SHALBY - Shalby Limited Share Price

Management Outlook:
Shalby's management is optimistic about future growth, driven by strategic expansions, cost optimization, and operational efficiency. Key focus areas include scaling Sanar International Hospital (targeting 200 beds) to boost occupancy and leveraging international patient revenue. The implant business (SAT) aims for $100 million revenue by FY2028-29, supported by 90% YoY growth, entry into new markets (Latin America, Japan), and cost reductions (30% lower manufacturing costs). Hospital segment growth will stem from organic bed additions, high-end surgeries (transplants, CAR-T therapy), and improving ARPOB (7% YoY increase). Franchise expansion (40+ units in 4-5 years) and home care/services (15% patient growth) remain priorities.

Major Points:

1. Expansion: Sanar Hospital bed capacity to increase; new units planned in Delhi NCR/Mumbai.
2. Implant Business: Targeting global markets with R&D-driven products; capacity up 178% QoQ.
3. Margins: Focus on reducing SAT losses via cost control; hospital EBITDA improvement expected as Sanar scales.
4. Occupancy: Targeting 70% occupancy long-term; spillover from Q2's weather-impacted surgeries to aid Q3.
5. Innovation: Bone bank license, CAR-T cell therapy, and partnerships to drive specialty care revenue.
6. Financials: Strong balance sheet (0.2x debt); guided 12-15% revenue growth and ROCE improvement (~20%).
7. CAPEX: Rs. 250 crore earmarked for Asha Parekh Hospital (Mumbai) over 36 months.

Question: "Sir, my question is, is there any plan for raising equity capital to fasten our growth of our company specifically for aggressive growth, specifically in Mumbai and NCR region? Or any plan in future to hive-off its implant business and focus more on our more lucrative business which is hospital business which has more secular growth and have higher margins?"
Answer: Shalby has no immediate plans to raise equity due to strong cash reserves and low debt (0.2x gearing). Expansion in Delhi NCR and Mumbai will rely on existing liquidity. The implant business is profitable and growing (90% YoY revenue growth in Q2), with no intention to divest.

Question: "Are we seeing spillover [surgeries] in the month of October? How has been the response and do we see the growth coming back in this quarter based on the spillover in the last quarter?"
Answer: Postponed surgeries due to floods in Gujarat/Rajasthan are expected to recover in Q3, with October/November showing improved volumes despite partial festive disruptions. Occupancy and ARPOB are projected to rise.

Question: "What could be the idea behind scaling up [Sanar Hospital] right away? And what is the kind of timeline that we are looking at Sanar scaling up to occupancy level at hospital level of 50%?"
Answer: Sanar's bed capacity will expand from 130 to 200 beds over 12"“18 months. Occupancy (25% in Q2) is expected to grow gradually, aided by new specialties (e.g., CAR-T cell therapy) and international patient inflows (54% of revenue).

Question: "Your tax rate is almost 35% given that domestic companies pay only 25%. Is it due to MAT regime?"
Answer: The elevated tax rate stems from MAT (Minimum Alternate Tax) credits, which will likely be utilized by FY25-end, normalizing the rate thereafter.

Question: "What is the reason for the 50% YoY jump in consolidated other expenses?"
Answer: Higher expenses reflect consolidation of Sanar Hospital (acquired in FY25) and growth in the implant business. Standalone expenses rose marginally (Rs.1.5 crore), excluding these factors.

Question: "What is the guidance for FY25 revenue, EBITDA, and capex?"
Answer: Shalby targets double-digit revenue growth (16.5% YoY in H1) driven by hospitals and implants. Implants aim for $100M revenue by FY29. Capex focuses on Sanar's bed expansion (Rs.250 crore for Mumbai's Asha Parekh Hospital spread over 36 months).

Question: "What is the long-term EBIT margin target for the hospital business post-Sanar scaling?"
Answer: Standalone hospital EBITDA margins are 18"“25%. Including Sanar, consolidated margins are 21"“23%, expected to improve as Sanar achieves breakeven (single-digit EBITDA in FY25, double-digit thereafter).

Question: "How does the FOSO/FOSM franchise model impact capex and profitability?"
Answer: FOSO (owned franchises) involve minimal capex (Rs.3"“5 crore for 25"“60 beds) and are consolidated into revenue. FOSM (managed franchises) operate on a revenue-sharing model, contributing directly to margins with no capex.

Question: "What drove the 7% YoY ARPOB growth, and what is the outlook?"
Answer: ARPOB rose due to higher international patients (Sanar) and complex surgeries (transplants, oncology). Growth will continue (5"“7% quarterly) as Sanar's occupancy improves.

Question: "Why did insurance contribution drop to 41% from 44% YoY?"
Answer: The decline reflects regional mix shifts (e.g., lower surgeries in Gujarat, higher government-patient share in Jabalpur). Insurance penetration remains stable in flagship units.