MedPlus Health Services Ltd (NSE: MEDPLUS) Q4 2025 Earnings Call dated May. 28, 2025
Corporate Participants:
Unidentified Speaker
Srinivas — Investor Relations
Gangadi Madhukar Reddy — Chairman, Managing Director and Chief Executive Officer
Sujit Kumar Mahato — Chief Financial Officer
Analysts:
Unidentified Participant
Saion Mukherjee — Analyst
Sudarshan Agarwal — Analyst
Sanjay Ladha — Analyst
Madhav Marda — Analyst
Bino Pathiparampil — Analyst
Aejas Lakhani — Analyst
Gaurav Gandhi — Analyst
Lakshminarayanan K G — Analyst
Harith Ahmad — Analyst
Tarang Agrawal — Analyst
Vilina Jain — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Med Plus Health Services Limited Q4FY25 earnings conference call. As a reminder, all participant lines will be 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 an operator by pressing Star then zero on your touchtone phone. I now hand the CONFERENCE over to Mr. Srinivas. Thank you. And over to you sir.
Srinivas — Investor Relations
Thank you, Sagar. Good evening everyone. On behalf of MedPlus, it’s my utmost pleasure to welcome you all to the MedPlus Q4 FY25 earnings conference call to discuss the financial results of MedPlus for the fourth quarter and full year FY25 which were announced yesterday. We have with us today the senior management team represented by Mr. Reddy Gangady, CEO and MD and Mr. Sujith Mato, CFO. Before we begin, I would like to mention that some of the 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 Srinivas and good evening everyone on this call. As we prepare for the next phase of expansion, we are strategically strengthening our backend operations and infrastructure to support long term scalability and ensure seamless execution. We remain focused on optimizing our existing network while laying the strong foundation for opening new stores across the 13 states in which we operate. As an update, we have added around 10 additional warehouses in the last financial year to enhance our availability at our existing outlet and and further supporting our endeavor in new store expansion. This disciplined approach will enable us to drive sustainable growth and enhance value for all the stakeholders.
An Update on the network we opened 113 stores during the current quarter. Over the past 12 months we have added a net total of 305 stores gross 398 store edition and we closed down certain stores throughout Q4 there were 13 store closures. Taking into account both openings and closures, we achieved a net addition of 100 stores during the quarter compared to the 60 stores added in Q3, 108 stores added in quarter two and 37 stores in Q1 totaling 305 stores on YTT basis, we expect a total of 600 next store additions in FY26. In terms of our store’s network age, around 22% of our stores are operational for less than two years and the remaining 78% of our stores have been operational for two years or more.
As a guardrail, we closely monitor the time frame for our new stores to reach break even. For stores opened between April 2024 and September 2024, approximately 58% of them achieved breakeven within six months of operation. As a cohort, all stores combined reach break even in five months. In terms of our store size as at the end of the quarter, our network has grown to 4712 stores with 2.5 million plus square feet compared to 4407 stores and 2.3 million square feet at the end of March 2024. The average store size is 527 SFDs. In terms of the revenue mix, presently Medplus offers over 1200 carefully selected SKUs spanning across pharmaceutical and non pharmaceutical categories.
Private Label sales for Q4FY25 constitutes 23.3%, pharma 13.6% and non pharma 9.7% of our total revenue. The following is the impact of the launch of Medplus branded products across our network in Q1 FY24. Prior to the launch, the share of private label Pharma stood at 7.9% of total GMV compared to 20.9 during the current quarter. Our consolidated revenue stands at 15,096 million for the quarter and 61,361 million rupees for FY25. Our consolidated operating EBITDA stood at 803 million rupees representing 5.3% for the quarter and 2,776 million representing 4.5% for the full year FY25. Around 99% of our revenue is from our pharmacy operations.
Revenue from pharmacy operations grew by 6.2% on YoY basis on GMV terms and 1% YoY on net basis on the full year revenue from pharmacy operations IT grew by 14.8% on GMV basis and 8.6% on net basis. The pharmacy operating EBITDA stood at 769 million rupees representing 5.2% on the update on our store performance. I would like to update on our stores older than 12 months. Revenue from these stores in Q4 was Rupees 14,011 million representing 95% of pharmacy revenue. These stores had a Store level EBITDA margin of of 11.5%. The store level operating ROCE of these stores stood at 59.2% a word year on the store level EBITDA margin by age while stores greater than 12 months had a margin of 11.5%.
This was 11.7 for stores greater than 24 months and 8.2% for stores in the 13 month to 24 month age bracket. If we allocated the non store related cost then the operating EBITDA of stores greater than 12 months would be 817 million which translates to a margin of 5.8% on working capital. Our net working capital for Q4 was 63 days. The inventory in our warehouse was 37 days. In Q4 the inventory level of our first year stores was 108 days. In comparison for stores older than 12 months the inventory was 43 days. Our diagnostics numbers diagnostics revenue grew to 280 million in Q4 FY25 compared to rupees 232.4 million in quarter four.
