Metropolis Healthcare (NSE:METROPOLIS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Metropolis Healthcare Limited Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by BNP Paribas. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded.

0:47 I now hand the conference over to Mr. Toshif Sheikh. Thank you, and over to you, Mr. Sheikh. Good morning, everyone. I welcome you all for the Metropolis Healthcare two q f y twenty twenty first half earnings call call. I,, India analyst at BNP Paribas for pharma and healthcare, would like to thank the management for giving us the opportunity for hosting the call. For the Metropolis team, we have the senior management led by Amira Shah, Chairperson, Hold Time Director Surinder Chamun Kattel, Managing Director Sabir Patil, Chief Financial Officer and Mohan Menon, Chief Marketing Officer. Now I will hand the call to Mira, ma'am, for a quick remarks. Over to you, ma'am. Hi, good morning, everyone, and thank you for joining us today for the Q2 FY 'twenty seven earnings conference call of Metropolis Healthcare. I'm joined by Suneel, Managing Director Sameer Patel, CFO Mohan Nenen, CMO and the rest of our leadership team along with SGA, Investor Relations partner.

1:41 We've uploaded our investor presentation on the exchanges and the website. I hope all of you have had a chance to go through it. Let me start with the headlines for the first half. For the past few years, our growth was around 12% to 13% organically per year. However, over the last four to six quarters, we have stepped that up to 15% to 16% with revenue growing at 16.2% for H1 FY 'twenty seven, ahead of our stated guidance. Importantly, we have delivered the step up in growth while expanding EBITDA margin by 190 basis points to 26.2% EBITDA margin for the first half, and this is without any price increase so far in the year. As we move forward, we are optimistic of continuing similar growth and margin trajectory for the rest of the year. What gives us more confidence is that this is not a one off. Over the last two years, we have been deliberately putting in place the foundation to sustain and accelerate this growth while continuing to expand margins, a denser network of centers around our labs, a richer business mix led by specialty and True Health, standardizing our laboratory platforms, significant technology upgrades across business and a disciplined approach in our inorganic strategy.

2:49 It's also worth noting that we delivered this growth in a quarter where the monsoon was one of the weakest in over two decades, with rainfall about 13% below normal and highly uneven across regions. The seasonal rise in acute and infectious diseases such as dengue, malaria, typhoid and viral fevers was therefore sporadic and varied significantly across geographies. Despite this, we still grew around 16%, reinforces an important part of our business model that our growth is not only dependent on seasonal spikes in demand. It's also driven by the underlying strength of our portfolio across chronic disease management, preventive care and specialty testing, alongside the continued expansion of our network. Let me now share perspective on the industry, the regulatory environment and our strategic priorities. The broad picture of the industry remains consistent with what we have shared with you before.

3:38 The market is stable and the structural shift from unorganized to organized segment continues, driven by a greater emphasis on quality and accuracy, rising demand for specialty testing, technology led convenience and the move to preventive healthcare and wider access in Tier two and Tier three markets. Diagnostics is not merely a price driven business. It is a fundamental business driven by science, accuracy, service quality and the trust of doctors and patients. Putting in a simple way, the market is moving towards quality and science and that's exactly where Metropolis has been built to compete. What is new today and what I would like to spend time on is the increasingly constructive role of government towards healthcare. Over the past several months, we've seen the government move to raise the bar on the diagnostics industry on quality, transparency and access rather than controlling price.

4:26 Together, these developments move the industry in a direction that clearly favors organized compliant players like Metropolis over unorganized, which do not necessarily focus on quality and service. Firstly, on price cap on pharma products for hospitals, There has been a lot of discussion around pricing control on drugs and consumables sold by hospitals. Let me be clear that this has no bearing on our business either financially or operationally. These measures are aimed at hospital pricing. Diagnostics and there is no move towards price capping or price parity in our segment. Diagnostic pricing at organized chains is also transparent and in most cases significantly lower than comparable tests in a hospital setting. Second, the display of rates at centers. The requirement of display rates at centers at the point of service is a welcome change and one we fully support. For us, the change is very little operationally.

5:18 At Metropolis, the patient already knows the price upfront, we collect the payment and then we deliver the service. In a hospital, it's usually the reverse where the service is delivered first and the patient discovers the bill afterwards. Mandatory display of rates brings the rest of the industry closer to the way we already operate. It reduces the information gap that opaque unorganized players have relied on and allows patients to compare like for like on price and quality. When the comparison is transparent, we believe our accreditation, our test menu and our service standards will speak for themselves. Third, the NMC advisory on digital authorization of report. The National Medical Council Commission has recently clarified that a registered medical practitioner can remotely review and authenticate lab and pathology reports using a recognized digital signature subject to clear safeguards.

6:07 This is a meaningful enabler for us in three ways. Number one, it improves quality. Every report is reviewed by a qualified pathologist exercising independent professional judgment. Our lab information systems already maintain complete audit trails, authentication logs, time stamps and signing credentials on each report, thereby enabling us to target a wider network base for specialty testing while the talent pool resides at one location. We can now route a report to the right expert wherever they sit rather than relying only on whoever is on-site. A complex hematology or oncology case from a small town can be reviewed by a specialist in our reference laboratory with the same rigor as a case processed in Bombay. Second, it supports our rural and Tier three expansion.

