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00:00 Hello and welcome to NDTV Profit. I am your host Varsha Chandanani. Thyrocare Technology
00:11 is in focus. Our company did report its Q4 FY24 results wherein our revenue was up almost
00:17 13% and margins if you see were around 22% versus 18% last year. Net profit was up 37%
00:25 at 17 crore versus 12 crore last year. To speak more about numbers I am joined by Mr.
00:31 Rahul Guha who is the Managing Director and CEO of Thyrocare and President of API Group.
00:38 Hello and welcome to the show sir. Good morning. Good morning. So just speaking, my first question
00:46 to you is how was the quarter for us? What stood out? Were there any disappointments?
00:54 Overall I think the quarter has spanned out well. Just a minor correction, our total consolidated
01:00 revenue grew 14% year on year and I think a large part of that has been driven by one
01:08 our partnerships business actually which year on year for this quarter grew by more than
01:12 40% and our franchise business also coming back on track and growing at 13%. We continue
01:19 to have headwinds on our government business. We had exited a set of government contracts
01:25 last year so that has been pulling down our growth which overall brought us down to the
01:31 14% but overall I am very happy with how our core business is shaping up. Core business
01:37 year on year grew by close to about 16% and actually for the full year also is along those
01:45 lines. So I am quite happy with how the core business is spanning out. Our focus areas
01:49 remain our franchises and our partnerships and both are firing very well. Also if you
01:56 see last quarter we did see decline in volume growth due to exit in government business.
02:02 Now what was the volume and value growth this quarter? See the volume growth year on year
02:08 it is a bit complicated question because the government business actually was a very high
02:14 volume business but at a very low price and we have been able to cover up those volumes
02:20 you know with our franchise business and our partnerships. So year on year you will see
02:25 that our volume growth is 2% but actually our franchise and partnership volume growth
02:31 is closer to 8% and that's the mix that is at play over there and because our franchise
02:37 and partnerships come at much higher realisation than the government business you know we have
02:43 seen the value growth as well. If you can quantify the value growth? So you are saying
02:51 from price? Yeah. Roughly about 6% is the price revenue per sample but as I said it
02:59 is not because we have raised prices it is because the government business has stopped
03:04 which was at a very low price and our franchise and partnerships business has picked up which
03:09 is at much better price realisation. Okay and also last quarter there was decline in
03:15 your farm easy business and I mean how was the business this quarter for the same? The
03:21 farm easy business has bounced back this quarter. A large part of online business actually is
03:26 packages and packages are very popular during the last quarter of the year because of the
03:33 tax benefits also that they bring. So we saw a good bump up in the farm easy business in
03:39 this quarter but it remains to be seen if it is sustainable. So we are being cautious
03:45 in our projections for farm easy over the next year but definitely the last quarter
03:51 of this year saw a very good pickup. Now coming to your radiology revenue, so if you see this
03:59 I mean radiology revenue was up 15% this year but there was pressure in EBITDA margin if
04:04 I am not wrong on account of cost increase and now going forward where this radiology
04:10 is heading for you? See our radiology business is actually quite old and therefore a lot
04:17 of the machines that we have in our radiology business have now reached a substantial age
04:23 as a result of which our maintenance cost for these equipment has gone up quite a bit
04:28 and that's what you see in our cost increase. We have not increased any other overheads,
04:33 it's largely the maintenance cost of our PET-CT equipment which is quite substantial that
04:38 is going up as the machines age. We are still at a lower utilization so I think there is
04:46 more scope for revenue growth in this business and you know given that most of the costs
04:51 in the nuclear business are fixed in nature, we should see operating leverage come in as
04:57 we continue to grow. And so you are expecting revenue growth in radiology more than 15%
05:04 going forward? I think it will be in that 15% range, it won't accelerate from here.
05:10 I think if we are able to sustain the 10 to 15% growth we will be quite happy. You must
05:16 remember that the radiology business has consistently grown by 20% plus every year and this is without
05:23 adding any new machines. So effectively we are utilizing the machines or sweating our
05:30 assets quite a bit. There is only so much more we can squeeze out of the assets. Right.
05:37 So speaking about your margin profile, your normalized margin considering ESORBs and all
05:43 are around 27% this quarter. Now where do you see this margins going forward? What are
05:49 you expecting as you wanted to cover up last quarter's margins going forward? Yeah, our
05:55 normalized margin typically is in the 28 to 30% range and this quarter also it's in that
06:01 range. We expect our margins to remain stable at those levels. It's important to remember
06:08 we are also investing in multiple new lines of business. So we are investing in radiology
06:13 at home through our acquisition of Think Health and we are expanding in Africa with our lab
06:19 in Tanzania. So whatever operating leverage we get next year we will reinvest it in building
06:25 these new lines of business. So therefore you should expect the EBITDA margins to remain
06:30 stable. Okay, so 28 to 30% is the range that you are expecting when it comes to EBITDA
06:36 margin. Now Mr. Guha, considering the base effect of COVID which is behind you, what
06:42 is FY24 therefore without the COVID base? Sorry FY25 I meant. COVID base was almost
06:50 zero in FY24 so it's not that important anymore. I have been saying that we are aspiring to
06:58 land in the mid-teens from a growth point of view and I'll be happy if we are able to
07:03 achieve that. All the operating metrics will move in the right direction should we get
07:09 that level of growth and I'm reasonably confident we'll get that. So any kind of target that
07:15 you internally have for FY25 when it comes to growth, top-line growth basically? As I
07:22 said mid-teens growth is what we are expecting. Okay, mid-teens growth. Alright and also if
07:28 you see ThyroCare has had maximum expansion in tier 2 and tier 3 and tier 4 basically
07:35 and how are the IIR therefore in those regions? When you say you are talking about the internal
07:43 rate of return? Yes. See these are investing markets for us. So actually from a CapEx point
07:50 of view we don't invest that much because we use our existing lab network and actually
07:56 use logistics to move the samples from tier 3, tier 4 to one of our high throughput labs.
08:01 So from a CapEx point of view there is hardly any investment, it's mostly OpEx and most
08:07 of the OpEx is actually done with our franchisees. So it's a very asset light expansion. So the
08:13 IRR is comparable to our tier 1, tier 2 model because there is actually very little CapEx
08:20 that we put into this. Okay, so now since we are on CapEx, so what is the CapEx that
08:28 you have in mind for FY25? We are expecting to spend roughly between 40 to 50 crores in
08:35 CapEx and acquisitions and it will be divided between that. Most of the CapEx will go into
08:44 lab expansion and some of our investments in Tanzania. Okay, so my last question before
08:52 I let you go, I wanted some more clarity on API front. How do you see it going further
08:59 as a percentage of revenue? I think from what I understand the diagnostics business at API
09:06 is profitable and so therefore in the group this is definitely a focus area. So I am quite
09:14 hopeful that the API business comes back on a growth trajectory. Okay, well thank you
09:21 so much sir for interacting with us. All the best for the company. Always a pleasure. Thank
09:28 you so much for having me.
09:30 (Music)
09:34 you