Yatharth Hospital & Trauma Care Services Limited (NSE: YATHARTH) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Yatharth Tyagi — Whole-Time Director
Nitin Gupta — President, Finance and Chief Operating Officer
Amit Kumar Singh — Group Chief Executive Officer
Analysts:
Aman Vishwakarma — Analyst
Pujan Shah — Analyst
Mohit Mehra — Analyst
Priyank Parekh — Analyst
Tushar — Analyst
Virat — Analyst
Sumit Gupta — Analyst
Gaurang — Analyst
Prashant Nair — Analyst
Arpit Shah — Analyst
Krishit Shah — Analyst
Nirali Shah — Analyst
Ritika Khandelwal — Analyst
Shubham — Analyst
Naman Bhansali — Analyst
Prerana — Analyst
Akshaya Shinde — Analyst
Siddharth — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q2 and H1 FY ’25 Earnings Conference Call of Yatharth Hospitals and Trauma Care Services Limited, hosted by PhillipCapital. [Operator Instructions] Please note that this conference is being recorded.
Let me draw your attention to the fact that on this call, our discussions will include certain forward-looking statements, which are predictions, projections or other estimates about future events. These estimates reflects management’s current expectations about the future performance of the company. Please note that these estimates involve several risks and uncertainties that causes our actual results to differ materially from what is expressed or implied.
I now hand the conference over to Mr. Aman from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Aman Vishwakarma — Analyst
Thank you, Sejal. Good morning, everyone. On behalf of PhillipCapital Private Client Group, I welcome you all to the Q2 and H1 FY ’25 earnings conference call of Yatharth Hospital and Trauma Care Services.
From the management, we have Mr. Yatharth Tyagi, Whole-Time Director; Mr. Amit Kumar Singh, Group Chief Executive Officer; Mr. Nitin Gupta, President, Finance and Chief Operating Officer; Mr. Pankaj Prabhakar, Chief Financial Officer; Mr. Neeraj Vinayak, Head of Strategy and Investor Relations; and Mr. Sonu Goyal, Group Finance Controller.
I now hand over the conference to Mr. Yatharth Tyagi for his opening remarks and we will then open the floor for question-and-answer session. Over to you, Mr. Tyagi.
Yatharth Tyagi — Whole-Time Director
Good afternoon, and a very warm welcome to Yatharth Hospitals and Trauma Care Services Limited’s earnings conference call for the quarter ended September 30, 2024. We have uploaded our presentation on the exchange and the company website, and I hope you all might have received and have had an opportunity to go through it.
I am pleased to report that Yatharth Hospitals have achieved exceptional growth in revenue and profit, surpassing 30% year-on-year in H1 FY ’25. This performance underscores our commitment to high-impact growth strategies, operational excellence, and a continued focus on advancing healthcare delivery.
Our expanding network of super specialty services alongside the successful integration of the new Greater Faridabad hospital has been instrumental in driving this momentum. The Yatharth brand is now attracting leading doctors and specialists across NCR region, reinforcing our position as a trusted healthcare provider.
Our commitment to clinical excellence is demonstrated by several noteworthy cases this quarter, showcasing the advanced medical capabilities at Yatharth Hospitals. Some of them are, number one, we successfully treated an elderly patient with a life-threatening 8-centimeter left atrial myxoma through a complex surgery involving meticulous excision of the tumor through an open-heart procedure. Advanced cardiovascular techniques were employed to ensure the safety removal of the tumor while preserving critical heart structures, such as the mitral valves and atrial valves, resulting in a full recovery of the patient.
In another instance this quarter, a rare gastroenterology procedure was performed on two male patients with severe acid reflux by successfully executing ARMA, Anti-Reflux Mucosal Ablation, procedures achieving discharge within just 24 hours of admission.
Our team also performed a non-surgical colonoscopic removal of a giant rectal polyp in an 82-year-old patient with no complications and a symptom-free recovery within 24 hours benefiting from procedure that minimize the risk of sepsis and avoided external incisions.
In another scenario, an international patient with a recurrent retroperitoneal liposarcoma underwent a complex surgery to preserve the right kidney while completely removing a large 4-centimeter tumor.
These cases reflect the high standard of care and cutting-edge treatments available at Yatharth Hospitals. I’m also proud to announce that our Noida Extension hospital has recently been accredited by Joint Commission International, JCI, making it the first hospital in Uttar Pradesh to receive this prestigious recognition. We are also among the few hospitals to achieve JCI accreditation in a first attempt across India. This accomplishment highlights our commitment to providing healthcare of highest international standards and reinforces our position as a leader in quality healthcare delivery.
Aligned with a vision to be a leading healthcare provider in North India, we are excited to announce our recent successful bid for a well-established hospital in Model Town, New Delhi, offering all the high superspecialty services, marking our entry into the attractive market of Delhi. The acquisition is under the SARFAESI Act 2002 through e-auction at an estimated cost of approx. INR160 crores. The hospital has an expandable bed capacity of 300-plus beds.
We also recently entered in a strategic collaboration agreement to acquire majority stake in another 400-bedded hospital in Faridabad, Haryana for approximately INR91 crores. This is a second acquisition in Faridabad following a Greater Faridabad acquisition in March 2024. Built on approximately 2 acres of land, the hospital has completed structure and is expected to be operationalized by the start of next fiscal. The company plans to invest additional INR100 crores towards equipping the hospital with latest medical equipment with all high-end superspecialties, including full suite of oncology services and robotics. This acquisition enhances Yatharth Hospitals’ position as the leading healthcare provider with largest private bed capacity now in Faridabad region and a critical step forward towards strengthening our reach in the NCR region.
As we continue to scale our operations, we are committed to maintaining the highest standards of governance and transparency. Aligned to this, we have appointed Deloitte as our internal auditor, ensuring rigorous oversight of our process and reinforcing our commitment to best practices in governance and operational integrity.
