Refused to commit on core diagnostics standalone volume.

My first question is on integrated offerings. While our pilot projects have indicated positive traction in basic radiology, what could be our plan going forward -- would we sort of think about getting into advanced radiology or continue to expand basic radiology across our network? Secondly, would this be on an asset-light basis or would we own these equipments?

I think on the basic radiology, we will continue to spread it across our centers. And these equipments are not very expensive. These are smaller equipments. A lot of them are on asset-light basis. We are not procuring all of them. It is a combination, I would say. We are evaluating whether higher-end radiology is something worth getting into or not. We do not have a clear answer at this point of time. I think over the next couple of quarters, I think we will have a clearer direction. But meantime, we will continue to roll out the basic radiology. Where we are finding this is helping, it is not helping obviously very significantly on the independent revenue front. But what we are finding is that customer frequency to our centers increases with it. And when they do add on some of these tests, either radiology or the non-blood vitals, it actually helps them do a larger screening program, wellness screening program with us. So, it is more about the completion of the services at the center, which also helps in NPS with the customer.

The second question is on GLP medication. From what we understand, Ameera here, would patients or would customers start becoming healthier by using this medication? Is that a risk for the healthcare delivery providers? How should we look at it?

See, the product is only talking about weight loss. The product is not necessarily saying better health. These are not necessarily the same thing. They can be. For somebody who has got obesity as an issue, obviously, automatically, it brings about diabetes and other things. But you also have to remember anytime you are giving a dosage of a drug, there also can be side effects, there are known side effects of these drugs, and therefore, doctors who are prescribing them will also have to continue to monitor those patients to watch out for whether those side effects are taking place in the patient's body or not. So, our sense is that while it has a potential to manage maybe diabetes better because of obesity coming down, but things like cardiovascular risk and other risk, which could be caused because of these GLP-1 medications, will continue to have to be monitored. We have to remember that these drugs are not that old in the world and people have not had a chance to really see what is the impact of these for the next 10-15 years. So, I sense that people will continue to monitor their health, because one of the things they are doing to take GLP-1 is to get healthier and that automatically means also that you want to do a more regular wellness screening to make sure that all parts of your body are working fine.

In terms of our margin profile, I am talking about the organic part of the business excluding the acquisitions. When do we start seeing the benefits of the hub expansion that we took over the last two to three years to sort of creep in, in our margins? Should we not expect a margin expansion of 100-150 bps on our organic business?

Anshul, we have mentioned this in the past also that the drag on the margin from the newly acquired labs actually happens for two years. First year, it normally gets into a negative margin and the year two, it gets into a positive 10-12% margin and the year three normally gets into the Company levels of margin. So, we have anyway halted all the accelerated expansions at the end of Quarter 4. So, this year, for the labs that we expanded last year and the year prior to that, there will be some little bit of drag on that, and the next year, we will have a little bit of drag on because of the labs we expanded the previous year. So, you will start seeing benefits on EBITDA margins coming this year to start with, and by the end of next year, we will get the full benefit of the lab expansion, which has been halted. So, I think it is a couple of years' time where you fully get that 1% plus benefit, which otherwise we used to talk about. But compared to last year, obviously, in FY2025-26, we will certainly see a margin bump EBITDA expansion. You will start seeing it obviously from Q2 itself.

And second question again is on Core Diagnostics. At the time of the acquisition, we had mentioned we had a field force of 100 people. Have we done any kind of restructuring to this field force?

No, we have not disturbed the field force at this point of time. Let them continue to operate the way they used to operate. Because they are all specialist salespeople and we have not done any restructuring at this stage.

I want to understand on basically rationale for expanding into Kolhapur.

So, like Ameera mentioned, this lab, which is Ambika Diagnostics, used to be on lease-owned lab with us in the past for the last two years. And where it has been run by our people, right. Now we have decided to acquire this lab. And we also have a Metropolis separate lab in that area. So, now with this acquisition, we need to have only one of the two labs in that place because it will be fully owned by us. And this will also help us to expand into the entire Kolhapur region, right. And we already have presence in most part of the Kolhapur region, but with the addition of Ambika Diagnostics, we will have a little more stronger footprint and good coverage across that area.

Okay, so going forward, like, can we expect more acquisitions of this particular size or we can expect a size to be bigger?

