half percent over last year.
And because these are new units, you should always look at quarter on trailing quarter as well. It’s got a 25% top line growth quarter and trailing quarter. So that means the ramp up that we are building out is phenomenal. In fact, now that you asked me this question, a Nagar call facility has grown up from almost, I think it started in October last year and we are now doing positive EBITDA and the run rate of EBITDA seems to be double digit. So that’s the level that we’ve been able to achieve so quickly. I know the previous question was about payback, etc, etc, so some of these markets really turn around very fast.
And I’ll go to one such example. The third category is where I think that there’s a little bit of which is where I would say focus units which is where Banjara comes in, high tech comes in. Now what’s interesting is that these units have also shown significant growth over the last Quarter. So quarter on trailing quarters, 7% growth on the top and 60 on the bottom. So essentially, the way I look at our performances, it’s not skewed only by one cluster. While we may have seen volume growth coming from one cluster, value growth coming from another.
So if you look at the performance, it’s quite blended across our network. Hope that answers your question.
Unidentified Participant
Great, thank you for the detailed answer. Just couple of quick questions. In Bangladesh operations, are you seeing any difficulty managing the operation out of here, given the geopolitical situation?
Alisha Moopen
Well, I shared a story last time, I’m happy to repeat it again. Even during the worst times at Bangladesh, there was one, you know, our assets were not impacted at all. In fact, the patients around us ensured that we were working pretty fine. And that’s not changed. Bangladesh continues to grow, do exceptionally well. In fact, the Dhaka facility is continue to get better every passing quarter.
Unidentified Participant
Got it. And one last small question. At the consolidated level, is there any debt on the QCIL books? If I could get the Quantum, that would be great.
Alisha Moopen
Well, our debt is, you know, maybe generally, I don’t know the exact number, but the way I see it is our debt is significantly lower than our current ebitda, if that’s a question.
Sunil Kumar
Yeah, Let me add to that. You know, the numbers that we had. Reported, we knew for FY24, when we announced the merger, we on the combined level had almost zero net debt, you know, for, for Aster plus qci. So I don’t expect the numbers to. Materially, you know, move from that direction. And then that kind of also supports what Varun mentioned, you know, around the number should be lower than the ebitda.
Unidentified Participant
Yeah. Thank you.
operator
Thank you. Thank you. Thank you. Thanks. The next question is from Mr. Harith. Can you please unmute yourself and ask the question?
Unidentified Participant
Hi. Hope I’m audible.
Puneet Maheswari
Yes, you’re audible.
Unidentified Participant
Yeah. So the bits that you’ve guided for commissioning in the first half, FY26, I see Casa code, which is a green field expansion, and then the Brownfield expansions at Mongol and Whitefield. What’s the status of these expansions? Are these already commissioned or should we expect these in the this quarter?
Alisha Moopen
Yeah, see the first, let me start with Whitefield. WHITEFIELD it is 159 beds. We’ll be adding. That is the Tower 4, we call it as the D Tower. So this will be another two months time we should be able to commission this and then it’ll be moving the, the women and children, which is in Towers Tower C, into Tower D. So that’s our strategy adding few more clinicians there. So in yeah. By another two or maximum three months time we should be able to commission this tower additional 159 bits and then moving on to Castle Goat.
We, we are already there and it’s a matter of another two months time to fully function the hospital. I mean already we have onboarded the clinicians, the, the staff and everything and we’ll be, we’ll kick start the hospital another two months time to to three months time. And of course Ongo is getting ready. I’m. We are yet to fix a timeline for that and slowly we will, we’ll. We will be tracking it very, very closely and then we should be able to tell you the exact timeline might be another 2/4 down the line.
Unidentified Participant
Okay, thanks for that. And the, the pipeline that we’ve shown for aster around the 2600 bits over the next few years. Is there a similar number that you can share for QCIL or any color on what QC pipeline looks like?
Ramesh Kumar S
Arith, I’ll take it. So from pipeline standpoint we’re looking about 1200 beds. We added a couple of hundred already and 1200 beds across various projects or expansions within the hospitals we’ve laid out earlier. And that number’s not changed.
Unidentified Participant
Okay.