Overall, we are encouraged by the progress made in H1 FY ’25 and are excited to build on this momentum in the coming quarters. Our focus on patient-centric high-quality healthcare combined with strategic acquisitions and investments in medical technologies will drive long-term value for our stakeholders. We remain committed to delivering exceptional care, expanding our network, and strengthening our relationship in the healthcare sector.
I now hand over the call to Mr. Nitin Gupta for financial updates.
Nitin Gupta — President, Finance and Chief Operating Officer
Thank you, Yatharth, and good afternoon, everyone. I am delighted to share that Yatharth Hospital has delivered industry-leading growth in both the revenues and the profitability for the quarter and the half year ending September 30, 2024.
Let me first take you all through the results for this quarter. During the quarter, Yatharth Hospital has achieved a revenue of INR2,178 million, reflecting a substantial growth of 27% Y-o-Y and a growth of 3% Q-on-Q, driven by the growth in our occupancy and ARPOB. Notably, our Noida Extension hospital registered the highest growth with a remarkable 53% Y-o-Y increase in revenues, now contributing 37% of our top line. Our inpatient volumes were up by 32%, while our outpatient volumes were up by 16% Y-o-Y in this quarter.
We have also made significant strides in advancement of our tertiary and the quaternary care services. Earlier this year, we introduced a new radiation PET line at our Noida Extension hospital and robotics across our Noida Extension, Greater Noida, and the Greater Faridabad hospital. These investments have significantly boosted our oncology revenue with the oncology now contributing 20% to the Noida Extension revenue and 11% to the Group’s overall revenue, a four-fold increase from the last year.
The shift towards the high-value superspecialty services had driven a notably 11% Y-o-Y increase in our ARPOB, which now stands at INR30,641 for the Q2 FY ’25. Notably, Noida Extension achieved an ARPOB of INR38,166, driven by its 70% contribution from the superspecialty services, reflecting our focus on the high-end healthcare solutions.
Our EBITDA for this quarter improved by 20% Y-o-Y to INR546 million. However, our EBITDA margin this quarter were at 25.1% compared to 26.6% last year. The reduction in the EBITDA margins for the quarter was on account of the operational losses at our Greater Faridabad unit, which became operational in the mid-May this year. Adjusting for the Faridabad Hospital, our EBITDA margin could have been in the range of 26% to 27% for the quarter. Within five months of the operation, our Greater Faridabad hospital now contribute to around 4% of our top line, and thus we remain optimistic about contributing to the Greater Faridabad facility in our overall Group’s revenue.
Overall, our profit grew by 12% Y-o-Y and 2% Q-on-Q at INR310 million. Our relatively slower profit growth recorded due to an increase in the depreciation expenses this year in the quarter with the Greater Faridabad acquisition.
Now coming to the half-year numbers. Our revenue grew by 32% Y-o-Y to INR4,296 million. Our inpatient volumes were up by 30%, while our outpatient volumes were up by 12% Y-o-Y in H1. Our overall Group occupancy also increased to 61% in H1 ’25 compared to 54% same period last year. Notably, our Noida Extension and the Jhansi-Orchha have shown impressive occupancy growth, reaching to 60% and 47%, respectively compared to 41% and 19% in the same period last year. Our Greater Faridabad hospital, operational since May ’24, has also delivered solid occupancy growth.
Our EBITDA for the half year stood at INR1,083 million, up by 25% Y-o-Y, while EBITDA margin stood at 25.2%. Our profit for the half year stood at INR616 million at 32% Y-o-Y.
Our balance sheet continue to remain strong with a net profit position at INR1,541 million. Our company’s credit rating has been recently upgraded by the CRISIL at A minus with a stable outlook, reflecting an adequate safety and the low credit risk of our financial instruments. Our return on the capital employed post the Faridabad acquisition came at 23%. Our substantial efforts to reduce our debtors by optimizing our payer mix has paid off with the working capital days at the end of September ’24, reducing to 104 days compared to 112 days in the March ’24 despite the high growth in H1.
Looking ahead, we remain confident to not only sustain the growth momentum in revenue and the profitability but also towards capitalizing opportunities ahead to keep operational excellence and expanding our reach in North India.
Thank you. With this, I would like to hand over to the moderator for the question and answers.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions]. The first question is from the line of Pujan Shah from Molecule [Phonetic] Ventures. Please go ahead.
Pujan Shah
Hello, sir. Am I audible?
Operator
Sir, I would request you to please use your handset.
Pujan Shah
Yeah, sure, sure. Hello. Am I audible now?
Operator
Yes, sir. Please go ahead.
Pujan Shah
Yeah, yeah. Sir, first question would be on the Delhi, the acquisition what we have done from the SARFAESI Act. Sir, just wanted to know like what amount we will be trying to deploy for the restructuring and trying to implement for better structure coming years? And second question would be on the thing which is related to — is it like — what could be the ARPOB possibility in this specific hospital and what we have been writing to, what we are into specific in this thing?
Yatharth Tyagi
Hi, good afternoon. So the Delhi hospital, the Model Town hospital that we have got through the SARFAESI Act, so we will be paying around, if you add the expenses, INR160 crores will go to the Union Bank through which we have won this bid for this hospital. Around 25% has already been paid from the company’s book to the bank and the rest would be paid very soon.
Above and beyond this INR160 crores, we will spend a bit more on the upgradation of certain infrastructure as well as upgrading the medical equipment. So we’ve seen that infra updation and medical equipment should be costing somewhere around INR60 crores to INR70 crores more. So overall, we see an outlay of INR220 crores for this hospital.
And the hospital is located in a very prime area of Model Town in Delhi with huge residential population residing across the area. There are lot of renowned doctors also practicing in the nearby hospitals there. And we feel that it has a huge potential. The expandable bed capacity that this hospital can have is up to 300 beds.