6:55 One of the practical restraints in smaller towns has been the availability of qualified pathologists on-site. Remote authorization allows us to set up many labs in these markets faster with a central pool of pathologists supporting them while also improving turnaround times and enabling round the clock reporting. Taken together, we see the evolving regulatory landscape as a clear tailwind. History has shown that whenever formal regulation is introduced, business shifts more rapidly from unorganized to organized. We expect Diagnostics to follow the same path and we are well positioned not just to adapt to these changes, but to benefit from them. Now let's focus on our key strategic priorities for growth. Science and technology remain at the forefront. Science has always been at the heart of Metropolis and we continue to invest ahead of the curve.

7:41 In genomics, we are expanding our capabilities across oncology, reproductive health and rare and inherited disorders. We see genomics as a significant long term growth opportunity and one where scientific depth, interpretation expertise and clinician trust are decisive. We continue to invest in automation and AI across our labs and are deploying AI across the value chain, from sample logistics and lab operations to report validation, customer engagement, quality improvement, the TAT and productivity. Lastly, data protection and patient data as a responsibility we take very seriously. We are well advanced in aligning our systems and processes with the digital personal data protection framework, which further strengthens the trust patients and doctors' placement. Let me now spend a moment on preventive health care, which we see also as one of the more exciting growth areas for our business.

8:33 Over the past few years, preventive care has clearly moved into the mainstream. Consumers today are far more health conscious and proactively choosing regular checkups and early screenings rather than visiting a lab only when they fall ill. This trend is translating into strong performance for us with our preventive health care revenues growing at about 20% per To build on this momentum, we have been adding allied services such as basic radiology, doctor consultations and vital checks across our network in our own centers. This gives us a clear advantage in prescription completion because patients can now complete their entire set of recommended tests and consultations with us in one place under one trusted brand. Looking ahead, we'll be piloting some new models in preventive health care in line with our strategy of building a strong ecosystem of allied services around our core diagnostics business. We look forward to updating you on our progress once the pilots are completed.

9:26 Speaking of our recent acquisitions and inorganic pipeline, all the acquisitions we have done over the past year are performing well and integrating smoothly into the network. DAPIC in Dhradun and Scientific in Agra are both growing in line with the company average while delivering margins higher than the overall company margins, which validates both our selection and our integration approach. Core Diagnostics is a strong example of how we create value through strategic acquisition, driving both revenue growth and margin improvement. On the revenue front, the acquisition has strengthened our capabilities in high end specialized testing in oncology, an area where only a handful of players in the country have the required expertise, while providing access to new clinician and patient segments. Importantly, cross selling core specialized testing portfolio across our wider Metropolis network along with upselling high end test to our existing customer base is driving strong traction in the specialty segment, which continues to grow at about 20%.

10:23 At the same time, leveraging core oncology and genomics portfolio across our network has accelerated the growth of our own genomics business. On margins, core was at breakeven when we acquired it a year and a half ago and to date is delivering near double digit margins. Taking into account the acceleration of our genomics business, we estimate that in the past year, our IRR on the core acquisition is at about 13% and this will only accelerate in H2 as revenue growth increases and margins expand. We have also completed a planned restructuring of the core team and with that now in place our focus shifts to accelerating revenue further. Together, Core, GAPFIC and Scientific have increased contribution from North India to about 17% of our domestic revenue, and we expect this share to rise as these businesses scale.

11:12 Currently, the North Zone is the fastest organically growing region for us on the back of enhanced execution. Combined with our on ground presence and established brand equity, these acquisitions have allowed us to penetrate deeper into these markets. We see this as a stepping stone, particularly for targeting micro markets where there is a persistent gap between demand and quality supply. Let me also share how we're thinking about the M and A market today because it shapes the deals we choose to do and the ones we choose not to do. Broadly, are two kind of businesses in the market, poor quality businesses that are up for sale and struggling to find buyers and some good quality businesses, which have been acquired at very high valuations. We have looked at these deals but passed on them as it's not possible to own a decent IRR. The math here is important. When a Diagnostics business is acquired at 18 to 20 multiple of EBITDA, the return depends heavily on margin expansion.

12:06 But Diagnostics is not like the pharma industry where the back end can be easily integrated and synergies flow through quickly. In our experience, margins in an acquired Diagnostics business were small during integration as quality systems, people and processes are brought up to standard and then may recover, but almost never then the level higher than when we started. Therefore, at those entry multiples, the IRR on such deals works out to be less than 10%. In contrast, when we acquire businesses at reasonable valuations and then create the value ourselves over three years through our brand, test menu, specialty portfolio, logistics and procurement, the IRR generated can be closer to 20%. That is the approach we have followed with DAPIC, Scientific and Co. Looking ahead, we will continue to actively evaluate M and A opportunities, especially in North India across pathology and ancillary services.