At this point, we do not have anything else that we are expecting to announce at least in the next quarter or so. But as we keep evaluating the funnels, we are obviously looking at different sizes. We are looking at small ones, but which are very credible, like we did DAPIC, like we did Agra, like we have done Ambika and we are looking at larger ones as well. But the final goal is not about small or big, the final goal is about whether it really fits the culture, whether it fits the way of thinking that Metropolis has a strategy and most importantly, does it create value for our shareholders and we are only doing deals where we feel that we are able to create that kind of value and not having to pay a crazy price when it becomes difficult to create value.

And like just a bookkeeping question. What was the EBITDA for this Ambika in FY25?

So, standalone, it was Rs.1.8 crores on its own if you look at FY25. But in the model of lab on lease, we were also sharing certain revenue share with the Ambika Pathology, etc., So, when it is in our books, it will actually be Rs.3.4 crores and not Rs.1.8 crores.

My first question was on the competition, like in our annual report, we have talked about some easing out of competition on pricing, also from the organized and unorganized players. If you can throw some more light on how the organized and unorganized piece in terms of competition has behaved, and what are the factors that have led to competition kind of abating in the last 18 months, it would be really helpful?

See, if you look at the period of 2020 to 2023, it was as we all know, a black swan event. And in any black swan event, you have lots of people who look at opportunities that are hot and try to jump in. So, that is what really happened in healthcare. And especially in diagnostics, because there was so much COVID testing that needed to be done. But you saw a bunch of new corporate players who sort of said, "Oh, this is an industry which is going to grow for a long time, let us jump in." And you also saw obviously health tech guys coming in. The reality of our industry, however, is that these black swan events, which create large revenues in a short period is not the norm. You are seeing a funding slowing down. In some cases, you are seeing a funding winter, because companies have not been able to show and prove unit economics that work profitability for them. And therefore, funding is not coming for them. So, generally, we are seeing that there is a little bit more rationality on the pricing. And we are seeing the kind of intensity we saw between 2020 and '23 has certainly come down. The players have not gone anywhere, they are still in the market, they continue to compete. But we are not seeing irrationality, which is a good thing for the industry.

And when we look at the gross margin for most of the listed players, we have seen either stability or going up. Is it entirely due to pricing, rationality coming up or because the large guys have started seeing market share gains, so there is a second order impact on the raw material procurement cost?

Actually, it is a combination of multiple things. One, of course, the price stability is definitely coming and become more predictable. That is really helping us. And then a lot of operational efficiencies are coming in because of automation, digitization, etc., And then of course, as the scale goes up, the profitability gets better. So, basically, it is a combination of all these three things put together and you will see it is playing out for everyone as we go forward.

When we are moving from top towns to Tier-two, Tier-three towns, how do one look at the unit economics in those smaller towns, because the scale at which we will be operating in top eight cities will be very different when you are going to those smaller towns, can one expect similar kind of unit economics in terms of throughput, margins, etc., in those smaller towns?

Yes. So, see, now our expansion into Tier-3 and beyond will only be with respect to centers, not with respect to labs. The labs part of the expansion is already over, right? And these expansion of the centers are also happening on Tier-3 and beyond only through the franchisee route. So, from a Metropolis point of view, largely, the investments are in terms of clinician engagement, logistic, etc., which has been properly been stitched. So, your unit economics will largely be at par with the rest of the Tier-3 towns, and we do not really find any further stress on that going forward when we expand. And actually, we are going deeper into it. We have already reached 750 towns and we already have currently mechanism to engage with the clinicians and the logistic arrangements. Now, your question is only about going deeper and getting more volumes. So, the unit economics only get better from these towns.

Maybe one thing was on the basic radiology that we talked about. Are margins again similar there as well compared to what we have in our core business?

See, it is too early days for us. Just in the last, year or so we have expanded into as Ameera said 20 centers. Now where we have both x-ray and ultrasound, and about 35 centers, we would not have x-ray alone, and 250 centers with ECG. So, very early days to look at the margin profile of these business separately. But we are sure that it will only be adding to the overall profitability because it is happening from the same centers, we have not set up extra centers for the same people. So, there is no additional cost other than the processing cost in these cases. So, the margin should only be at par or better.

Just wanted to understand on the B2C part, considering the current test and the setup and the geographical expansion that we have, what is the kind of level of share that we could see from the B2C part in the next three to five years?

See, our first target now at a group level to move into the 60% plus levels. We are at a group level and we are at 56% after all the reclassification and keeping the group together. We are at 56%. Our first target is to reach up to 60% as we go.

And similarly, on the radiology side, which we started, do we see it as a significant revenue contribution in the next three to five years?