As far as your question on the ARPOB is concerned, we feel the ARPOB in this hospital will be more than the ARPOB of our Noida hospitals because in Delhi, the pricing is bit higher compared to Noida and Faridabad. And also, we will be deploying superspecialties from day one in this hospital. And in the region — in the vicinity, the ARPOB is also higher of other hospitals. So we feel around an ARPOB of somewhere close to INR40,000 is easily achievable in this hospital.
Pujan Shah
And sir, you told — you correctly said the expandable capacity is 300 beds. So what would be the current capacity of the — as of now?
Yatharth Tyagi
It would be close to 150 to 170 beds.
Pujan Shah
150 to 170. And my second question would be on the acquisition of Faridabad hospital. The — like currently, you — like we have been investing INR91 crores for 60% of the stake as per the enterprise value what we have been deriving at. And so — and additionally, we will be investing INR100 crores. So how we have been planning to — like will it be the stake would be majority of ours? Like after that 100% of the acquisition, then we will invest INR100 crores or like we will be keep investing on a 60%-40% basis.
Yatharth Tyagi
So we will keep on investing on 60%-40% basis; 60% as the acquisition cost that we were on INR90 crores, plus more will be spent similarly, as I was mentioning for upgrading Delhi hospital, same will be spent in Faridabad to finish the structure. Certain minor work is still left and all the medical equipment needs to be put in. Here the medical equipment cost will be a bit more than the Delhi hospital because this Faridabad new hospital will also have the complete oncology machine. So it will have radiation oncology, PET scan, [Indecipherable] therapy.
So similar outlay of the cost that including the acquisition as well as the medical equipment, it will be almost totaling — would be similar to the Delhi hospital cost. And this will be — again, both these two hospitals, we are trying to operationalize from the first day of the new financial year. We might do a soft launch earlier, we might start OPDs earlier, but as far as the complete hospital launch is concerned, that’s what we write.
Pujan Shah
Okay, okay. Got it. And all will be the — all the capex infusion would be via internal accruals or we have been planning some of the debt also?
Yatharth Tyagi
I think we have all the options open to us and with time, we will consider how to go about that.
Pujan Shah
Okay, no issues. Thank you and all the best, sir.
Operator
Thank you. The next question is from the line of Mohit Mehra from Guardian Capital. Please go ahead.
Mohit Mehra
Hi, thanks for this opportunity. This Delhi hospital, it was set up in 2019, right? How come it will get operationalized by Q1 FY ’26? I don’t understand the long time period.
Yatharth Tyagi
Okay. So this hospital is currently non-operational for last almost one and a half years. This hospital was earlier being run by a family of doctors who had got the hospital and they were running it from the land that — forming a trust. But they faced some financial difficulties, so they couldn’t continue the hospital and the hospital went to the banks through whom they would have extended the loan to the previous promoter and banks then further resell this hospital in an online auction. So the hospital has been technically not operational for last one and a half years. So that’s why we would be upgrading it, making it operationalized, installing new medical equipment, recruiting doctors. That’s why we plan to start it at the new fiscal.
Mohit Mehra
Got it. And the land is also Yatharth’s for both the newly acquired hospitals or will rent we need to pay?
Yatharth Tyagi
No. So the complete land structure and the buildings would belong to us for both these hospitals. As it’s a SARFAESI deal, the Delhi hospital now, so the land and the structure and the building is — it belongs to Yatharth Hospitals.
Mohit Mehra
Okay, good. And what caused this sharp rise in employee expenses?
Yatharth Tyagi
So if you see, our thought process has been last one to one and a half years is to get leading and renowned doctors across NCR and because also we have started certain new therapeutic areas, which we were not doing earlier, so new doctors were onboarded and leading doctors, HODs from other hospitals have joined Yatharth Hospitals and are currently also joining. So this could have led to a bit of increase in the employee and the doctor cost.
Mohit Mehra
Got it. But will this exert downward pressure on the margins or do you expect the revenue will more than compensate for the higher opex?
Yatharth Tyagi
I think it will be sustainable. The quarter-on-quarter margins should be sustainable. So that’s what we are targeting.
Mohit Mehra
Okay. That’s it from my end. Thanks.
Operator
Thank you. The next question is from the line of Priyank Parekh from Abakkus Asset Managers LLP. Please go ahead.
Priyank Parekh
Yeah, thanks for the opportunity. Sir, I wanted to ask on the drop in occupancy in our Noida and Noida Extension hospital. Of course, the ARPOB has grown there, but how should we read it with new trend?
Amit Kumar Singh
So see, as you had earlier mentioned that this dropping is mainly on the government business. And as we had mentioned earlier, that’s the government — what we do, we do a very controlled manner in government business. So as this occupancy of Noida and Greater Noida was inching towards optimal utilization, so we thought of let’s have some kind of sanitization on this business and that’s what you see. But impact is — if you see the other — the self-paying patient has increased, contribution has increased. So you will see the next coming quarters, you will see the impact of this act. So this is a totally deliberation. There is no other thing on it.
Yatharth Tyagi
And also the occupancy is hardly overall, it’s 1% to 2% dip. So that’s not a major occupancy dip. In fact, if you see, our IPD volumes have increased and that’s the main aspect. And as Mr. Amit mentioned, it is — what is more important to us is now is the cash segment and the insurance segment has increased and the government segment has decreased, which has only led to this decrease in the 1% or 2% of the occupancy.
Priyank Parekh
Yeah, but there is a sharp drop in Noida hospital occupancy, it was running around 90%, now it has come to 80%.
Amit Kumar Singh
So, this is what exactly I said it. See, if you look at that, where is that headway for the Noida hospital to grow because we can’t grow in terms of number of beds. That’s the limitation which we had. So we thought of let’s work on the payer mix and the case mix, right? And that’s what is this growth and that is what you see the impact on even by ALOS, which earlier it used to be higher because of this government. Now you see that this quarter it’s a bit lesser. So as I said, it’s a totally on a controlled way. We know exactly what we are doing it and then you will see the impact of the coming quarters.