Ramesh Kumar S
Yeah. Group level. The, the goal was, I mean we expect at least 14000 beds in the next two to three years. So like what Varun was saying, the combination of that 1200 plus the 2600 that we’re talking from master will get. Us to that AR where we are mature and we’re doing well. You know, we identified that we need more bed capacity and all of those projects are underway.
Unidentified Participant
Okay.
Ramesh Kumar S
There is a significant capacity addition in our existing hospitals which means the scale up will also be fast. Will, will come in over the next six to eight quarters.
Unidentified Participant
All right. And then last one, with your permission. On RPOP growth, we’ve seen very strong momentum for the last few quarters and this quarter as well. We saw a very strong yoy growth there. And you talked about a few reasons on what’s driving this growth. But what is the sustainable level that we should look at? Because we’ve seen some moderation when we look at some of your peers. So is that something that we should bake in a moderation in our pop groups?
Alisha Moopen
So Harith. No, I think we feel the trends are, are likely to continue. I think it’s more the specialty mix. Right. So right now on oncology we’re still only at 11%. We do think that there is a opportunity for us to go further up and take it to sort of higher teens which will definitely help sort of increase the rpop. We also. So I think overall when we look at the specialty mix, the acuity mix, there is a tendency we don’t see any moderation and the mix of where our beds are coming as well. So when we’re talking about almost a thousand beds coming in from Bangalore, that will actually be at a higher rpop which is why Whitefield coming up has sort of enhanced the RPOP levels for us.
And then also the way we are kind of looking at scheme patients where we need to reduce it, how to sort of optimize as capacity is increasing in units, we feel pretty confident that we should be consistently be able to see growth on the RPOps.
Ramesh Kumar S
Just to add to what Alicia called out, there is a one time, you know, the impact in the RPOP. Currently 14%, 4% is coming from alos. And alos we already efficient at 3.1. Right. So we don’t see much of a change in the ALOs. At least it should be between 3 to 3.1. Keeping in that mind and I think previously called out on a long term basis, it’s a three to four year term, you’re looking at a seven to eight percent and that could get only tweaked as Alicia called out because of oncology. If oncology has been the driving the growth that should yield more better R pop.
But on a neutral apple to apple comparison we are looking at around 78% over a period of three to four years.
Unidentified Participant
All right, thanks for taking my question.
Puneet Maheswari
We request you to please limit your question to two, but not more than three per participant at a time. The next question is from Mr. Nikhil Mathur. Nikhil, can you please unmute yourself and ask the question?
Unidentified Participant
Yeah, yeah. Hi, good morning. I hope I’m audible. My couple of questions are on UCL side. Sorry, I have a bad, bad throat. I hope I’m able to put across my question. I’m trying to understand the 20 crore EBITDA uplift that QCI has reported this quarter. I mean it’s a pretty material number, almost 10% of your operating EBITDA. So what was happening incorrectly? I mean how. What was the procurement strategy previously and what is getting changed now? I mean it’s a big number. Why was the procurement so inefficient in the past and why is it so easy to change that you are able to deliver this kind of uplift?
Alisha Moopen
So Nikhil, first of all thank you. You’ve been very ably to put forward your question. I should also tell you that our medical director’s name is Nikhil Mathur. And the moment we saw your name up there, we were thinking as to why he’s asking a question. So, so first of all, 20 crores in the quarter has not been easy. So let me, it’s taken us a lot of external help, etc. Etc. So Nikhil, there are three things that we try and do when it comes to material cost optimization. One is scale and this is the first time the three entities that we currently have, which is Care, which is Kim’s and Nevercare, has come together and the procurement has got centralized across the board.
So the three entities are no longer operating independently. From a, from a procurement standpoint, it’s a single source which is now procuring. And when scale comes in and you’re able to vendor optimize, you’re able to bring down the cost quite significantly. Half of our, maybe more than half of our savings are coming in just from the efficiency on procurement optimization. The second part is formulary. And formulary compliance is a huge thing, right? There are various parts of our business, our scheme business, cash business, insurance business. And when you optimize formulary, you’re able to bring down your, Your vendors from 10 different vendors for the same molecule to 2 vendors of the same molecule molecules.