FY24 diagnostic segment recorded an operating EBITDA of rupees 34.3 million compared to a loss of rupees 11.3 million in quarter four. Last year in January we sold four hundred and twenty gross plants per day. In February this was 462 on 478 plans sold per day respectively. As of 31st December we had 152,000 active plans covering 315,000 underlying lives. As on 31st March we had 157,000 active plans and covering 327,000 underlying lines. Our current observed on time renewal rate was 25% in Q4 versus 26% in the last quarter. That concludes our update for the quarter. I request the host to open the line for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their Touchstone phone. If you wish to remove yourself from the question queue, you may press Star then two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles again. To register for a question, please press STAR then one. Our first question comes from the line of Sayan Mukherjee from Nomura Securities. Please go ahead.
Saion Mukherjee
Yeah, hi, good evening. So this question on GMV growth at pharmacy which you mentioned is at 6.6%. Given that the pharma market itself is growing at around 7% and we would expect Med plus to grow faster, what in your assessment is impacting the overall GMV growth in pharmacy.
Gangadi Madhukar Reddy
So a couple of things, Sahin. The one main one would be the mix of private label and branded products. Our private label of course sells for a much lesser price than the branded products. So the top line is going to be slightly lesser. That’s one second and I know we will come to this question going forward. Our focus on private label and the incentives which we have set up for our employees have also probably dampened the overall or muted the sale of branded things to a small extent. I don’t think it is significant. I think what we did was absolutely necessary to get the entire organization enthused about selling private label and everything else.
So I think we have achieved what we set out to achieve. Now we are basically again aligning everyone to both private label as well as branded products. So I think we’ll probably recover it again. And the third thing which probably muted our overall sales and maybe did not give us the SSG which we really required was, was because of the rapid expansion, we had a few constraints both on manpower side on the back end and also on the warehouses. Warehouses in particular. We have now started the process of getting the warehouses. We are seeing the benefits in just West Bengal where it is launched.
The rest are still to come. So I think going forward we’ll probably see the benefits of all those things as we go forward.
Saion Mukherjee
Yes, actually I was, you know, mentioning about the GMV which shouldn’t have got impact. I can understand the transition and the mix change in favor of private label but GMV growth ideally should have been sort of higher than where the farmer market growth is.
Gangadi Madhukar Reddy
Yeah,
Saion Mukherjee
I mean, is there any pricing issue with respect to private label? I mean or you know, is there market share gained by competition or online players or quick commerce? Any. Any such structural dynamics at play here, you think?
Gangadi Madhukar Reddy
I don’t think so. Saiyan. Actually the GmV growth is 9%, not 6 for the year. No, for the year is 9% for the year. So it is not 6. So we have grown slightly. I mean, not that it is a big thing, we expect to grow much faster. But the other reasons are also there which basically accounted for whatever happened out there, which is, you know, our own constraints and everything else and all on the GMV side, it’s definitely not lower for the year.
Saion Mukherjee
What’s your expectation going forward? Like how should we think about, you know, this growth to play out now?
Gangadi Madhukar Reddy
I think we will be back on track given that the new store numbers are going to be much less compared to the overall size of the company itself and stores also will sort of get phased out throughout the year. I don’t expect that to be a big factor. So whatever growth will come in will probably come in through the existing stores just growing and that I expect it to be let’s say high single digits to low double digits kind of number on the ssg.
Saion Mukherjee
Understood. Thank you.
Gangadi Madhukar Reddy
Thanks Ayel.
operator
Thank you Participants. You may press Star then one to ask a question. Our next question comes from the line of Sudarshan Agarwal from Access Capital. Please go ahead.
Sudarshan Agarwal
Yeah hi. On the gross margin front you have seen a strong expansion on a Q on Q basis and on a Y on Y basis. If I’m not wrong, every 1 percentage point of your private label expansion adds around 30 to 40 bids. Right. So is there some additional benefit that kind of came into this quarter on the gross margin front? Was there some inventory provision etc that kind of was taken or and also what would be you know the steady state margin going ahead for this on the gross margin side? Yeah.
Sujit Kumar Mahato
So in quarter four Sanjay, what happened is we had a inventory provision release of around 3 crore rupees. This was in connection with the provision which the company had made as part of its abundant caution accounting policy on the Wind Clark or the old private label pharma products when we had transitioned to our Med plus brand and there has been a release only into the books on actual liquidation or sale and during Q4 we were able to sell worth 3 crores of this inventory and we got a release of around 3 crores in the gross margin that would have contributed to around 20bps.
But the major surge, what you have seen is for the private label increase between Q3 and Q4 both on pharma as well as non pharma. Your other question on the steady state gross margin we would look at in the range of 24.5 to around 24.75 going forward. And once again the private label growth journey commence. We should again start seeing an incremental growth in the gross margin.