Priyank Parekh
Yeah, okay. So this level of occupancy will remain for upcoming years, right?
Amit Kumar Singh
Yeah, it will increase, but now the incremental increase will be in the cash and the private insurance segment. This is why it might seem a reduction now because the government business has reduced now and every incremental now will be at a higher ARPOB. So that’s how the revenue will increase in an optimized utilized hospital.
Priyank Parekh
Yeah, got it. Understood. Sir, what is our EBITDA loss in Faridabad hospital? Hello?
Nitin Gupta
Yeah. So as we started Faridabad in the month of May, so in the month of May and June, it is basically half of quarter and Q2 is a complete quarter of three months. So there is a loss of — if you see, the loss has been reduced from Q1 versus Q2. Q1 loss is around 256% negative and Q2 loss is coming around 28% negative. Overall, we are on a better trend and the losses are reducing.
Priyank Parekh
Okay, understood. Sir, last question. So this INR700 crores of QIP that we are planning, so how we are planning it to utilize? So first, I think that for our recent acquisition in Model Town and Faridabad, I understand we are going to spend around INR400 crores or INR450 crores. Additional above that, how we are planning to spend and use, specifically when we have INR250 crores of cash in our balance sheet as of now?
Yatharth Tyagi
See, we have a strong cash position and we also have a strong leverage to take bank loans, right? So for us, the company can easily have the option to utilize the cash we have and we can always take more bank debt as and when required. But at the same point of time, we are also keeping an option open because as of now, these two are just not the only hospitals that Yatharth Group will be looking to add in the course of next two to three years, right? There are more acquisitions that will be coming up in next two to three years. So either we utilize the complete cash and take a bank debt today and complete these two acquisitions that we have done in Faridabad and Delhi, but that would mean that in the years forward, that would restrict our growth into being aggressive in terms of the other assets that we are currently evaluating.
So we are also keeping an option open where today we can raise funds for just not these two hospitals, but also certain more aspects. So in the future for next two to three years, if certain more bigger opportunity comes for acquisitions or greenfield, then we can take bank debt that time also. So it would continue to sustain the growth of number of beds that we are doing. So we are keeping our options open as far as that is concerned.
Priyank Parekh
Understood. Sir, if I ask you in other way, apart from this acquisition, what sort of planned capex we have for our existing structure?
Yatharth Tyagi
For existing structure, the planned — yeah, the planned capex we are already doing and we plan to do from an internal accrual. So the brownfield expansion of the Greater Noida hospital and the Noida Extension hospital where we are adding 200 beds and 250 beds each, this will be happening through our internal accruals. And we see a capex of around INR60 lakh to INR70 lakhs per bed for these two 450 bed addition that will be happening in two to three years time. This is already being planned from internal capex. And I would like to also appraise you that the Greater Noida capex, the brownfield expansion, has just started. So we are already on track with that. Any other capex that would be done other than these organic expansions would be done through the other funding.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Tushar from Motilal Oswal Financial Services. Please go ahead.
Tushar
Thanks for the opportunity. Sir, this is mainly to do with the Faridabad. So we already have just started this 200 bed Farida Hospital — Faridabad hospital and now we are sort of getting this another, which will overall expand the bed capacity to say 600, like 400. So just to know your thought process as far as Faridabad as a market is concerned where you’re getting so bullish in terms of ARPOB or in terms of the demand. And given the backdrop that I guess there is a big 2,000-bed Amma Hospital also there. I mean, of course, it’s more from a social angle point of view rather than the profit-making perspective, but just your thoughts on Faridabad as a market first. So that’s my first question.
Yatharth Tyagi
The reason why we have added one more hospital in Faridabad, which is 400 beds and it’s a much bigger hospital will be — we feel that, first of all, the 200 bedded hospital is in Greater Faridabad region. And the newer, this 400-bed hospital, is in the old town and main city of Faridabad. So technically, there would be 15 to 20 kilometers gap between two hospitals. And if you see at the history of the company, that’s what we did in Noida. We first started the small hospital in Greater Noida, then we started in Noida, then we went to Noida Extension.
So we feel that once you become a big player in a city, your brand is able to attract much more patients and doctors. Being a small player of just 200 beds in Faridabad, it’s not that easy to compete with other hospitals which are 500 beds or 600 beds or 300 beds in that region. But now because we will have a capacity of total 600 beds, we’ll be almost one of the largest private player in that region.
So that will be able to sort of benefit us in terms of our brand positioning is concerned. And another reason you see is that even in terms of star doctors, the same cost can be shared between two hospitals. We can actually leverage our profitability and expenses and divide them the same for two hospitals. This is what we even did when we started hospitals in Greater Noida and Noida. So it sort of benefits us in terms of our managing our expenses is concerned.
And obviously, third thing is your brand positioning and — is very important. So now with 200 beds, it’s not that easy to attract the leading doctors of Faridabad. But today, as soon as we have announced a 400-bed hospital, even a 200-bed hospital will now benefit because same star doctors are now willing to join us and work in both the hospitals as head of departments. And so we feel that Faridabad in general is a good hospital market. It is an ever expanding market. There is a road which is even connecting the Jewar Greater Noida Airport to Faridabad. So even that city will benefit from the upcoming airport that is being planned in Greater Noida.
And if you look at the competitive landscape in Faridabad, I think everybody is doing well there. So we feel this city, which is actually an even an older city compared to Noida and Gurgaon, is now undergoing a massive expansion. There is a huge population drainage that comes from the nearby villages of Haryana including Palwal, Sona, there are — even Agra-Mathura highway connects to that region. That’s why we feel and we feel that it was a no-brainer decision for us to take. Even the doctors who had joined us at the 200-bedded hospital used to say that there is a hospital which is 400 beds available, we should definitely look at it. And it is actually from the common concession that we did the study, we felt that it is the perfect choice for acquisition.
