In an interview with ET Now, Ravi Bhandari, Shalby Hospitals , says they are very much mindful about capex and spend around Rs 45 lakh per bed while the others spend Rs 75 to 80 lakh and even upwards of Rs 1 crore.
There has been a marginal dip in your margins but the PAT is down 50% and there is a one-off tax impact. Can you explain that to us?
Last year, the PAT was around Rs 22 crore which included a MAT credit which we had for the last three years. If we normalise for previous year's MAT credit, the PAT was around Rs 7 crore and this quarter, the PAT is Rs 10.7 crore. So effectively it is up by 43%.
What is the exact impact or rather ex the tax impact of MAT credit? How has the quarter been operationally and any guidance for growth in FY18 which you could give us? Is the PAT growth going to bounce back in a strong way in Q4 because the MAT impact seems like a one-time hit?
Absolutely, that is one-time impact only and if we really look at the overall numbers, I am happy to inform that our overall revenue has gone up by 30% and our EBITDA has gone up by 27%.
Overall, there is a positive impact. The overall revenues have gone up. The EBITDA margins have gone up. Our new hospitals which we have made operational two years back are now giving positive EBITDA and the other hospitals also have started contributing. All put together, we are getting 30% plus revenue in this quarter as compared to the last year.
Are you making the case that in the fourth quarter, the PAT jump will be extraordinary?
Yes, it will be much better because apart from the normal operations, there is the contribution from the interest income which otherwise you have been paying and the loans which we have repaid after the IPO and also the surplus money which is there. Quarter four traditionally has always been better for us and we are also talking about some acquisitions so that may also add up further for the PAT. Overall, we are very much hopeful of a much better quarter in Q4.
Could you quantify exactly what is it that you are hoping to achieve in the fourth quarter then?
Last time, we had talked about our overall performance whereby I had talked about the industry performing at a CAGR of 17% and that will be definitely growing much more than the average industry growth and this is what we have shown in this quarter as well whereby we have grown by 27% in EBITDA and 30% in the revenues and I can only say at this point of time that we will definitely continue to grow in this fashion.
Can you just walk us through once again? The new hospitals that are coming up. Earlier, Shalby had an advantage over its competitors with breakeven time being shorter than the industry average. Will that continue?
Last time also, we were very much mindful when we spent our capex. We spent around Rs 45 lakh per bed while the others may take around Rs 75 to 80 lakh and even upwards of Rs 1 crore. Also, there is a natural operational efficiency because of our wise capex planning and beyond that also, we keep on leveraging our economies of scale as we have been growing in the last few years.
We keep on marginalising our cost and that is how we come up with the efficiencies and that is where we have been in last few years. We have been around or upwards of 20% in terms of the EBITDA margins, which is definitely much higher than the other players in the industry.
Give us some more colour on how you are going to be diversifying your revenue streams? A major chunk of your revenue comes in from knee replacement surgeries. Are you expecting to gain more market share there? What is your strategy with regard to broadening your revenue base?
Both the things. In fact, the last question I miss out one point which you talked about our new hospitals. Two years back, we made our Indore and Jabalpur hospitals operational, now both of them are positive EBITDA. This year we have made our Jaipur, Surat operational and will make one more hospital in Ahmedabad operational with more than 200 beds. The initial signs have been very good where we are getting a few EBITDA neutral or EBITDA positive month also in couple of the units.
Going forward we have got four more projects in the pipeline which are Vadodra, Nashik, and two hospitals coming up in Mumbai and all four are an asset light model where our average capex is going to be only Rs 30 lakh.
The return on the capital employed is going to become more and more better going forward.