You know, it doesn’t matter. So, so optimization on demand also helps this in a, in a very big way. Third, margins do vary from one from a company to the other and sometimes when you do this in a scientific manner, you’re able to move to margin optimization as well. The good part about all of this is this is sustainable. So Nikhil, you’ll see it not only in this quarter, this is something that you will continue to see quarter on quarter. I hope that answers your question.
Unidentified Participant
So basically these initiatives still continue and like you mentioned, FNB sourcing clinical talent, some other levers as well. So this number can continue to improve in foreseeable one, two years.
Alisha Moopen
Oh absolutely. So again, these are pre merger synergies. And while when we did the merger conversation we told you that there are synergies that will be built on top of this. So we have a synergy wheel which takes care of about 10 to 15 initiatives which either get impacted by scale or get impacted by, you know, by efficiency, all of these will continue to be at play. And I did mention in my comment earlier, we’ve currently insourced food and that’s already started to bring us savings, the savings will continue to grow. We are doing a lot more on revenue cycle management which is a very focused exercise which will continue to bring us more.
And from a procurement standpoint, as we close the merger, the group level synergies will also come into play.
Unidentified Participant
Understood. I have one more question on the OPD business. Not specific to QCL or Aster, but what is the level of OPD business in overall hospital mix today and what is the outlook on the OPD business over a two, three years period? I mean the reason I’m asking about the outlook is that if OPD were to grow faster than inpatient business then that obviously is our public creative, right? If my understanding is correct. So any thoughts on the OPD business over a two, three year period? Is it a very faster growing space that most of the hospitals, not just AS and QC but Pan India hospitals are kind of recognizing?
Sunil Kumar
Okay, so I’ll take a part of the question. So OP business has grown pretty well for QCL. Nikhil, we’ve one, we’ve grown the volumes about 12%. It’s been a very focused thing that we are trying to drive and OP volume impacts the the RPOB favorably. One of the questions that previously was asked and I think Sunil addressed it on the rpob. So we see continued growth in this network on op. If I if there’s anything specific around OP that you want to know, certainly. So opd, OP diagnostics, OP radiology, the more numbers you bring in.
So I told you we grew 12% on OP so that will have a traction on pharmacy, that will have a traction on radiology etc etc and diagnostics which is good business to get.
Unidentified Participant
So basically what I’m trying to understand is that obviously we are slightly confused with the level of RPAP growth that continues to come in across hospitals, not just Ashraql but across across other hospitals as well. So just trying to understand that can OP volumes sustainably outgrow the IP volumes and that itself leads to some bit of RPOB accretion.
Alisha Moopen
All right Nikhil, so let me, let me add to what Sunil’s already said I think and I’ll take the QCI view around rpob. So RPOP growth is, is happening on four factors and let me break all four factors for you. One is price and I think RPOP should not be confused with price. A 2%, 3% increase in price over the year can also lead to a double digit growth in terms of RPOB because of the other factors. Now in our case, we’ve been very conscious of how can we enhance our Congo mix. Alicia alluded to the oncology mix and I’m going to use Congo because largely Congo does impact RPOP very favorably.
We are, I think we moved 200 basis points on the Congo mix this quarter. We moved from 56 to 58. Now the question you may want to ask is what’s the best in class? Who’s the current leader in Congo across the country and that number sits in excess of 70%. So can we get from 58 to 70? Absolutely. As the network starts to mature, as the clinical hiring gets better, as the investments in technology get better, you’ll certainly see that number growing and that number will continue to grow and therefore RPOP will get favorably impacted.
Second, oncology does play a very significant role when it comes to RPOP expansion. Right. And there the focus of the group is quite strong. Now the other element that’s impacting for us favorably, our cash and insurance mix is also moving northward, which means we were again 210 basis points of the quarterly improvement. We moved from 77 change to 80 odd percent now. And that has a very significant upside, Very, very significant upside because the scheme business comes at 40% of the cash tariff, sometimes not even that. Right. So as you move the needle towards cash and insurance and as the brand gets stronger, people want to the paying propensity of people and people who can pay start to get to your hospital and therefore making it stronger.