Tushar
Got you, sir. Interesting. So, currently, what is the — like I missed, so this is proposed up to 400, but currently what is the capacity?
Yatharth Tyagi
It will be starting as a 400-bedded hospital because it is a new hospital that is starting up. The structure is now complete. Some more months it will require for the interiors to happen. So we will start it as 350 to 400 bed operationalized in that hospital.
Amit Kumar Singh
But we’ll go in a phased manner definitely by looking at its occupancy and others.
Tushar
Understood. So broadly, what kind of ARPOB can be expected from now this 400 bed where you can attract clinical talent as well as superspecialty compared to, say, 200-bed earlier?
Yatharth Tyagi
Yeah. So I think we feel that the ARPOB that our Noida Extension hospital is having, which is one of the highest ARPOB contributor to our overall Group, which is having close to an ARPOB of INR38,000, we feel the bigger Faridabad hospital can at least start off with a similar ARPOB and it can even go beyond because we are not just planning to start [Indecipherable] services, we will be starting liver transplant there, bone marrow transplant. So it will become a center of excellence for the whole region.
Operator
Thank you. The next question is from the line of Virat [Phonetic] from SkyRidge Wealth Management. Please go ahead.
Virat
Hello, thank you for the opportunity. Just need some better understanding regarding New Delhi hospital. You mentioned it currently has a capacity of 150 to 170 beds and you will be spending close to INR220 crores to INR230 crores for the hospital, including upgradation. So will you need to spend extra to get to the 300 mark or will the INR60 crores to INR70 crores for upgradation will be enough for the expansion to reach 300?
Yatharth Tyagi
Yeah, it will be enough for expansion. So when we say INR220 crores total outlay, that includes the INR160 crores acquisition cost plus around INR60 crores would be spent. See, upgradation of two, three floors doesn’t cost much and that’s all what will be required. These two, three floors needs to be constructed. Rest, medical expense can always be almost same for 170 to 300 beds. So the cost is including in that.
Virat
All right. Just some question on your internal rate-of-return requirements and payback period for which you acquired the hospitals for. Like what’s your internal target? And also your maintenance capex figure would be helpful.
Nitin Gupta
So the payback period, we presume that it may be by two years probably the kind of average period we say, perceived.
Yatharth Tyagi
Yeah, two years is the breakeven period that we are looking at. And I think three to three and a half would be the fair payback period is what we are looking at.
Virat
And maintenance capex, sir?
Yatharth Tyagi
So maintenance capex wouldn’t be that high because it’s a newer hospital, so all the machines and equipment will be new. I think — so maintenance capex will not be yearly not more than — INR15 crores will not be the maintenance. It is more than that.
Operator
Thank you. The next question is from the line of Sumit Gupta from Centrum Broking. Please go ahead.
Sumit Gupta
Hi, thank you for the opportunity. Sir, first question is on the overall margins. So like previously you used to guide around 27% margin. So now going forward, can we expect it to be around 25% margins over the next two to three years?
Yatharth Tyagi
So we have always talked about sustaining our EBITDA margins close to 26% — 25% to 26%. And if you look at even with an increase in the doctor expenses, Q-on-Q, even with the increase in the business of cash and private segment — private insurance segment, national business is increasing, our share of superspecialty business is increasing. Even then, our margins are almost, if you say from last quarter, it is close to that. It’s not a variation much. So we feel that the margins that we have now of 25.5% to 26% should be sustained.
Sumit Gupta
Okay. And how much would be the mature hospitals would be making?
Yatharth Tyagi
So mature hospitals would be making — if I talk about Noida hospital, the margins there should be very close to 29%. If I talk about other hospitals, so somewhere around 28% to 29% is the — our mature hospitals would be making.
Sumit Gupta
Okay. And sir, another question is on Jhansi Hospital. So why has the ARPOB declined to like nearly INR12,000, INR12,500 versus if I talk about FY ’23 or FY ’24, it was at around INR18,000. So — and is there any further room to grow for this ARPOB?
Amit Kumar Singh
Yeah. So first of all, see if you look at Jhansi, it’s a — margin as per expected because last year Q2 ’24 versus this quarter — this half year, see, initially, we had no empanelments, governments, and other things, other tiers were not there. So mainly the cash patients were more, right? As we grow, as we get the empanelment, slowly, slowly, as you know that government panels will always drag you in the margin. So this is more of the volume and I think as — see, this is not a right time to look at it, probably the few more quarters. I think the colors will be seen better in Jhansi Hospital. I think we would be in average what we had talked about anything between INR15,000 to INR18,000 — INR15,000 to INR20,000. I think that’s what our expectations from the Jhansi Hospital. I think we would able to achieve it.
Operator
Thank you. The next question is from the line of Gaurang from HSBC. Please go ahead.
Gaurang
Hi, am I audible?
Operator
Yes, sir.
Gaurang
Yeah. Hi, thank you for this opportunity. Sir, I just wanted to understand the evolving competition dynamics in your Noida hospital, given that Max has opened its new hospital as in the acquired hospital just near your Noida hospital, it’s just 2.5 kilometers away. So do you feel that there is a very meaningful change in terms of how our business model is affected by Max opening the hospital there?
Yatharth Tyagi
See as far as the Noida region is concerned, our Noida Extension hospital is the first hospital in the region ever to get JCI accreditation and it just got JCI accreditation a few weeks back. JCI accreditation, not just in Noida, it’s the first hospital in UP, Uttarakhand, and the nearby vicinity to get that and that was a thought process as we feel that there are new players who are entering into the market. We also need to constantly upgrade ourselves in terms of our quality standards, in terms of getting more doctors is concerned.