Sudarshan Agarwal
Okay so my follow up question is that you know given that you saw a strong ramp up in this particular quarter for private level share, I think you had alluded to let’s say 1% Q on Q expansion per quarter for let’s say 6 to 8 quarters. Do you still see that from current levels? Should it moderate? Can you provide some guidance on that?
Gangadi Madhukar Reddy
Yes, sure. So we probably grabbed the Q1 growth also in the Q4 side. So I expect this quarter to be slightly flattish as far as private label growth is concerned. But going forward I think we will definitely be able to maintain the 1% growth pretty easily. I don’t think that’s an issue.
Sudarshan Agarwal
Got it. That’s it from my side. Thank you.
Gangadi Madhukar Reddy
Thank you Sudarsh.
operator
Thank you. The next question comes from the line of Sanjay from Bastion Research. Please go ahead.
Sanjay Ladha
Hi sir. Thank you for the opportunity. So my question would be in the morning interview you have guided the revenue growth to be at around 15% and I understand you have said that the older retail, older stores which we have, which command 80% of the stores, they will grow at inflation plus. So that is the understanding, correct that the additional 600 stores which we are going to open in the next year, they will deliver or the order remaining below to 12 month stores will deliver greater than 20% growth going forward. And how you are saying that, how can we should see the revenue growth drivers going forward? If you can explain.
Gangadi Madhukar Reddy
See revenue growth is going to come from regular same store sales growth as you know, more customers come to our store and everything else as they mature and all that. I actually said closer to let us say the low double digits kind of number. I don’t think the 600 stores which we add is going to really add a lot in terms of top line. So most of it is going to come through SSC only. The 600 stores which you add at 50 per month typically will start with only around 2 to 3, 3 lakh rupees or 4 lakh rupees per month.
So it is not very significant to the overall growth of the company. So going forward, what are the drivers? There could be several. As we continue to make the private label popular, we’re not really spending any money on advertisement actually. But as word of mouth spreads and more people benefit from the savings of private lab, we expect at some point there will be people walking into a store to take advantage of that. But I don’t think that time is now. I think we probably need to wait for a while before the commission starts happening in a major way.
Sanjay Ladha
Okay, so my second question would be on in Q4FY20, our revenue growth for stores greater than 12 month has degrow by 1%. So it is because of private label mix increasing or is there something else attached to that?
Gangadi Madhukar Reddy
No, as I, you know summarized in the first answer which I gave out two things. The combination of private label mix and everything else obviously drives it down a little bit. Our focus on private label also, you know, kind of, I would say maybe muted the overall growth on Brands and everything else. And finally, as I said, our growth of number of stores in the last two, three years has constrained our supply chain systems and everything else. We’re still in the process of easing that situation. It will take a little while, but that also has caused a little bit of, I would say dampening of sales.
So it’s a combination of various things.
Sanjay Ladha
Okay, so since we have added 10 additional warehouses and since you know the ramp up is also on the stage. So in terms of growth you have eluded that you are seeing high single digit of the overall revenue or of the, you know, the greater than 12 month stores revenue.
Gangadi Madhukar Reddy
I don’t think it really is going to change that much either way because the new stores which we added this year are only 300. The base is going to be really low out there. So you could take it as the full set high single digits to low double digits kind of growth.
Sanjay Ladha
Okay, sir, thank you. We’ll come back in the queue. Thank you.
operator
Thank you. Our next question comes from the line of Madhav, Marda from fil. Please go ahead.
Madhav Marda
Good afternoon. Thank you so much for your time. First wanted to understand that, just a clarification. When we say that the pharmacy sales growth was about 9% for FY25, how much was the GMB growth for the full year? FY25?
Gangadi Madhukar Reddy
The full year FY25 was 14.8% on GMB.
Madhav Marda
So which is a proxy for volume. Right, so we can say 15%.
Gangadi Madhukar Reddy
Yeah, 15%, yes.
Madhav Marda
And the, and the 6% which is sort of the difference is more of a mix impact for more private label sales. Right, so that’s the way we should read it very broadly.
Gangadi Madhukar Reddy
Yeah, absolutely
Madhav Marda
the same thing. Could you grade the similar thing for quarter four as well where we reported 1% sales growth, how much is the GMV growth for quarter four?
Gangadi Madhukar Reddy
GMV. Okay, can you hold for one second? Malavi, can I get back to you on that? The example of gm.
Madhav Marda
The second question was on the margin side. So I think you’re just guided for a Gross margin of 24.5 to 24.8% going ahead. This is for the pharmacy business, right?
Sujit Kumar Mahato
Yes, yeah, it will be plus one with diagnostic.
Madhav Marda
Sorry, sorry, didn’t get the last one.
Sujit Kumar Mahato
I said you can add 1% for the diagnostics so that it comes to the console number.
Madhav Marda
So the, the pharmacy business where the guidance is 24.5 to 24.8, that number is 23.3 this year. So we are basically indicating 120 to 150 basis points of expansion of gross margin in next full financial year. That’s how we should read it. Right?