12:55 But we will prioritize deals that generate higher IRR rather than pay very high valuations just to buy revenue. Acquiring established local brands at the right price gives us a head start in each micro market from where we can expand into the surrounding peripheral markets by adding tests, building more organized logistics and sample movement and deepening our connect with doctors and patients through digital channels and tech platforms. I'm now going to ask Siren to go through the operational and financial performance of Q2 and H1. But before that, just want to announce that the company has declared an interim dividend of INR 1 per share. Thanks, Siren. Thank you, Amira, and good morning, everyone. Quarter four has been another strong quarter for us with revenue growth of about 16% ahead of our stated guidance.

13:42 Importantly, we have seen healthy growth across both B2C and B2B channels, strengthened our presence in the True Health and the Specialty segments and delivered broad based growth across all geographies, spanning metropolitan markets to Tier three and Tier four towns. This demonstrates the strength of our diversified business model and our ability to drive growth across channels, segments and markets. Patient volumes grew by 10 percentage and test volume around 11 percentage, with the balance coming from a richer test mix and better realization. Importantly, this growth has been delivered without any price increase. For the first half as a whole, revenue grew by 16.2%, a clear step up from 12% to 13% we have delivered in recent years, while margin expanded by 190 bps to 26.2%, reflecting the operating leverage in our business. Given the consistency of this performance and the momentum we are carrying into the second half, we expect these trends to continue through the rest of the year. I would also like to address a point widely discussed in the industry in the recent past, the price revision in CGHS rates has supported growth for several players in the sector.

14:54 Our revenue contribution from CGHS is minimal, so our growth has been purely volume and mix based. Turning into channel performance and the delivery of other segments. Our B2C revenue grew by 17 percentage in quarter two as well as in H1 of the year, driven by sustained double digit growth in patient and test volume, which increased by 13.511% respectively. Patient acquisition was supported by digital engagement, focused micro marketing campaigns and growing brand across geographies and segments. Growth was broad based across both mature and newer center, with existing centers delivering same store growth of 10% list and improved retail productivity, while newer centers continued to ramp up. During the quarter, we added 116 collection centers, taking our net additions to 700 over the last twenty four months. The labs established in financial year 2025 and 2026 are also gaining traction, and we are further strengthening their reach through an expanding network of collections folks to drive higher throughput.

15:59 Our B2B business grew 15% reflecting our focused approach on partnering with hospitals, clinicians and quality led institutions where our science expertise and specialty portfolio give us a clear edge. Within B2B, patient volume grew by seven percentage and test volume grew by 11 percentage, which means partners are sending us more test per patient, a clear sign of growing value share. We continue to add new lab and hospital partnership during the quarter and B2B partner network has now crossed 9,000 partners. Our partner portal continue to make it simpler for partners to work with us with better visibility, quicker turnaround and seamless access to our full test menu. On True Health and Specialty, both our strategic growth engines continue to deliver strong performance.

16:47 Specialty grew around 20% ish, supported by wider adoption of advanced tests, deeper engagement with clinicians and cross selling of course oncology portfolio. We added 43 specialty and super specialty tests in the first half of the year, giving us further headroom for growth. Specialty also creates a halo effect to our routine business. A patient who comes to us for a specialty test naturally provers to complete all their tests in one place. True Health, our preventive healthcare franchise also grew 20 percentage, driven by integrated wellness offerings and focused digital acquisition. Packages that include radiology are gaining traction, supported by add ons such as doctor consultations, vital checkups and ECG. We are now adding these allied services not only in our own centers, but also across the mature franchisee network, which helps us improve prescription completion and offer patients complete health care experience under one trusted brand.

17:46 Speaking of our performance, region wise, our growth has been broad based geographically and not restricted to our core geographies. Our Tier three and rural centers led the way with around 20% revenue growth and together they account now for 26% of our domestic revenue, reflecting the success of our expansion beyond the metros. All the four geographical regions shown good growth again in this quarter, more particularly North. North India strengthened by our acquisitions now contributes to around 17% domestic revenue. Let me share our focus areas for the second half of the year. Accelerated center additions, both to cover the peripheral areas around our newer labs and to go deeper in existing markets. For faster B2B partner addition with sharper focus on specialty partnerships, mini hubs to bring testing closer to the patient, add basic radiology and allied services and improve turnaround times, increasing retail and center productivity by getting more out of every existing center.

18:50 And of course, focus on Tier two and Tier three markets, where improving access to health care is creating a large and growing base of new patients. Now let me speak about the margin trajectory and the improvements that we have done. EBITDA margins for the quarter stood at 27.2%, an expansion of 180 basis points year on year, well ahead of our guidance of 125 to 170 basis points. This improvement came from volume led operating leverage, disciplined cost management and steady progress on our productivity agenda. What gives us confidence is that now margin expansion is sustainable as clearly visible in our operating metrics. Productivity per employee has improved as our manpower basis fairly remained stable for the last many quarters, even as test volumes grew around 10 percentage to 11% year on year. We are growing the business without growing the team in proportion, thereby increasing productivity and operating leverage.

19:45 Sample process per lab have increased per day, so each lab is processing higher volumes on the same fixed cost base. Gross margin improvement has been our prime focus. Our laboratory platform transition, which I talked earlier, standardizes our network on a common test menu, equipment, reagents and turnaround times while consolidating vendors will be completed in quarter three, which will aid the growth gross margins. Also, research test mix will support uptick in gross margins. We are progressively replacing many manual processes with technology across operations from sample logistic to reporting and back office functions. Network density is increasing as we add centers around existing labs, taking our center to lab ratio from 20 four :one towards thirty:one and then 30 five:one over the next two years.