So it’s something that we are doing regardless of who are entering, who is not. We also feel that it’s actually good for the Noida market that other big players are now entering here. If you look at what is happening in Gurgaon, this is probably now Noida’s time to happen because all players started this journey in Gurgaon probably seven, eight years back. And if you look at the market which is developed for all hospitals being present there, more doctor talent move there, more ecosystem for international patients develop, more facilities develop and this mindset of Noida patients to going to Delhi, to going to Gurgaon as more hospitals open up in Noida. So we feel it’s good for the Noida market. We are constantly evolving, upgrading our accreditations, quality standards and we feel that in the long run, it will be beneficial for everyone.
Gaurang
Okay. Sir, and just extension to this and sorry if I’m being ignorant about your comments on doctor’s cost going up. But are our doctor costs going up related to this incremental competition, is it like a defense mechanism that we have employed to sort of curtail any poaching that may or may not happen?
Yatharth Tyagi
No, our doctor costs have — or is going up as in intentionally and that’s the strategy that we have deployed. See, a few years back, we used to not have star doctors. When we started with a small brand, we used to have doctors who were second in line to the star doctors who were equally experienced, who were equally skilled who were driving volumes. But today, I think the brand is able to attract all the leading star doctors and HODs who are a bit heavy cost model, but then they bring their own benefit.
And that is also a reason why we are seeing our cash segment of the patients, private insurance segment of the patients increasing. It is actually because of these star doctors and the cost that we have incurred and it is just starting phase. It will — their complete return will come in the quarters to come when they will be even justifying their costs and doing much more volume than the cost layout to them. So it is a strategic call that we have taken. It has nothing to do keeping in mind with the competition.
Operator
Thank you. The next question is from the line of Prashant Nair from Ambit Capital. Please go ahead.
Prashant Nair
Thanks. Good afternoon, everyone. Just one question on the seasonality that usually plays out. This year, we haven’t seen much difference in revenue between the first and second quarter. In fact, if you take Faridabad out, it’s probably flat and it appears that the Noida hospitals have actually seen a dip in revenues quarter-on-quarter. So what has changed in the normal pattern? My understanding was that second quarter is usually seasonally stronger.
Yatharth Tyagi
So this time, it’s not that quarter two had some higher seasonality. We see, at least in the markets that we are operating, there wasn’t any breakout of some major dengue or certain other flu, which usually happens during Q2. So yes, it wasn’t there this time, at least in the regions we are there. And second thing, as we mentioned earlier in the call, it is a strategic decision where certain percentage of the government business that we have reduced, specifically in the matured hospital of Noida in order to optimize better the growth in the incremental occupancy from here on for a higher ARPOB growth in the future to come, is a call that we have taken. If you look at their private insurance business and cash insurance business across all our hospitals that increased quarter-on-quarter, which is government business that we have intentionally kept a check on. So as far as the seasonality and that is concerned, I think that’s the way.
Prashant Nair
Okay. That makes sense. How much would share of government schemes had come down to in your — I mean, I’m sorry if you have already mentioned this, I missed it initially.
Yatharth Tyagi
So we have reduced government business close to 4% quarter-on-quarter. So our thought process was that, at the H1 level, we are almost down 6% compared to the last year’s government business is concerned and we feel that if we are able to reduce government business close to 8% for the whole year, that is what we are targeting on. So we feel that when we say in next two and a half to three years, we see a government business reducing to 25%. That’s how we are able to do it. That’s how — so we have to start now in order to achieve that in two and a half years time. But more importantly, as I said, it is at — it’s not that we are just reducing government business. We have also increased private insurance and cash segment. That is more important to us simultaneously.
Operator
Thank you. The next question is from the line of Arpit Shah from Stallion Asset. Please go ahead.
Arpit Shah
Yeah, hi. Am I audible?
Operator
Yes, sir.
Yatharth Tyagi
Yes.
Arpit Shah
Yeah, congratulations on good set of numbers. I just wanted to understand a little bit on the doctor cost, which we have seen a substantial jump. I do understand that we might have hired star doctors from other hospitals for the newer therapy that we are starting at Noida Extension or Faridabad or at any hospital. So when should we see a significant or subsequent jump in ARPOBs going ahead? That would be my number one question because the star doctors would actually take your ARPOBs high or that is what my belief is, and that should also help you to expand your margins going ahead.
Amit Kumar Singh
So, if you see that in fact we have probably the 10% increase in our ARPOB. So as earlier mentioned that the new treatments, modalities that added in the systems and Faridabad is a new infrastructure. So that’s what you see the increase in the cost. And once these all the doctors actually start kick in the departments, you will see that impact, which impact will be on ARPOB and in terms of the revenue as well. So we are very comfortable with this as of now, the doctor cost, and we are keeping eye on it, but impact you will see in the coming quarters.
Arpit Shah
Got it. And how should we see the revenues, let’s say, for FY ’25 and FY ’26, given that some seasonality was weaker in Q2 this year? How should we see that number for FY ’25 and ’26? And despite that in ’26, we’re going to see addition of two new hospitals getting added to the P&L, how should we see the numbers for ’25 and ’26?
Yatharth Tyagi
I think the percentage growth that we are seeing year-on-year growth this time, it will certainly surpass that and we do expect a higher year-on-year growth, even though we are already delivering industry-leading year-on-year growth. But from ’25, ’26, we do expect this growth to be much more. At the same time, we feel that EBITDA margin should be sustainable to what they are in this quarter.
Operator
Thank you. [Operator Instructions] The next question is from the line of Krishit Shah from B-Fly India. Please go ahead.
Krishit Shah
Thank you for this opportunity. My question is regarding the [Technical Issues] occupancy drop during the quarter-on-quarter to the management.
Amit Kumar Singh
So I think we have already answered it that our occupancy, if you look at it, this drop of occupancy of 1% or 2%, just it’s a deliberate as a management call. As I mentioned earlier, that we do a government business with a very completely in a controlled way, and that’s we thought of to increase the other payers. So this was the call, and which definitely will have an impact on the coming quarters.
Operator
Thank you. The next question is from the line of Nirali Shah from Ashika Stock Broking. Please go ahead.