So we are about 80% there alos. And you’ve seen Alicia and Sunil report the ALOS For Aster at 3.0 or something. QCL is at 4. We’ve got down to 3.9. So we have a significant enhancement that will continue to happen over the next six to eight quarters again on ALOs. And as you make the ALOs better, that’s inversely proportional to the RPOB as well. And lastly, I must also say that we are nowhere close to what the benchmark today has been set for rpop. So I think we have a journey to grow is the way I’ll see it.
OP Mix does play a role and I think if you have the right level of diagnostics and services at play and you’re able to manage footfalls well, that revenue will also continue to grow. But that will not become so significant. I mean at some point in time the, the level to that is about 35 to 65. So rupee revenues generally don’t go below beyond the 35, 36 contribution to the Total business. So that’s where the level will be. Nikhil. I’m sorry it’s a bit long.
Unidentified Participant
Yeah, it’s very clear. Yeah, thank you and this is helpful. Thank you so much.
Puneet Maheswari
Thanks Nikhil. The next question is for Mr. Sumit Gupta. Sumit, can you please unmute yourself and ask the question.
Unidentified Participant
Hi, am I audible?
Puneet Maheswari
Yes you’re audible.
Unidentified Participant
Hi, thanks for taking my question. So a few questions from the Bangalore market. So first is with the new hospital which is planned in Yeshankur. So just to know how, how do you plan to fund it basically market now that hospital. So how do you. We can’t properly panning out for you.
Ramesh Kumar S
And sorry you’re not clear. Maybe you need to be.
Unidentified Participant
Yeah just give me. And now am I audible now? Yes, now it is better. Yeah. So a few questions on the Bangalore market. So first is on the new hospital. Which is coming in the Yashanpur. So how do you plan to fund it? And second is on the overall Bangalore market. How. So can we expect this Karnataka and. Maharashtra cluster to go over the next two to three years to contribute more towards the overall business and Bangalore market in particular to the overall business.
Puneet Maheswari
Sunil, you want to give some more of the details?
Sunil Kumar
Yeah, yeah, thanks Sumit. So on the funding bit of it it’ll be mix of internal and external funds and we don’t get into because we have a very good cash flow from operations conversion from the pre inde Today we’re running at more than 80 to 85% so I think we should be able to do with the internal accruals itself. And also you know that this is a greenfield project. The capex funding will be recorded over a period of year. And also in our case because you’re only doing the interiors and the medical equipments it should be more in the fag end of around 20 months on the project.
You know that’s how it is going to be on the. What is your second question Sumit?
Unidentified Participant
So basically your outlook on the Bangalore market. So how do you.
Sunil Kumar
Yeah see in Bangalore market if you look at the quality, quality beds today, right. I’m not talking about the other beds where there are 50 beds and 25 beds I’m talking about the quality beds, right? More than 100, 150 bed hospitals it’s approximately between 8 to 9,000 beds. And that if you look at a population or the quality I would say that patient density it comes to around 0.6 to 0.7 per thousand population. And very specifically in the micro market which we are talking about that’s the central to northwest zone there you see almost a 4 million plus population but only the bay if you look at the bed density it’s only 0.5 on the quality beds bit of it.
That is also I think Alicia also very clearly called out. There is no oncology in the extreme northwest zone. It’s only 100 to 200 bed hospital. That’s where we want to make a difference by adding the hospital there and with a complete oncology and super specialty including the transplants. And also this particular hospital is situated exactly on the AH7 or NH4 and that is where it links to the upcountry in Karnataka and complete referral channels can be built into this.
Unidentified Participant
Understood. So with regards to the profitability, so. Let’S say on the EBITDA per bed. Side, so Bangalore would be how much like what kind of road can we expect on the profitability side per bed? What can be, what can we expect. On the EBITDA per bed growth over the next three to four years considering Bangalore market in particular.
Sunil Kumar
Yeah, you can calculate, we know that you know the alos is around 30, sorry 3 in Bangalore. Overall K and M cluster RPOP is approximately at 70 but when you look at the Bangalore market alone it’s between 80 to 85,000 per bed. The revenue RPOP and margins are Approximately around, you know, 25 to 27% only in Bangalore.