Sujit Kumar Mahato
So for the current year, Madhav, it’s in the range of 24.1 in the, for the full year, that’s what we are saying. It should move up to 24.5 to 24.8.
Madhav Marda
Okay. At the console level then basically. Okay, maybe I’ll just check it with you offline. Maybe there’s some confusion here. And so then the, on the margin side, the last follow up was that seems like this year we have, you know, spend some money for expansion of our warehouses, you know, which probably would have led to some front ending of some cost. So is it fair to assume that next couple of years the OPEX growth could be more controlled and we could see some operating leverage benefit from there? Is that the right thing?
Gangadi Madhukar Reddy
The OPEX may or may not be controlled. We may continue to add some warehouses here and there, some automation and everything else that we will see. But definitely the benefits of these will come in the next year only because of all the warehouses which we actually kicked off, only one has become functional as of now in Calcutta. Otherwise almost everything is going to come online in the next few quarters.
Madhav Marda
So any guidance for the pharmacy operating EBITDA margin which was at 4.5% this year, any outlook for that over the next couple of years? Do you see that crossing 5% in the next two years or so or would you give some sense there? Thank you.
Gangadi Madhukar Reddy
I think so, Madhav, because the number of stores we are adding are not very significant. So the drag of the new stores is not going to be significant. But I think we’ll continue to get the benefit of private label. So that should basically help us expand the margin, I think.
Madhav Marda
Perfect. Got it. Thank you.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. Our next question comes from the line of Binopathy parampils from, from Elara Capital. Please go ahead.
Bino Pathiparampil
Hello, Am I audible?
Gangadi Madhukar Reddy
Yeah, yeah.
Bino Pathiparampil
Hi. Good evening. Madhukar. This revenue growth, with all the private. Label shift happening, are we looking at a relatively low revenue growth, increasing margin sort of strategy going forward?
Gangadi Madhukar Reddy
Not as much as we have seen in the past. The main reason is I think the early adopters have basically come in and bought the private label already. So the growth from now on the private label is going to be just 1%. So the substitution of the brands is not going to be very high. So whatever growth which comes in through the brands will continue to accrete to it. And since the substitution is not going to be high I don’t expect that the drag because of substitution is going to be very high on the top line, but the margin will continue to grow mainly because we will at least continue 1% every quarter in the mix.
Bino Pathiparampil
Got it. So things get stabilized now. More second question on store edition. The 600 that you mentioned, would that be net or gross?
Gangadi Madhukar Reddy
That will be net.
Bino Pathiparampil
Net 600. Okay. And yeah, finally on your tax rate. Why is it below the 25% level and how you see that moving over the next two, three years?
Sujit Kumar Mahato
On the income tax there, there is a deduction which the company continues to claim. It’s the section 80 AJA, which is linked with the employment created for new employees. So as we continue to expand our network and new employees get added to the network, there is an additional deduction which is available over the next three years for the amount spent on salaries for these new employees. And that is driving down the tax numbers. And we expect this to continue in the same manner provided this section is available in Finance Act.
Bino Pathiparampil
Understood? Yeah, I’ll jump back to you. Thank you.
operator
Thank you. The next question comes from the line of Ajax Lakhani from Unifi Mutual Funds. Please go ahead.
Aejas Lakhani
Yeah. Hi. Madhukar and Sujith. Nice to see the operating EBITDA number, you know, truly reflect the efforts that the team has been putting in. My first question, Madhuba, to you, is that, you know, at the start of the year we had called out for the 600 store edition and we’ve closed at about half of that. So could you just walk us through what really took place for us to, you know, drop this run rate and how are you thinking at that point of time?
Gangadi Madhukar Reddy
So, Ajis, a couple of things happened actually. One, the first quarter of last year was not great because of elections and everything else. And then by the time that we went into the second quarter and all, we realized that our warehouses were restrained. They were not able to supply all the stores. And we decided that we would actually slow down, especially in the periphery and all. So for instance, in Tamil Nadu, we now have set up warehouses in Hubli and Madurai and likewise in other places in West Bengal and all. So the places which would be supplied by today’s Madurai and Hubli were receiving the material very late.
And we were having a little bit of challenge in the main cities because of manpower, attrition and everything. So because of all those reasons, we thought we’d actually set up the backend properly and come back and actually start growing once again. And that’s the reason we took a breather out there. We were around 400, but in the end I think we guided towards a 300, 350 number and that’s where we ended. We did a total of 398 though garage editions. But we shut down a bunch of stores which were old and you know, had their characteristics kind of changed and were relocated and all.
So the net addition then ended up being only around 305 stores.
Aejas Lakhani
Got it. Madhukurj. The second question actually is a leaf of what you just answered. So one is that could you just give some further color on the 10 warehouse that you have added in the year. Is this more from a densification standpoint or is it more expansionary towards tier 2 and onwards? And you know, just, you know, double tapping into that question. I’m trying to understand how have fill rates been. And if you can give me any color because have fill rates been affected in. Because you know there was supply chain from a warehousing standpoint constraint, have fill rates been affected? And third, if you could just speak a little bit about the attrition aspect.