20:36 Our business mix continues to premiere as specialty genomics and true health continues to contribute a growing share of revenue. Let me talk about our technology road map. The second half will also be a significant period for our technology transformation. We will be rolling out a new CRM platform, a dynamic pricing engine, a new sales app for our field teams and enhanced HLIMM integration capabilities across our laboratories. Through HLIMM, we are also working towards seamless integration of hospital portals with our system, empowering our hospital partners with streamlined workflows, better connectivity and greater ease of doing business in Metropolis. We're also transforming our finance function and have launched a comprehensive program to reengineer our end to end finance processes across all work streams.

21:27 Alongside these initiatives, we are scaling our AI applications across customer engagement, laboratory, operations and quality. Together, this technology investment will make us faster, more data driven and more productive, while strengthening the overall experience of our customers and partners. Lastly, on the pricing front, our last price increase was implemented in January 25, and we are currently evaluating the possibility of the next price revision maybe early next year. This is being considered in light of the increase in our operating input costs, transportation and logistic costs, service costs amongst many other expenses. Given our strong volume trends and the structural shift towards trusted organized players, we believe there is room for a calibrated price increase, enabling us to pass on a portion of these cost increases without any meaningful impact on volumes.

22:18 Our approach will be data driven with the extent of the revision determined for each micro market based on pure benchmarks on market share, competitive intensity and brand equity. We estimate a rollout of this in quarter four for part of the business. With this, I hand over the call to Sameer, who will take us through the financial highlights. And thank you, and over to you, Sameer. Thank you, Suhed, and good morning, everyone. Let me briefly walk you through the key financial highlights for quarter two FY 'twenty seven. Quarter two FY 'twenty seven revenues stood at INR $4.97 crore with a growth of 16% year on year, supported by 10% growth in patient volumes and 11% growth in test volume. B2C and B2B revenue for the quarter grew 1715%, respectively, on year on year basis.

23:09 Our focus segment continued to perform well. 2F contributed 17% of revenue and grew 20% on year on year basis, while specialty contributed 30% of revenue and grew 20% on year on year basis. With respect to quarter two margin, EBITDA stood at INR 135 crore, growing 24% year on year. EBITDA margin expanded 180 basis points to 27.2%. PAT stood at INR 75 crore growing at 43% year on year. PAT margin expanded two ninety basis points to 15.2%. This debt margin is highest post COVID period. On the balance sheet front, our network working capital days stood at thirteen days compared to sixteen days in FY 'twenty six. This is through efficiencies that we are building.

24:01 Our cash and liquid investments stood at INR $3.48 crore as on 09/30/2026 compared to INR $20.03 crore as on 03/31/2026, building a strong cash position to fund further our organic and inorganic growth. With this, I open the floor for question and answer. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets for asking a question. The first question comes from the line of Surya Narayan Patra with Philip Capital India Private Limited. Please go ahead.

24:54 Yes. Thanks for the opportunity, and congratulations for the great set of numbers. My first question is on the on the the number of test purpose and what we are seeing. See, in fact, the True Health has been doing phenomenally well and consistent momentum that we have been seeing there. But still, the test per person, number of test per person, if I see, it holds around just two number only, which seems to be lower in the industry. Is it because a large portion of the test volume that we are facing seeing, it is around the sickness test or specialty test, something like that?

25:41 So what happens for us, know, we count one true health test or a wellness test as one test. You know, we don't count it as eight or 10 tests, which there are various components in nature, the wellness packages, up to maybe 50 or 60 parameters also. But we just counted only as one test. That's why even if the true health is increasing by 20%, all of which has been counted as one test. So that's what is the reason why you are seeing the number the way it is. Okay. Sure. My second point is about the genomic and cancer volume share. So if you can see, we have been seeing there is a kind of a consistent and sequential improvement in the specialty revenue share and particularly after the acquisition of the codiagnostic.

26:31 But since that is now fully integrated into the business model now, we are kind of focusing more on the genomic side and all that. So what is the share that these two specialty areas that would be having in the overall thing? And what mix it can attain, let's say, next couple of year time? You're asking about the oncology share in the overall specialty test? And is that what the question is? Yes, genomic and oncology. Yes. See, oncology is a fair because oncology, in fact, we were doing the oncology testing even before core acquisition of the basic oncology test we used to do it, right? So oncology is a large portion of the overall specialty test. But genomics is in early days for us, let's maybe last one point five, two years we are doing genomics. We are still just growing the in the genomics portfolio.

27:26 So I mean, genomics plus oncology put together will be a considerable portion of the overall specialty portfolio. And I think both these portfolios will continue to accelerate faster than the average company growth. So the opportunity for genomics, we believe, is quite large. And like Purin mentioned, we are early days, so we continue to expect to see a significant acceleration in that area over the next years to come. The next point is the center to to lab ratio, what we have been seeing is kind of a consistent improvement, and we are targeting a better number also. So on that front, if you can just highlight how this METROPOLISE program or the partner portal program, so those are kind of helping us really expanding the franchisee count.