Unidentified Participant
Understood. Thank you. Thank you.
operator
Thanks Umit. Next follow up question from Tausif. Can you please unmute yourself and ask the question?
Unidentified Participant
I hope I’m audible.
Puneet Maheswari
Yes.
Unidentified Participant
Just want to understand your thoughts on the diagnostic business post the completion of merger since rest of the large hospital chain has got into this business very aggressively and becoming a pan India play. What’s your thought on this business going ahead?
Sunil Kumar
So Tasif, the diagnostic business for us is much more to make it a full ecosystem play in the markets that we operate. So as Sunil was talking about the lab business it has become positive and you’ve seen a good improvement in the margins as well. So at this point in time we’re not talking about becoming a pan India player for us it is about an extension of what our patients in our key clusters will need. So we’ll continue to focus on building that in Kerala, Karnataka and if we think that the business model is working well, we’ll of course look at expanding to the other regions that we’ve now got as part of the merger.
But at this point it’s more about stabilizing the model that we’ve built and we’re seeing it at least moving in the right direction right now.
Unidentified Participant
Thanks.
Puneet Maheswari
The next question is from Mr. Amrish. Can you please unmute yourself and ask the question?
Unidentified Participant
Thank you for the opportunity. The first question is relating to arpp. You’ve been reporting this now for a couple of quarters and I’m just trying to understand what information we get from ARPP beyond what is there in rpob assuming I mean I can understand if ALOS changes we get some additional information and some specific questions. The IPP we’ve got Bangalore increasing 19%. Is this just again back to what you earlier explained about the numerator and denominator changing.
Alisha Moopen
So Amrish, two parts ERPP we are trying to give because in case of rpop, RPAP growth always have a linkage to a loss and that whatever the plus or minus the growth or degrowth which happens in the alos that that doesn’t get reflected immediately. Right. It’s always skewed. For example in our case 14% growth that has already inbuilt a 4% alos efficiency. But you look at the ERPP that doesn’t have the alos impact. So it’s very clear. So you can always look at the volume and the rpp. That’s one of the reason why we are trying to give a understanding there.
What was your second question? Sorry Amrish.
Unidentified Participant
Yeah, so the number ARPP number for Bangalore has jumped 19% and I’m just trying to see that’s just 19%.
Ramesh Kumar S
There are two parts. The Air PB is for both Karnataka and Master Cluster. It has two basically impact. One is the impact for the Astra Aadhar. I called out where we had discussed the scheme because of the capacity bottleneck to drive more walk in and TPI patients that has helped at least 2% into the growth here. And second biggest I would say at least 4 to 5% growth is coming in the air puppy. Only because of the white feed. And you know that white feed started only in the, you know I would say one and a half year back and only in the last quarter one it was just a ramp up stages and after that we have seen a very good growth in the oncology and also in the neurosciences and specifically Whitefield.
I very clearly called out it’s a grown year on year for the quarter one at 31% and ERP itself has grown more than 20%.
Sunil Kumar
Thank you. Just a side comment on that. I think there’s some discrepancy between the ARPP reported in Q4 and the ones reported in this quarter, nearly a 20, 30% difference. I’m not sure what, what the reason is for the same quarter. The second question is, it’s a broader question just relating to robotics. I mean, we’ve been calling out robotics, you know, the robotic surgeries. And again, last two quarters, we’ve, we’ve now put a whole separate page in the annexure showing our improvements in modernization and automation. And there’s a lot of robotic equipment. I think Mr.
Kanna also called out a little bit about robotics. Is there something structural we need to be thinking about over here? Was it just like a feel good that we are up to date and technology advanced and so on?
Alisha Moopen
So, Amrish, I’m trying to understand your point. I mean, there’s obviously the associated benefits in terms of ALOS reduction as well that comes from robotics, apart from the, you know, early, so early discharge, better outcomes, precision. So I think it’s much more than feel good now. I think it’s really, it’s gotten to a point where patients are coming in asking if some of the surgeries for specific departments, if robot is available. So with, you know, so there is a preference where patients are leaning towards this as options for specific modalities, for specific procedures. And that’s why we are seeing increased adoption as well as increasing sort of the installation of robots within a network as well.