Gangadi Madhukar Reddy
Yeah, yeah, fill rates, definitely they were affected and they were affected largely in the remote parts of the states which are getting supplied from the main warehouses. For instance, the Bangalore warehouse is supplying all the way up to UDP Mangalore. And that was taking a hit because of attrition at Bangalore. Attrition in the larger cities in South India has been fairly high. So combined both with warehouse which is not fully adequate and people and being short of people, we were barely able to supply the main cities. And so our sales and our fill rates and then consequently our sales in the smaller towns took a hit.
Yeah, attrition fairly high. We feel that as we go into the smaller towns it will not be as high and we’ll probably be able to get slightly cheaper manpower. But at least that is not even if the cost is not very different. Second, definitely as we go forward fill rates, we expect they will be better and hopefully they’ll all get reflected in sales as we go forward.
Aejas Lakhani
Understood. And could you just share that the warehouse, was it more densification or expansionary towards tier two, tier three cities?
Gangadi Madhukar Reddy
Yeah. Okay, by densification you would mean are we doing more in the, let us say in Hyderabad or Bangalore or Chennai? No, we are definitely setting up warehouses in the, let’s say outer parts of the state. Whereas in the initial stage we basically have just one warehouse for one state. We’re now doing anywhere from two to three for each state. So you could Say this is definitely densification of the state itself. They’re putting in more in the state but away from the main warehouse and to increase the supply lines to the remote parts of the states.
Aejas Lakhani
Understood. And just one last thing. On the private label, pharma as well as non pharma, you know, in your own mental construct, where are you from a category standpoint? Are you seeing white spaces there that you still wish to populate or you know, the first wave of private label that you needed to introduce is all there. And it’s just now about the push through and conversion.
Gangadi Madhukar Reddy
On the pharma side. I don’t think there’s that many gaps. The one big gap I would say is insulin, but that’s not an easy one to actually fill. We will have to find a willing and reliable partner out there for us to actually move forward on that. So there are not that many gaps. And I think right now, as you said, it is going to be more about conversion of more of the newer guys. And that’s why we say 1% every quarter. We’re not going to be really jumping up on those numbers anytime soon. On the other hand, the private label and general goods, that’s a wide open thing there.
We can add a lot more categories and probably a lot more. I would say we’d have a lot better chance of selling if the range was bigger so that the customers who walked into a store to buy the regular stuff now can see a variety of brands from us and appreciate the quality and the price difference and then start buying. So that would be all additional sales. And there we see a lot of scope, not as much in pharma, but definitely in the non pharma side.
Aejas Lakhani
Understood. And finally on diagnostic, I’m sorry Sujith, I missed the starting remark where you called out the count of paying subscribers that we have. And where are we on that journey? I know we had a number which was significantly higher. So what’s the call out there from a diagnostic standpoint? Are we just going to keep trying to increase that member base right now and are we going to add those feeder diagnostic centers so that they feed into your larger centers? Just some color on diagnostic. Thanks.
Gangadi Madhukar Reddy
Sure. The number was 157,000 active plants and 327 active plants underlying lives versus 152. So while we added 5,000 plants out there, it is definitely much lower than what we want. We need the number to be closer to 250,000 for us to actually take the leap of expanding to other states and all. So for now we are going to continue to push forward and try to get this number up. We are seeing obviously a bigger level of acceptance out there and one of the ways in which we expect to actually grow this number is by increasing the standalone collection centers across the city and increase the service level or increase the number of people available for home pickup of samples.
So both these places we will see some expansion, hopefully touch more people and increase the number of plants.
Aejas Lakhani
Understood. And Madhgur, the people who go for the home collection. So is my understanding correct that at the existing store only you will have a technician who can double up as that and then go and collect it? Or are you talking about incremental hires and space required to execute the same?
Gangadi Madhukar Reddy
No, no, no. So there’s no space required. This is an online thing. You open up the slots based on the number of people you have and typically as the demand continues to grow, you keep hiring new people. So it is not in one shot. So rarely do we have a situation in which the people are not actually. In fact today we have have a shortage of slots and some of the active members are actually wanting more slots to be opened up for home pickup. So yeah, the way and space, that’s not space and that’s not the people in the store don’t double up.
The home service guys are different.
Aejas Lakhani
Understood. Thanks so much and wishing you the best.
Gangadi Madhukar Reddy
All these orders are booked a day in advance and the people in the standalone collection renders they stay there there between 7 to 10 to take care of any walk in customers. They don’t go out to pick up the samples.
Aejas Lakhani
Got it. Thanks for that and wish you and the team the best.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. The next question comes from the line of Gaurav Gandhi from GCAM limited. Please go ahead.