28:20 Yes. So let me just take a couple of minutes to extend this whole thing. See, one is we have stopped adding any more new labs, and we stay put with seven fifty towns for operations, right? And then we are doing the addition of the collection centers in the seven fifty towns. So that's what you are signing where your denominator is constant and your numerator is going up. You are and on existing markets only, we are not expanding into further markets. So that definitely gives us that center to lab ratio going up with every quarter, right? And we said that we will take this up to maybe close to 30 by the end of this year and then maybe end of next year to our 30 by one is to 35 ratio. I think that program stays very solid. And the other one is that we also when we're partners, we also need to retain these partners, make sure these partners are happy and they make money and they enjoy doing business with us. That's where the METROPOLISE comes into effect. METROPOLISE is nothing but an engagement program between the partners and us. I mean, in the portal, they are able to see their all the test menu, the prices, they're able to see their statement of account, they're able to see their daily number, their target versus actuals, if there are any additional programs and incentives, etcetera, that we give it to them, they are able to see this. And there are also annual and quarterly engagement that we do with the partner. That's basically the METROPOLISE program. So with

29:51 the implementation of the METROPOLISE program for the last now eighteen months, it's done. Now we are seeing the retention of our partners is very high. We have very low single digit partner churn at this point out versus what we used to do, maybe a close to two digit number in the past. So same partner and growing volumes and staying put with us, the same geography is really helping us to get the overall volume growth in this Tier three, Tier two markets. Just my point of asking this question was that, sir, are we doing anything different to have accelerated growth in the franchise account because that is what seems driving the Tier three kind of a growth momentum. So that was the question. So exactly that's what I've answered. I think one is we are adding up more centers.

30:42 And secondly, we are retaining the franchises, because most of the centers we are adding it through franchises. And earlier we used to have a higher attrition of channel partners through with the METROPOLISE program, the partner portal by making ease of doing business, etcetera, the partner retention has gone up. And hence, we're able to see a much better ratio. Okay. Just last one clarification I wanted, ma'am. See, the Bharat government directive to the hospitals that all the procedure pricing has to be kind of reported publicly. So whether this is likely to have a kind of positive implication on the volumes that we can think about? I think, Amira mentioned in her speech that publishing the rates upfront is a welcome change as far as we are concerned. In our business, we tell the rates upfront to the patient and he or she pays the money first and then go through the testing. That's how it happens.

31:41 And we will be more than happy to publish in all our centers and our website, etcetera, anyway the customer can get all the ways. So it's a very welcome change from our point of view. That's a very good move. Next question comes from the line of Kunal Pamm, Banyan Tree Advisors. Please go Thank you for the opportunity and congrats on good set of numbers. I had three questions. One was on so we had launched a sixty minute test in Mumbai. Wanted to understand, you know, the the traction there, and is...

32:29 Are any other cities that we have added with, you know, instant booking kind of, you know, model? The second question was on... You spoke about, you know, the regulatory changes that are coming through, you know, in the opening remarks. I mean, I just wanted to understand. So we've already been seeing, you know, the unorganized sector kind of, you know, struggling a bit in last eighteen months or so, and that has... That is reflective in all, you know, National Labs numbers because we see growth. There's some some step up in the growth that has come through. Do you think this can bring the, you know, the the the the intensity of, you know, the shift from unorganized to organized can become, like, reasonably harder with, you know, regulations also kind of supporting the quality and, you know, standardization in terms of reports, etcetera? And the third question was on competition and market share in in two specific markets. One is not because, you know, with core, we have entered that market, and perhaps this is the first time, and we are seeing we're doing well in North. So I wanted to understand how, you know, we are, you know, doing with the with the competition.

33:45 And secondly, in our home market, which is Mumbai, we see, you know, the the... There's a... Like, at least from an anecdotal point of view, we see, you know, the the other two players, which is, say, you know, suburban and the other one, they both are also gearing up very strongly in terms of their brand communication, in terms of live edition, etcetera. Do we see any market share movement in in our core market or we are able to hold on to our market share in Mumbai? Because two years back, I remember we were gaining market share in Mumbai as well. So so these are the three questions. Thanks. So as I was saying on the industry front, we've been obviously the movement from unorganized to organized has been going on now for a while. And as we mentioned, this is not going to be a hockey stick, but there have been a few incidents that triggered this. For example, one, obviously, incident that triggered it was COVID, where out of 300,000 labs in the country, only 2,000 got approval to actually do COVID testing. And therefore, during those few years, those 2,000 became more visible, more brand focused and quality came to the front. So those that's how one that was one trigger that moved a faster movement to organized market.