Nirali Shah
Hi. Sir, I just wanted to ask on this recent acquisition in Model Town and Faridabad. Can you outline what is our plan in terms of ARPOB it will be contributing over a two to three years horizon?
Yatharth Tyagi
So I think if you look at the contribution that the Greater Faridabad hospital has started off, I think the Model Town hospital will be on the similar line, but the Delhi hospital will obviously have a much more contribution to our overall ARPOB is concerned and we feel that the case mix will be very optimized here. And also it’s important to note that from now on, all the new hospitals that we are adding, whether it’s Greater Faridabad, which we are already showing or the Model Town, Delhi or the newer hospital in Faridabad will have a very high share of private insurance and cash CPA segment. And the government business will already be close to 20%, 25% from day one of those new hospitals. So this is why that’s more important for us to work on our KPIs as far as the new hospitals is concerned.
Amit Kumar Singh
So any hospitals when we take and so to fulfill — because that bed capacity is already there, so fulfill that initially, we tend to take a more empanelment government business. But as the other players increases and capacity reaches — inches towards the optimum side of it, it — automatically we reduce it. So this is how the I think pattern one should operate.
Yatharth Tyagi
Yeah. And for the newer hospitals, as we said that it will not be required for us to take a lot of government business in the beginning. So we will be keeping that in check on these Delhi hospitals and Faridabad hospitals.
Operator
Thank you. The next question is from the line of Ritika from Perpetuity Ventures LLP. Please go ahead.
Ritika Khandelwal
Hi. Sir, just wanted to know who is the minority shareholder for the Faridabad hospital?
Yatharth Tyagi
So the minority shareholder is a family who have a company called MGS. They do not operate any other hospital. They are into other businesses and they made this hospital because one of their sons is a cardiologist doctor, so they thought of constructing the hospital, starting it, but then they feel it will be better for them to partner with a healthcare specialist firm in order to drive the maximum value from that hospital. So they would be the 40% partner in this hospital.
Operator
Thank you. The next question is from the line of Shubham from Perpetual Capital Advisor. Please go ahead.
Shubham
Hello. Am I audible?
Operator
Yes, sir.
Shubham
Thank you for the opportunity, sir. So sir, I just had one question. Can you please share what kind of EBITDA margins you generate in different payer category, let’s say for healthcare versus insurance segment versus government business?
Amit Kumar Singh
So you were asking forward-looking numbers. So we don’t want to give you any forward-looking number as of now. But yes, as you do in a more-and-more complex and high-end surgery, just EBITDA margin bit compromised over there, but this is what I think again you do a business, it is what you wanted. So as of now, I think there is no forward-looking number I can give you.
Operator
Thank you. The next question is from the line of Priyank Parekh from Abakkus Asset Managers LLP. Please go ahead.
Priyank Parekh
Yeah. Thanks for the opportunity again. Sir, my only question is about the maintenance capex that we have to do for our mature hospitals. Any per-bed number you would like to give?
Yatharth Tyagi
As I already mentioned, the maintenance capex is usually very low unless and until we upgrade or add a facility. And we feel that in our all matured hospitals now, every facility has been added. We have already done actually a lot of capex in the last quarter, if you look at. But that is for the upgradation of new services. So we added robots, we added new equipment, mainly maintenance capex for the whole thing, as I mentioned, will not be close to even more than INR15 crores for the whole year.
Operator
Thank you. The next follow-up question is from the line of Sumit Gupta from Centrum Broking. Please go ahead.
Sumit Gupta
Hi, thanks for the opportunity again. Sir, just want to understand on the Model Town hospital as a whole. So basically, like we have one competitor, Max, Shalimar Bagh is also near to the — this Model Town hospital, which is just nearly 15, 20 minutes time. So how do you see the competitive dynamics panning out? And apart from that, what is your strategy tools for this hospital over the next four to five years?
Amit Kumar Singh
See, yes, there are good hospitals in nearby, but still that area, if you look at it, Delhi population moves two, three kilometers around, right? So the Civil Lines is absolutely the old and very high-end societies are there, high-end residents living there. So we believe this is a strategically wonderful location and for us entering into that as far as strategy is concerned, we are very much aware with the competitions over there. So we’ll enter into the — all those things keeping in mind and the one thing is sure that we’re going to provide a very high in tertiary and quaternary care in that particular hospital.
Nitin Gupta
See, I think what’s also important is the — being an old area and there are lot of leading doctors who are already practicing in their own clinic and our focuses will be to add those doctors who have a very-high individual practice at their clinic to our hospitals. Some of them have actually started contacting us already because that area as I mentioned that people tend to move to hospitals where their own family GP or their family doctor is. So our strategy would be to again add those doctors in our hospital and we have a huge group pension from the Model Town hospital.
Operator
Thank you. The next follow-up question is from the line of Arpit Shah from Stallion Asset. Please go ahead.
Arpit Shah
Yeah, hi. Thank you for the opportunity again. I just wanted to understand margins in FY ’26, given that we’ll be starting in at least with new 700 beds. Will you be still able to sustain 25%, 26% margins on the consolidated level or you see a dip on that?
Yatharth Tyagi
So we feel that we will be able to sustain the EBITDA margins. The reason being that, yes, there are two new hospitals that will be starting and there will be certain drag-down due to that. But because our hospitals of Noida Extension and Greater Noida will also expand in margins, there is still occupancy ramp-up that is yet to happen in Noida Extension hospital, which is close to around 60% of occupancy in this quarter and even Greater Noida will further grow because of the airport coming in. Now when the occupancy ramp-up in these two hospitals happens, their EBITDA margin will further increase. So at the Group level, they will compensate for the drag-down from our newer hospitals. So that’s why we are confident of sustaining EBITDA margins like we have, quarter-on-quarter.
Operator
Thank you. The next question is from the line of Naman from Nine Rivers Capital. Please go ahead.