Gaurav Gandhi
Thanks for the opportunity. Sir, how do you plan to reduce. The drug license suspension issue and is there any possibility of any bigger regulatory. Action if such suspensions happen regularly?
Gangadi Madhukar Reddy
No, we are working with the drug departments in order to correct all the issues out there as much as possible. I can tell you for sure we probably are more in line with the government’s mandate than anyone else out there. It is just that we are a larger company so we attract a little bit more attention and we probably and we have to actually report it. That’s why it’s probably news. But otherwise, you know, our stores are way more compliant than anyone else out there.
Gaurav Gandhi
Okay. And the second question, do promoters have any plan to cut down the stake in the company in next three to four years?
Gangadi Madhukar Reddy
Three to four Years is a long time. I’m not really thinking about it right now. But I don’t expect to sell any shares in the near future, at least.
Gaurav Gandhi
All right, thank you.
Gangadi Madhukar Reddy
Yeah, just to, you know, finish off that, make the answer slightly more elaborate. If I do sell, it’ll be for mainly to clear the debt. And if, when it comes to refinancing, I may end up doing a little bit of that. But otherwise it is not. I’m not looking to exit any amount of my stake out there.
Gaurav Gandhi
Okay. Okay. Thanks for the clarification. Thank you.
operator
Thank you. The next question comes from the line of Lakshmi Narayanan KG from Tunga Investments. Please go ahead.
Lakshminarayanan K G
Hi, Madhukur. A couple of things I just want to understand. What are your top three priorities for the next three years?
Gangadi Madhukar Reddy
So I would say opening stores, 600 stores. That’s the number one priority. Also getting into, let us say, making sure that the pilot for the franchisee store goes well. We’ll try to make the franchisee thing as successful as possible. Given that the margins now have increased for us overall. We feel that this is the time for us right now where we can actually share a little bit with the franchisee and make it successful at the same time, reduce the overall, let us say, burden of investment as well as the, you know, the overall task of managing people slightly less onerous for us by going to the franchisee side.
So we feel if we can get the franchise thing right, we will be able to go much faster. So outside of opening the stores, doing the franchisee thing, I think the third one would be to continue to grow the private label and see if we can actually continue to increase the margins for us.
Lakshminarayanan K G
I see that you have been expanding in Kerala in the last one year, how successful it has been, because I could see a significant ramp up in Kerala and what kind of potential it will have in the next two, three years.
Gangadi Madhukar Reddy
We are actually, you know, in comparison to other states and all, we’re still going slow in Kerala. Kerala has its own set of problems out there. It’s not very easy to. There’s several issues out there. We see a lot of potential. It’s very dense. People are affluent. There’s a lot of, I would say, need for medication out there and all, but it had its own set of problems. So we are still kind of doing a wait and watch kind of thing. We have put in a few stores. We want to make sure that they’re all profitable and we find the right model for us to expand.
Lakshminarayanan K G
Got it, Got it. And you talked about 600 stores. That is over a period of. Can you just tell me in the next few years how do you want to ramp up your 600 stores?
Gangadi Madhukar Reddy
The seasonal are going to be in the next 12 months so they will spread out. So we will continue to open. Maybe Q1 is not going to be as big as the other quadrants typically, but yeah, otherwise it will be throughout the year.
Lakshminarayanan K G
Got it. And this revenue mix which you actually show in your slide 14, this, you know, I mean I think this is calculated as at the discounted price or at the mrp.
Gangadi Madhukar Reddy
It is a net price, net of discounts and everything else.
Lakshminarayanan K G
It’s a net of discount. So which means that normalized thing we, you know our, I mean I’m just trying to understand our own brand pharma should be, you know what would be the normalized price because this is net of discount.
Gangadi Madhukar Reddy
So if you actually compare it MRP to mrp, which is more this thing of the volume, the pharma private label in the last quarter would be around 22% and the non pharma in the last quarter was 13%. So bearing in mind that 80% of our overall sale comes from pharmacy, given that we are already at 22% that would mean roughly around 28% of all medicines sold today by GMV in GMV terms come from the Nutbus brand.
Lakshminarayanan K G
And in terms of new state addition, whichever states you are planning to go for the next.
Gangadi Madhukar Reddy
So the states are Madhya Pradesh, Chhattisgarh and Kerala. That remains the thing, not changed.
Lakshminarayanan K G
Thank you.
Gangadi Madhukar Reddy
Yeah, thank you.
operator
Thank you. Our next follow up question comes from the line of Sayan Mukherjee from Nomura Securities. Please go ahead.
Saion Mukherjee
Yeah, thanks for the follow up. Matugan, this you mentioned 28% of pharma is on private label. So what? And it will keep growing as you mentioned. Do you have any sort of, you know, optimum fraction in mind that you know where you where this number can settle eventually?