35:03 The second thing, obviously, again, during COVID was the use of technology. And as people got very used to e commerce, things at home, technology used as a convenience, people started also looking for health care providers who were able to provide that kind of technology, which is why you've seen organized hospitals and organized diagnostics grow faster post because obviously, we are able to put in place the kind of technology requirements that consumers have. So if government regulation comes in, in a positive way, it will only help the organized players Because today, as organized players, we are already meeting all of those minimum standards, but not necessarily everybody else in the industry who are necessarily in the unorganized space are not necessarily following them. And therefore, that creates a dichotomy in the market. So if regulation comes in, it will certainly put more people at an apple to apple comparison, which does mean that it will probably many players who can't meet those requirements, who are at very, very small subscale levels will probably have to start winding down. And we've been seeing that happening over the last few years even without government regulation that as quality comes to the fore, as consumers become more conscious, as specialized testing increases, which the unorganized guys can't do, we have seen smaller players shut down and not be able to operate in the market. And even in the organized space, while we saw many competitors jump into the industry in the last seven, eight years, even with deep pockets, as they have not been able to scale profitably, we'll even see those shutdown

36:33 as well. So I think this is one industry where building a strong brand based on science, quality or whichever model that you follow and having trust really gives you a first mover advantage. Sareen can take the other. Yes. Okay. Let me come to the first question that you asked on the Insta360, which is the sixty minutes home visits services. We launched it in Mumbai. We could see a very good traction. We also were pleasantly surprised to see that like e commerce, people also wanted faster home visits services. Normally, we thought health services have been planned and maybe they in advance or so. But after launching these services, we are finding good traction. So we are able to serve our customer in almost 100 close to 100 percentage of the cases we are able to meet the sixty minute services whenever they are requested for.

37:23 So we have found good traction in post Mumbai. We have launched it in Chennai. We could find an equal enthusiasm in Chennai as well. So now we will take this forward. I think in the month of November first week of November, we are launching it in Bangalore. So the Insta360 service is definitely now seeing some headlines now. Now coming to your third question, the first part was about the North business, why and how is it doing. So definitely, see, one is the core diagnostic. And secondly, we also had Agra and Derradon, which is helping us in terms of growing in the North. And overall, in some of the markets beyond core, agra and DAPIC also we have pivoted on the B2B model and in market like rest of UP and Upper North and then in Delhi etcetera we are also getting good traction from the B2B hospitals on the specialty business. So everything put together is helping us to grow the North geography, and we will continue to put our best efforts in North to further grow.

38:29 And also there was another part of in the third questions about Mumbai market share growth, etcetera. See, we continue to do very well in Mumbai and our center expansion and our all productivity other initiatives around the existing center, etcetera, continue to do well. If you have seen our report, we already said 16%, 17%, the growth in the West market for us, largely spirited by markets like Mumbai, Pune, Surat, etcetera. So we continue to do well. I mean I won't be able to answer your question on the market share because there is no credible data available from the market share. You can compare the growth of the operator that you are talking about and our growth, and then you can figure out who is getting more traction actually.

39:17 Sure. Fair. Fair. I understand that. One last follow-up is on Insta360, right? Do you feel this can bring new growth to us or it is more of channel rerouting that is happening? And if so, then is this channel more costlier to you compared to the one day delivery kind of model? No. So this definitely what we are seeing in the while most of the customers are currently coming existing customers asking for speed of services, but we are also finding new customers, right? And as we continue to run this program, we are sure that we'll get more and more new customer. And with respect to the cost, this is not a it's only a question of we need to keep certain slots available, and it's more about planning and keeping our applications suiting the customer immediate requirement, etcetera. So not necessarily it's going to cost us more.

40:15 One of the advantages of being omnichannel player, which has brick and mortar plus home services is you're able to obviously use your resources in multiple channels versus obviously for the pure home visit guys who have to keep adding people every time they expand a route. So therefore, the cost for us, to Siren's point, doesn't turn out to be more because you're able to use your resources through branches and through your brick and mortar centers as well. Sure. Does it also mean that your productivity per resource will... Can go up because of this? Well, we we can have better productivity through this. Yeah. You're right. Sure. Thank you and all the very best. Thank Thank you.

41:03 The next question comes from the line of Tosif Sheikh with BNP Paribas. Please go ahead. Suralin, in your opening remarks, you said EBITDA margin expansion would be in the range of 120 to 170 bps for FY 'twenty seven. Are you revising your earlier guidance, which was at upper at 150 basis? So that's what we said in the first half of the year. We did about 180 bps, 190 bps is the growth in EBITDA, and we continue to see similar trend for the rest of the year as well. Okay. And on price hike, which you highlighted, it will taking in fourth quarter, just want to understand, will it be a broad base or it will be only restricted to B2C or any specific region? Well, at this point of time, restricted to B2C.

41:51 I mean, not necessarily restricted to any region. We are just examining all the possibilities and we are doing all our analytics at this point of time. It will be a different price changes in different micro markets. So what exactly will go to each of the markets, it's too early for me to comment on it. But we are working on it. It will take a couple of months for us to do complete groundwork before we go and execute it. Thanks. Thank you. Next question comes from the line of Anshul Agarwal with MK. Please go ahead. First question is on margins. I understand earlier, we had given a medium term guidance of margins going to 27%, 28%.