Naman Bhansali
Hi, sir. Thank you for the opportunity. I have two questions. First is on the employee cost. Can we provide the split between the professional fee which is paid to the doctors like every other peer in our industry provides? And second is the occupancy ramp-up number, which we have planned in terms of the newer acquisitions which you have done recently as well as Jhansi and the recently incorporated Faridabad hospital in May over the next couple of years.
Amit Kumar Singh
So coming back to your second question first, I think as earlier stated, there is no forward-looking number, but I think the Jhansi and Faridabad is doing really good. If you look at it quarter-on-quarter, Jhansi has gone — Jhansi hospital has done 48% — 20% to 48%, which is very good jump. Similarly Faridabad also. As far as new hospital is concerned, I think as of now, there is no forward-looking number. And what was your first question? I missed it.
Naman Bhansali
It was related to the employee cost as in the professional fee which we pay to the doctors.
Amit Kumar Singh
Yeah. So as we are growing organizations, initially, as of now, you see there is some — some employee cost will be higher because of the kind of the Group, it’s growing, there are two hospitals coming up, the existing hospital already adding lots of new specialties. But as far as this is concerned, we understand that we’re keeping around 14%, 15%, 16% of the professionals and 18% to 20% — 22% of kind of other employee costs. I think these are the percentages we have in mind and I think in coming quarters, it will be settled on the [Technical Issues]
Operator
Thank you. The next question is from the line of Prerana [Phonetic] from PNARS [Phonetic] Partnership. Please go ahead.
Prerana
Yeah, hi, sir. So I have a couple of questions. First thing is regarding the new acquisition that you’ve done in Delhi as well as Faridabad. What is the empanelment status with the government and various other medical insurance companies? And the second is with the — you’ve done these acquisitions, of course, little bit could be there, there would be an EBITDA debt. So going forward for this FY ’25 year, what is the expectation, PAT expectation or even if you could guide on telling what is the PAT margin? Will you be able to sustain the FY’24 PAT margin?
Yatharth Tyagi
So as far as first question is concerned, the empanelment for government and private insurance happens once you start a hospital. They can’t happen without the hospital being operationalized. So because we are operationalizing the hospital from the new fiscal and it is something that we were not running hospital and it’s been quite a while, so they have to be fresh empanelments and they will take few months to happen. Unlike the Faridabad — Greater Faridabad hospital where there were lot of private insurance that were already empaneled, in these two new hospitals, it will take some time for us to empanel both private insurances as well as government empanel.
As far as second question is concerned, we said the EBITDA margins we should be sustainable because of the increase in the margins in our matured hospitals, even though that will compensate from the drag-down for the newer hospitals. So I think that’s what we can tell.
Operator
Thank you. The next question is from the line of Akshaya Shinde from SMIFS Limited. Please go ahead.
Akshaya Shinde
Thank you for opportunity. Just wanted to understand as we are hiring star and leading doctors in the region, so does that mean we are shifting to the doctor-led model and how we are going to derisk in the long term?
Yatharth Tyagi
See, it’s — having star doctors, it’s not that you are fully focusing on doctor-led model. Ultimately, it’s always a mix. A patient chooses to where to get his surgery done, not just based on the doctor’s reputation, but also the reputation of a hospital. So it always goes hand-in-hand just because we are attracting leading doctors. Simultaneously, we are also doing our own separate marketing of the hospital, reaching out to the communities, showcasing and building on our quality standards like the JCI acquisition that we have done. So we are simultaneously doing a holistic approach and that’s how we will be always deleveraged from choosing just one single model.
Operator
Thank you. The next question is from the line of Siddharth [Phonetic] from Caprice Holding. Please go ahead.
Siddharth
Yeah. So hi, sir. This is Siddharth. So in Q1 con call, I mean, I’ve asked if we can hit INR1,000 crore mark, I mean you said that we could end-up close to INR1,000 crore, but looking at the current run rate, I think it’s a bit difficult. So just wanted to understand if still that INR1,000 crore guidance which you unofficially gave in last quarter still holds true or not.
Yatharth Tyagi
I think what we said is we will be closer to that mark. It’s not that we said that we will surpass or touch that mark. I think we still maintain that. We will be very close to that mark. And I think the company is on track with that. And we do expect Q3 and Q4 to be good growth quarters. But typically Q4, it should be even higher than the previous quarters and because of certain new therapeutic areas maturing, certain new more doctors coming up, so I think we do expect quarter-on-quarter growth going forward and we will be very close to that mark.
Siddharth
And so one more question, sir. So you said that the margins — I mean margins of 20% — I mean last year, that is roughly around 28%, right? Yeah. So we’ll be in this — so 28%, 29%. Is that sustainable or the current margins — I mean this quarter margins are sustainable? I just have — I mean I just have a question on that.
Yatharth Tyagi
Yeah, it’s not that we had 28%, 29% margins. I think our EBITDA margins were very close to 27% — somewhere between 26% and 27%. And so this is — if you talk about quarter-on-quarter, we have been close to 26% and this is what we will maintain, somewhere between 25% to 26%. That will be the target going forward also.
Nitin Gupta
Yeah, even if you compare to the last year numbers, previously in the last year, there was no new unit which has been added here. So when we see the current quarter numbers for the EBITDA margins, so that been diluted by nearly around 1.5%, if we add that then we will be clear to around 26% to 27% to reach the same numbers as well.
Operator
Thank you. Ladies and gentlemen, due to time constraint, we will take that as the last question. I now hand the conference over to Mr. Aman for closing comments.
Aman Vishwakarma
Thank you. On behalf of PhillipCapital India, we thank all the participants for your valuable time and especially the entire team of Yatharth Hospital and Trauma Care Services Limited.
I would now hand over the conference to Mr. Tyagi for his closing comments. Over to you, Mr. Tyagi.
Yatharth Tyagi
Thank you, everyone. Thank you for all your questions and thank you for attending the earnings call of Yatharth Group of Hospitals.
Operator
[Operator Closing Remarks]