Unidentified Participant
And it doesn’t change the dynamics of the number of doctors. We need to, to run hospitals and run surgeries. They’re still supervised. So it’s just.
Alisha Moopen
Yeah, exactly.
Unidentified Participant
Thank you. All the best.
Alisha Moopen
If I may mentioned. So it’s a, it’s a, it’s a good trend to track and an important one because it actually impacts alos, which has already alluded, already been alluded by Alicia. It actually impacts your realization as well. So the consumer is willing to pay more because there is a consumer preference around it. And in this market, outcomes also get significantly better with robotics because you’re able to get back home faster, scars lesser. So there is a preference that is at play. And most importantly, I think doctors also prefer to have an establishment which can actually bring them all of these tools so that they can enable the level of care that is desired of the brand.
And that’s how we are able to move large teams from hospitals that can’t make it to that level of investment to our kind of networks.
Puneet Maheswari
That’s helpful. Thank you very much. Thanks, Amrish. The next question is for Mr. Mohammed Patel. Mr. Mohammed, can you please unmute yourself and ask the question? Yeah.
Unidentified Participant
Can you hear me?
Puneet Maheswari
Yeah. Could you please introduce yourself and ask the question?
Unidentified Participant
Yeah, yeah. So I’m Mohammed Patel from Nehelle Public Odds. So my. I have two questions. So we are guiding for 7 to. 8% volume and 7 to 8% RPOB but currently volumes are flat and RPAP is growing at 14%. So when do you expect this to transition to equal contribution from volume and R Corp?
Ramesh Kumar S
So Mohammed, if you recall you look at the FY24 and FY25 growth in the first half we were giving more than. And also look at the CAGR of more than five years of Aster revenue has been growing at a 20% CAGR for five years. What has happened is that only in the last three to four quarters or I would say very specifically from quarter three of FY25 you’ve seen the, I would say subdued performance in terms of volumes because of multiple reasons. Right. And we have, I think we alluded to it very specifically towards the leadership change which has happened and in quarter four very specifically to the Ramdan impact which has come through and also certain very specific, I would say decisions which were taken in the MVT also for for example Maldives related payments.
We used to get the revenue but we used not get the payments. We have to ensure that whatever the revenue booking we need to collect that. Also to ensure that our DSO is better we have taken certain interventions and you can see that from quarter to 2% growth we’ve gone to 8% growth in the quarter one this financial year and I see that in couple of quarters we’ll start getting back into the double digit growth what we’re talking about.
Unidentified Participant
Okay, my second question is what is the CAPEX number that we should look at for Aster and QSIL in the next two, three years.
Sunil Kumar
Quickly on the Aster we know we are adding almost 2600 beds that entails to approximately 2500 of you know project CAPEX. What we require out of 2500 around 400 to 500 crores is what we already incurred as on the 30th of June and balance 2000 crores approximately will be spent over next 3 to 4. Years.
Unidentified Participant
And for QC.
Alisha Moopen
So let me add to that Mr. Patel. So essentially you look at about 5 odd percent of the top line which is the CAPEX required each year and it’s going to be no different this year and outside of that is the project CAPEX which we which is not in one particular year. So it’ll get spanned over the beds that we Open is about 1100 crores this year. The cumulative Capex outlay including the projects that we are coming out with is about 8 to 900 crores.
Unidentified Participant
Okay, thank you.
Puneet Maheswari
Thank you Mr. Mohammed. Next question is from Mr. Harsh Bhatia. Can you please unmute yourself and ask the question?
Unidentified Participant
Yeah. Thank you. Am I audible?
Puneet Maheswari
Yes, you’re audible. Thank you.
Unidentified Participant
Good afternoon. Just two quick follow ups. One on the RBOB side you mentioned 4% from the LOS part. I missed the initial comments. Was there anything linked to the insurance pricing as well and for the entire year as well for FY26 could we see some incremental insurance benefit coming through?
Ramesh Kumar S
Yeah. So broadly I had put across saying that out of 14%, 4% from ALOs and price increase from the cash patients and the TPA should be between 2 and a half to 3%. And specifically in case of TPA we across India our percentage contribution approximately 31% from the insurance patients. And these contracts are basically for each unit. Right. So we don’t have a central contract for these TPAs. And every month there’s one or the other two TPA renewals which comes in in one of the other geographies. So you’ll see that renewal happening across the year.