Gangadi Madhukar Reddy
Yeah, I would like it to go all the way to 90%. But the thing is we’ll probably settle down at a much lower number mainly because of two things. One, despite our discount there are still some brands which would be cheaper. There are still some naturally really inexpensive brands which you can’t anyhow substitute. So there are going to be those. There are also going to be products for which we don’t have a substitute. The Insulinol and a bunch of other things. And as we go forward we’re also seeing an increasing share of patented products with the likes of Bonzara and all Coming in.
If we start selling a lot of those, those will not have substitutes for a long time. So between all these things and the fact that not everyone is going to switch, we arsenals are going to be obviously pushing a lot on emphasizing a lot more on increasing the top line rather than just the private label. I think over the next 3, 4, 5, 6/4 a growth of not more than 1% is to be expected on the private level side. Beyond that sign, I’m not sure. As more and more companies get to the generic side and they start talking about it, as the government starts talking about it, the overall word of mouth may spread to an extent where people may just.
It may reach a tipping point where they just say that’s it. We will end up taking just the genetics and nothing more. And then it may just change. But right now I don’t see that. I’m thinking for the next several quarters it’s going to be 1% every quarter.
Saion Mukherjee
Understood. And just one question. I was thinking this whole GLP1 opportunity which is going to come up next year in terms of supply chain, is that something different? You know, which sort of benefits in any way? Matplus or you think it’s like one of the other products like which goes off patent and obviously we shouldn’t expect any private label play in the short term in that, right?
Gangadi Madhukar Reddy
No. Why would you not accept private label? Obviously that is a great product to launch a private label. We’ll definitely try and do it as quickly as possible. We already talked to people about that so that will happen. Now is there anything special in the supply chain? Not really. Obviously the cold chain and all have to be maintained and everything else, but that’s about it. I don’t think there’s anything, I mean it’s not really a big deal. It’s like selling insulins anyway.
Saion Mukherjee
And like private label for that injectable. Like when can you, I mean launch? I mean is there any timeline you have in mind?
Gangadi Madhukar Reddy
So we are talking to people. I can’t give you the exact timeline but I know it is coming out of patent. I think March 26th. And I’m hoping that we should be ready on day one or maybe if not day one, maybe month one.
Saion Mukherjee
Okay. Okay. Interesting. Thank you. Thank you.
operator
Thank you. Our next question comes from the line of Harith Ahmed from Aventus Park. Please go ahead.
Harith Ahmad
Hi. Thanks for the opportunity. The share of pharma private label which you disclosed at around 21% of DMV for the quarter Madhupur, can you give some color on how this number looks like across various states and across tier. One to tier four markets, how different is this share?
Gangadi Madhukar Reddy
So I don’t have the exact numbers out there, Harith, but I can tell you this for sure. Tier 4, Tier 3 obviously are going to be much, much higher than tier one. But that said, you know, Hyderabad, Bangalore and Chennai are not that bad. Even Bombay, which is the lowest, lowest I think for us. And private label is still at around 10 or 11% for us. So smaller towns, the private label medicine could be as high as 30 or 32%. Yeah, but state wise I don’t think it really differs that much. It is more in line with, you know, our own entry into the state.
So it depends on when we have actually gone to the place. So the older we are, the better the known we are, the higher the overall private label mix in the state.
Harith Ahmad
And you touched on opening stores and other franchisee models. Can you share a bit of color on the economics? Will you be booking the entire revenue? What kind of share will go to the franchisees and will be stores on. Top of the 600 stores that you vetted for?
Gangadi Madhukar Reddy
No, actually they will be part of the 600 stores. Part of the stores which are doing will be franchisee. This will be like a wholesale kind of model where we sell the product to the store and he then sells it downwards. And yeah, it will be a Met plus store where we act like a super distributor. You could say the only product that that franchisee can sell is stuff which we sell him. So everything will be sold to him and that will be the price which you will. So yeah, the top line will come down slightly because of that.
But the overall return on capital and everything will be much better.
Harith Ahmad
Thank you for taking my question.
Gangadi Madhukar Reddy
Thank you.
operator
Thank you. The next question comes from the line of Tarang Agarwal from Old Bridge. Please go ahead.
Tarang Agrawal
Hi, good evening. Just quite a few questions actually on bookkeeping. What are your number of stores in tier two and beyond?
Gangadi Madhukar Reddy
Don’t have the exact number but I think around 40% now of our stores probably are outside of the tier one.
Tarang Agrawal
Sorry, 70% is it? I mean you used to call out this number in your opening remarks, right?
Gangadi Madhukar Reddy
I think 40% of our stores. But I’ll come back to you on that. So why don’t you go ahead with your rest of the question.
Tarang Agrawal
Okay. In Q2, if I’m correct, I think you opened a store in up, is that right? I mean is up still there in your footprint or it’s no longer there?
Gangadi Madhukar Reddy
See, we Opened a store in Noida, one in Gurgaon and one in Delhi. So this is largely to basically see if you could enter Delhi as a city and do, you know, do online delivery out there. So we still, you know, that pilot is still running. Some of the stores are doing well, but it is not to enter this of Haryana up or this one.