42:42 Should we think about this in a manner of staggered expansion only because from what I can gather, taking price hikes, operating leverage, not building up too many labs, etcetera, because the network doesn't need it, would sort of accelerate our margin trajectory. So should we sort of think about margins reaching very quickly to that range? Or should we think that over the medium term, we have capability of going beyond this range as well? Yes. So Anshul, what takes the better margins up are basically things of course one of course will come from the operating leverage. And second, I talked about the lab platform transition, which is almost coming to a closure by the end of this quarter. For the coming quarters, I'll get the full benefit of the lab platform changes. And also the productivity initiatives, many things have already happened and more things are going to happen. So these are the things which are going to give me the benefit on the margins. And of course, once we start doing a price revisions and that also should help us in improving the margins, right? But at the same time, we are also like I said, we are expanding some twenty five minutei hubs and we are trying to bring in many other products on the retail. So there are some investments also parallelly we will do, which will may help us which may cost us a little bit more.

44:13 So net of it, we clearly see an opportunity to improve the margins, maybe 125 bps to 150 bps in the coming years also. Got it. Second question was on the comments Miriam had made in her opening remarks. I believe this regulation is around remotely approving or sort of signing the reports are already in place at least in radiology. Has something changed meaningful in the pathology... On the pathology front as well? Can you just elaborate on See the regulation that was there earlier, there is something given by the National Medical Commission and then each state makes their own rules as well. And sometimes these rules are conflicting, sometimes they're overlapping and there was a fair amount of lack of clarity around what the rules really are. And in some states, they waited whether remote authorization is allowed or not. So while we have pathologists in every lab and who are on the ground and looking at slides under the microscope, The idea was to use your specialist sitting in Bombay to approve a report in Patna because obviously, the doctor you appoint in Patna, the pathologist, is not going to be a specialist at everything.

45:27 And the earlier regulation did not have full clarity on this, and it was debated by multiple geographies. Therefore, now this NMC clarification gives clarity as to what clearly you can do and what you can't do, which helps chains like us because like we said, you're able to use your best talent wherever they are to approve reports in even a small market, providing better quality to patients and therefore that better quality will should lead to better business in those markets. So I hope that clarifies it. It does. Thanks. So this is Pan India level, correct? That's right. Just one last bookkeeping question from my end. Could you help us with the CapEx guidance for the current year, considering that we'll not be adding any more labs? So we did mention in the past that our CapEx will be in the range of 4% to 5% overall, right? And that's how we maintained it last year also with a similar range this year too.

46:22 I mean about INR 65 crores, 70 crores is the normal CapEx that we do with everything put together. So I mean we should be in the same range this year as well. Okay. Thank you. That's it from my end. All the latest. Thank you. Next question comes from the line of Shrikanth Akhulker with Numama. I have a couple of questions on the price increases. So on your price increase commentary, what do you think the will there be industry level price increases? And what kind of response do you anticipate from the unorganized diagnostic companies? See, well, I mean, I can talk on behalf of my company, right? I can't tell you what will happen in the rest of the organization of the industry because we are doing it because, see, two years, we have not done the price increase. There are many components of price our cost, which has gone up, the inflation, you all know about it, the logistic costs, the transportation costs, the service costs, everything has gone up for the last couple of years. And I think we it's only either right from our side to consider the price increase at this point of time. I'm not I don't know whether in the rest of the industry will behave which way and what will happen to the unorganized sector. I'm going to be able to comment on that.

47:42 Understood. For long the diagnostic organized player always believe to keep prices steady. And they always believe that the volume growth will come, which is happening. Now what is really changing because we have seen a couple of years back, there was a price increase. Now you're also talking about price increases. So apart from the cost increases, is there any other reason to increase prices right now? See, we have to remember one thing that price increase is not something new. Price increases have been happening every year or every two years by organized chains as well as unorganized for donkey's years, right? This is not a new phenomenon. So we are just saying that the only reason last year we did not do it is because there was a GST law that became applicable that gave some input benefit. And therefore, for one year, we took a pause, and I think some of the other industry peers also took a pause for that one year just to make sure that we are all very compliant from a tax perspective.

48:42 And therefore, otherwise, annual price increases have been a regular feature. Every one or two years has been a normal thing. We do not believe that the unorganized industry does not take price increases. In fact, if you have to understand that at the local level, the unorganized pathologist does not have much volume increase. And actually, price increase is their only way to increase the revenue. So usually, they do take increase every year, and that's been the norm in the industry. Understood. Last question on core diagnostic. I think we had last quarter high single digit exit run rate for the margins. Can you please update on this? So we had a double digit margin in the last quarter on core diagnostics.

49:28 Understood. That answers my questions. Thank you. Thank you. Next question comes from the line of Gaurav Bhamma with GM Financial. Please go ahead. Hi. Am I audible? Yes. Thank you for the opportunity. I would like to start with first congratulating on a great set of numbers. Just for bookkeeping and then at a single place, would request if you can provide us some sort of FY twenty twenty seven guidance on what on both top line growth and EBITDA margin? FY twenty seven, right? So we did say that the first half of the year was about 16 percentage is good revenue growth and about 180 to 200 bps margin growth.

50:18 We expect similar trend to continue for the rest of the year as well. So even okay, understood. Thank you. Thank you. Next question comes from the line of Shyam Sundar Srinivasan with Goldman Sachs. Just on some of the remarks made on the region wise growth, I think, Amir, you mentioned that North is growing organically the fastest. But if I look at your presentation Slide nine, it shows 12%. So maybe there is some way to reconcile. So if you could clarify that? Yes, you're right. I think 12% is for the North. We said the contribution from North has gone up to 17%.