And we see that, you know, at least in the second of coming in, that’s at least in H2 there’s a major, you know, contract which is going to get renewed very specifically for the GIPSA in Bangalore. That’s going to give us a considerable increase. But overall as a price increase guidance, what we always give is that including the cash patients increase and the TPA renewals which happens once in two years, we’re looking at somewhere between 3 to 3.5% contribution to the RPAP.
Unidentified Participant
Just one bit. In terms of the scheme business you highlighted rationalization of some asset in Maharashtra, some scheme business was discontinued. Going forward for the next few quarters. Is there anything implemented in the pipeline that is something related to the scheme business rationalization?
Ramesh Kumar S
Nothing very specific Karsh. It all depends on the dynamics of each unit. What we always put across is that we will try to ensure that the scheme business is in single digit. And even currently if you put across both the Esichs and the CGHS and the state and central government schemes, we’re approximately at 6%. So it all depends. Whenever we add the brownfield expansion, immediate requirement is there to fill in the capacity. And also we are not open up all departments in the schemes. We are very much very clear about very specific departments where the yields are better.
So that at least at the contribution level we are not negative. So that’s a broad understanding here.
Unidentified Participant
Just one last quick FY27 Pure Aster additions, close to thousand beds, Trivandram, Sarjapur, Hyderabad, largely Greenfield. Broader breakeven timeline for these assets or. If you will be able to call. Out the drag for the first 12 months if possible. I understand it’s a little bit more.
Alisha Moopen
Forward looking but anything so harsh. What we always say is that for example, I’m just giving an example here. It all depends on with the Mirch micro market. This is the first entry or we’ve already been there and we are expanding. For example Astra cmi. When we entered almost eight years back that was the first hospital and Astra brand was not known. We took almost 18 months to break even. When it came to Astra RV which is our second hospital in Bangalore. It happened almost three to four years after the Astra CMI. The brand recall was better. We were able to get attract better doctors and that ensured that we were able to break you in within 12 months.
And for example in Whitefield which is a third hospital, the ramp up was so quick we were able to break you in the third month. It all depends on that. So I want to try to give you the exact guidance. It’s all about the micro market we get in and the feedback from the doctors and the patients.
Unidentified Participant
Thank you.
Puneet Maheswari
Thank you. Thanks. Harsh. We would like to highlight that we’ll be giving preferences to attendees who have not asked a question before. So in that line, next question is from Nancy. Nancy, can you please unmute yourself and ask the question?
Unidentified Participant
Hi, am I audible?
Puneet Maheswari
Yes, you’re audible. Can you please introduce yourself?
Unidentified Participant
Hi, I’m Nancy and I’m from Allegro Advisors. So I just wanted to get some color on the EBITDA dip in the Andra and Telangana cluster in this quarter. So there is ALOS optimization. The airpop has also improved and even then there’s a very small increase in the revenue and there’s a dip in the ebitda. So I just wanted to understand the.
Alisha Moopen
Reason for this Nancy. It’s very much straightforward. Two reasons. One is that because of the case mix changes we have seen a material cost going up by at least 1% so that’s taken away 100bps in our EBITDA margin. Second is that both in our Hyderabad and Andhra region we had certain attrition in the clinical talent and we have brought that new clinical talent into these hospitals that has ensured that our revenue growth has come in at the same time. The cost has been initially at a higher stage, but as we always seen that in Andhra Telang cluster two, three years back, which was 8%, we have slowly, I would say, optimized it to more than 12 to 13%.
And we expected the test to go back to the similar numbers in the coming quarters.
Unidentified Participant
Sure. That was helpful. Thank you.
Puneet Maheswari
Thank you.
Alisha Moopen
Thank you, Nancy. If there is anyone, any other attendees who would like to ask a question, please pick and raise your hands so there is no more question. To the management. Thank you all. This concludes the earnings call for this quarter for Academ Healthcare. I thank the management and all the attendees for joining us today. If you have any further questions and queries, please do get in touch with us. Thank you.
Varun Khanna
Thank you. Thanks everyone.