Tarang Agrawal
Okay, got it, Got it. Madhuka, you said you, you guys have added about 10 warehouses in FY25. What was this number in FY24?
Gangadi Madhukar Reddy
So 10 less.
Tarang Agrawal
No, no. I mean, what’s the overall warehouse number as on the 31st, March 2025?
Gangadi Madhukar Reddy
It has actually doubled. I would say close to double because we had one, one larger for each state.
Tarang Agrawal
Okay, got it. And in, in terms of working capital, as the store matures, you know, what are the inventory days that you guys generally work with? I mean, for your reasonably matured store, in your footprint, generally, what are the inventory days that that store would work with?
Gangadi Madhukar Reddy
Around 40 to 43 days.
Tarang Agrawal
But one would believe that, I mean, that’s the number that you work with for stores greater than 12 months. Correct. But typically you would make it even more efficient. Right. As the store matures Even further, or 40 to 43 is where sort of you hit the ceiling.
Gangadi Madhukar Reddy
Not necessarily. If the store sales go beyond 2 lakh rupees per day, it will probably come down a little bit. But anything below that, it’s going to stay at around 40 to 43 days, or maybe it will go down to 37. See, the reason is the store’s reputation is built on fill rate. So if you’re going to constantly cut the long tail, people will stop coming to us. We have several products in our store which are, which we would have not sold even once in six months or once in seven months. But they need to be carried because every month we see from the list of products which you sell, there are several products which you have never sold in six months, sold as part of a customer overall basket.
And if it were not for that product, maybe the customer would have walked. So the thing in pharma is not focusing a lot on inventory days at the store, but more on the fill rate and the top line, I would say.
Tarang Agrawal
Got it. Now, just out of curiosity, you know, I mean, given the stock warehouse expansion that you’ve had, one would have presumed that your inventory days at the warehouse should have increased materially more. Right. But that hasn’t happened. So just wanted to understand because logically, if you’re adding a warehouse, you would typically add as much of SKUs and product that was there in the earlier warehouse and that would have a significant drain on your overall inventory. But that hasn’t played out. Is that my understanding correct though?
Gangadi Madhukar Reddy
Not really. But the thing is it is still to play out because the stores, the warehouses are not yet functional. There are only one warehouses up right now. The others are actually getting ramped up. But in the initial stage maybe, but afterwards it’s not going to really change that much because each of the warehouses is going to be taking care of at least 250 to 300 stores. So the inventory in, let’s say the Chennai warehouse is not going to be split between Madurai and Chennai.
Tarang Agrawal
Got it, Got it. And I mean from a working capitalist standpoint, both on inventory and payables days, do you think there is scope of improvement or you’ve maxed out there?
Gangadi Madhukar Reddy
I don’t think there’s a lot to be done out there.
Tarang Agrawal
Okay. And last, just if this number is handy with you. Actually to Madhav’s question, What was the MRP rate? MRP growth rate for Q4? And second, if you could give us a sense on what were the bills cut through the quarter?
Gangadi Madhukar Reddy
We don’t have that number. The MRP growth I think was 0.4% or something. 6.4.
Tarang Agrawal
6.4. Okay. Okay, thank you.
operator
Thank you. Our next question comes from the line of Velina Jain from Perpetuity Ventures. Please go ahead.
Vilina Jain
Hi sir. So I just want to understand our employee expense trends. Over the last three quarters it has grown significantly. So firstly on that. Secondly, to grow private label pharma, are we using some kind of incentives in the source?
Sujit Kumar Mahato
Yeah, I think it’s a great question. So it has both the components, as you rightly mentioned, as the private label sales increases, there is also the component of the employee incentive. Technically we would have wished that to go from the gross margin, but the way the accounting literature dictates, it goes as the selling cost and therefore it is shown as part of the salary expenses. So that’s the predominant thing for the increase. In addition to that, couple of quarters ago we had highlighted that we have brought in for the purpose of retaining employees. There is a retention plan for the store level employees.
So that is also contributed to a little extent. Based on these reasons, the costs have gone up.
Vilina Jain
Highlight what would be this selling cost which is like an employee incentive for private label. And how should we see this growing as we grow the private label?
Sujit Kumar Mahato
So it’s again based on private label pharma, then private label non pharma and then there are. During this year, we are also trying to align to the overall sales. So this is a dynamic thing which we try to do it every quarter internally. So maybe offline. I can take that with you.
Vilina Jain
All right, thank you.
Sujit Kumar Mahato
Thank you.
operator
Thank you, ladies and gentlemen. We will take that as a last question for today. I now hand the conference over to Mr. Sujith for closing comments.
Sujit Kumar Mahato
Thank you, Sagar. I thank all participants on this call for your interest in the MedPlus journey. Our investor relations team can be contacted@iredplus India.com thank you.
operator
Thank you on behalf of MedPlus Health Services Limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.