The basic radiology, I do not think will be a significant contribution from a revenue perspective. If, of course, we choose to go into high-end radiology, that would be different. But just on the question you asked around the volume in terms of tests for B2C and B2B, for B2C, I think it is Rs.37.9 lakhs for Q1 FY26 and B2B is Rs.32.8 lakhs.

Sir, I just want to understand how much of the total revenue is from B2G, can you give a ballpark figure?

I must say it is negligible; less than a percentage, if I can say so. So, in the last few calls, I have already mentioned that we are gradually withdrawing from the non-profitable, government businesses and other contracts are also finding it difficult to get our monies. We are withdrawing. The last one was Aam Aadmi Mohalla Clinics, which we have withdrawn from 30th of June. So, today, the government business is very, very negligible actually.

How much was it three years back if you can quantify that?

Three years back, we had a NACO, which is a big contract, which is about 7% revenue at that point of time. And in an overall, we had about 10% government revenue. Today, it is less than a percentage. Gradually and strategically, we have withdrawn from these businesses.

The main growth for any player in diagnostics is with respect to the volumes. So, can you give a guidance with respect to the volumes of just Metropolis and upon that, how much growth are you expecting for the acquired entities? And the recently acquired Ambika Diagnostics, can we expect it to grow 60%?

Okay, let me answer all the questions one after the other. The volume growth for the MHL organic business, our guidance were always 7% to 8%. We have already reached the 7% level. So, we expect to continue at 7% level, keep bettering it going forward. And at a group level, we have done 10% to 11%. And we expect that is the level that we will do for this year, right? Coming to Ambika and the 60% growth, we said we grew it to 60% over a period of two years, right? And initially, when we took over, there are many things that we could do it and could get immediate gains, hence that levels of growth you could see. But going forward, I think we will definitely see this business growing better than maybe the MHL business in the first year or so.

And sir, with respect to Core Diagnostics, so now it is like EBITDA positive, can we expect it to move shift towards higher single digit margin by the end of this year? And can we expect the revenue led by the volume growth to be above the industry average about like 30% or 40%?

Well, I think the EBITDA margins definitely, our estimate is that it will become a high single digit as we go forward. And maybe, the year one exited a very high single digit number, right? And revenue growth, like Ameera mentioned, we have to do some of cleanup in the early days and this year our focus is largely to get the synergies and margins corrected and getting the business as much cleaner as good, right, and then focus on the revenue growth from the year after that.

And Ameera, how many players let us say we know that of course in organized diagnostics, there are, I mean, largely three, four handful players. Is that the same when we talk about companion diagnostics?

Not really. I mean, I think the lab chains or the organized players who are doing better on the oncology side may not be exactly the same as the top three incumbents overall.

And when you are talking about of course taking margins in Core gradually higher, one driver you have been talking about is, of course, putting more of the mix of using Metropolis test in Core and, of course, growing onco specialty overall in Metropolis using Core, which of these two drivers will essentially drive that margin faster to the Company level in Core?

See, Core margin to Company level will be driven more by cost synergies. Core was a good business on its own, but the chances of it making money on its own profitably was low because it was subscale, and the kind of corporate costs that were involved and the kind of lab costs that were involved would never have allowed it to make money on its own. Now, in the 1st Quarter, if you see, we have already integrated the overlapping labs in locations where Metropolis and Core both had labs. I think we have done almost five such overlaps, so we have merged them. So, like that, as you make Core leaner and you are using shared infrastructure, we really believe that over the next three, four years, we will be able to take Core to the Company margins and obviously then the revenue acceleration will also have to kick in by then by year two, where you are able to really take this to more clients and you are able to get more tests from your existing distribution and increase your productivity for customers.

And Core increasing margins and TruHealth, of course, doing very well. Can you give some directional color or sense on where this RPT or RPP number should go trend-wise? For Metropolis overall.

See, I think if you look at history, I think the last few years, we have been seeing a 3-5% increase in RPP every year. And that is coming from a combination of moving up the value chain and therefore selling more specialized tests to patients who need them. And that is a journey that we believe will continue for Metropolis. So, usually, pricing as you know has got some part of it, but it is not a huge part of it. The bigger part of it is really the product mix that plays an important role for it.

Yes, but can you like see it doubling over the next five years, is that possible?

I do not think we have seen a double over the last five years. So, I think that would be requiring a 15%, 20% kind of an increase every year. So, unlikely. But I do think that the kind of trends that we have seen in the past five years, I think can sustain as we go into the future.