SHALBY - Shalby Limited Share Price

Management provided a cautiously optimistic outlook for Shalby Limited, highlighting both challenges and growth opportunities across its hospital and MedTech segments. Key financials for Q3 FY '26 include a consolidated revenue of INR 279.4 crores, a minor decline of 0.6% year-over-year, with consolidated EBITDA reported at INR 37.5 crores, representing an EBITDA margin of 13.4%. The consolidated profit before tax (PBT) decreased to INR 9.2 crores, and profit after tax (PAT) improved to INR 1.3 crores from a previous loss, indicating a significant turnaround.

In the hospital business, standalone revenue fell to INR 221 crores, with EBITDA declining to INR 35.4 crores, marking a margin drop to 16%. Management expressed that a temporary downturn in insurance work due to negotiations impacted patient volumes, though government business has improved, contributing positively to revenue.

For MedTech, consolidated revenue surged by 29% year-over-year to INR 303.8 million, with notable growth in both Shalby MedTech India and Shalby Global Technologies. EBITDA transitioned to positive, reflecting effective cost optimization.

Looking ahead, management anticipates achieving double-digit volume growth across hospitals and a 5% to 6% growth in average revenue per occupied bed (ARPOB). Significant investments in robotics, technology upgrades, and clinical talent were noted as strategic initiatives to boost performance. The management aims for an average occupancy of about 40 beds in FY '27 and emphasizes that ongoing expansions and improved operational efficiencies will further strengthen earnings.

The strategic framework for the MedTech division targets long-term growth in international markets, with consistent advancements expected from infrastructure improvements and new product introductions. Overall, management remains focused on stabilizing and enhancing profitability while ensuring sustainable growth across its operations.

Here are the summarized Q&A highlights from the earnings transcript of Shalby Limited's Q3 FY '26 call.

Question 1: What's happening with inpatient and outpatient volumes? Why are surgical counts decreasing?

Answer: We faced a temporary decline due to negotiations with insurance companies, halting work with some for 2-2.5 months. We've since signed contracts again, and the flow of patients has improved. Additionally, while inpatient volumes dipped, government business increased, compensating with higher patient realization. We also added 40 doctors this quarter, offsetting a few departures. Investments in technology, like new radiation oncology units, should positively impact our numbers going forward.

Question 2: Are we getting positive results from newly hired doctors?

Answer: Yes, we are seeing gradual improvements. The integration of new doctors takes time, typically 1-2 months, as they build their practice. While we've faced challenges with insurance negotiations, the overall outlook is encouraging, and more self-paying patients are coming in. We're conducting awareness programs and utilizing high-end technologies to support the new hires.

Question 3: Are we planning to increase our government business?

Answer: Yes, we aim to capitalize on specialties within government business, particularly where realizations have improved thanks to revised rates. We will continue pursuing areas with favorable margins while being strategic about our involvement.

Question 4: Regarding tax rates' volatility"”what is the outlook?

Answer: Our effective tax rate stands around 35%, primarily due to ongoing investments in the MedTech and PK segments. We anticipate a reduction to about 25% due to recent regulatory changes that will lower tax expenses in future quarters.

Question 5: What's the expansion strategy regarding bed additions in FY '27?

Answer: We have the capacity to grow significantly in existing hospitals without major capex over the next year. We plan to add about 50 beds in Delhi NCR and have invested in advanced technology, indicating a strategy focused on operational upgrades rather than significant new acquisitions.

Question 6: What's the expected trend for ARPOB?

Answer: Historically, ARPOB has grown about 5% to 6%. With recent developments, including insurance rate revisions and new robotic technologies, we anticipate maintaining that growth trajectory.

Question 7: For hospitals opened 0-5 years, when can we expect EBITDA to ramp up?

Answer: As we upscale our services with more super-specialists and technology investments, we expect margin improvements. Aiming for about 40-bed utilization on average for FY '27, we believe that should positively influence overall EBITDA margins.

Question 8: Can you share the outlook for the implant business?

Answer: We're optimistic about our growth trajectory. Our implants' consumption within our hospitals has significantly improved. We've transitioned from a few international markets to a wider global footprint, expecting significant sales in the coming quarters.

This encapsulates the main inquiries and responses, while respecting forward-looking guidance and important financial specifics.