51:09 Clearly, the moment you mentioned growth, but maybe I'm wrong. Okay. Just a second question is on, again, just going back to some of the opening remarks around hospital pricing and the kind of margin caps those industries are seeing. When we look at the TAM for diagnostics, about 35% sits with hospital labs. Right? So if, let's assume, I'm making a hypothetical suggestion here. If there are price caps that come on diagnostics also or, like, at least the standardized rate, I think you mentioned earlier that your rates are significantly lower than hospital labs. So does this represent an incremental opportunity from a B2B perspective? How would you think about that?

51:57 See, in the our contract with the hospitals at a certain price, it's also already the prices with them are on a discounted price. What price they give it to the customer is going to be what deals are coming under the cap, right? So my pricing with the hospital actually doesn't change. It's based on a very normal, what you call, price contract basis. Mean, we are... So No, no, no. Question is more an opportunity. Do you think their contribution will shrink? Like, why should there be 35% sitting with them when they are not cost competitive, when they now prices probably come under pressure for them? They need to do more outsourcing to guys like you. I'm looking at that logic. Alright. So we don't know about that because, see, what happens in hospital, most of the... See, they have their own labs. Many hospitals have their own labs. The test that they do do only getting outsourced to us, you know, which are largely the most of the hospital, the hospital only the specialty test gets outsourced to us.

53:01 And that's also on a price contract with them, and that's not going to change. But whether there's an opportunity for them not to do some of the tests and given mean also to us, I mean that's unlikely because they already have the lab and arrangements there. Then why will they also those tests where they already set up the lab for? Because prices are now untenable at the rates at which the government seems to be suggesting and their cost structures are bloated. We'll have to wait and watch whether the change in opco is actually impacting margins of hospitals or not because each hospital will have a different contribution of oncology drugs as a part of it. I mean, just from the hospital results, which have already come out just in the last few days, we have not really seen margins impacted yet.

53:49 So I think we'll have to first wait to see if margins are impacted of hospitals because of it. The logic is you're right that, hey, let's try to cut costs in other places. Now whether that results in more outsourcing of tests, I think we'll have to wait and watch. I don't think there's a clear direct connection at this point. Understood. Thank you for the time. Mentioned about the North Zone growing the fastest, we mentioned that for one, what the data you're looking at is for Q2. Yes. Hope that clarifies. And H one, what would that number be, Amira? Just sorry, that is not there in the presentation? About 16%. 16%. Thank you. Thank you. All the best. Thank you. Next question comes from the line of Akash Shah with Investec. Please go ahead.

54:36 Yes. Hi, ma'am. Good evening good morning and congratulations on the great set of results. Most of the questions have been answered. I just wanted to ask a question on the patient growth that we have been seeing over the past few quarters. The patient growth has suddenly risen from around 5% that we saw in fourth quarter of FY twenty twenty five to now high single digit to mid double digit. So is there anything that is anything structural that is driving the high new patient the patient growth that you see? See, for us, the patient volume growth maybe year back was about seven percentage. You know, that's now gone up to 10 percentage. Just getting the numbers right first. And two or three things which is happening, you know, which is helping us to do the patient volume growth. One is all the new centers and the labs that we put up over the last, let's say, couple of years in the Tier two, Tier three towns are all becoming productive.

55:32 And we are also seeing good traction and people wanting to do good quality diagnostics in these good labs, the branded labs. So we are clearly seeing good walk ins coming in these centers. That's one reason. And secondly, our engagement with our existing customers through the customer life cycle management, through the digital platform, etcetera, has also got accelerated. And we are seeing more number of customers, same customer coming back to our network for the next services also. So these are the two big things that I can suggest, which is helping us to take the patient volume growth to double digits. All right. All right. Thank you, sir. That's it. Thank you. Thank you. The next question comes from the line of Akshay Shinde with Centrumbrooke. Please go ahead.

56:24 Hello. Yeah. Thank you for the opportunity. With the tier three market merging is a key growth driver and no major acquisition plan this year, could you help us understand the growth opportunities in this market and key specialties were driving the demand there and the outlook on price hike and pricing strategy? That's it from my side. No. So Tier three markets, are growing at around 20% age and our contribution from Tier three is 26% age at this point of time is gradually going up. And now like I mentioned in the earlier comments that we are adding more and more centers in the Tier two, Tier three, four towns. And we will further accelerate the rate at which that we add centers. You will see more pace picking up in the center addition in the Tier two, Tier three markets in the days to come. So that's another way for us to make the best out of the Tier three opportunities coming in. And to your question of whether it is specialty or whether it's a routine test which is coming from here, it's actually both. In the Tier three towns, when you set up the lab and there's a collection center, the normal routine and semi special test also comes there. But also there's an opportunity for us to pick up sample from there, which is on the specialty and send it to the nearest reference lab and get it tested.

57:45 So we are seeing both routine as well as specialty tests coming in from Tier three. Price increase, Paul, I think I've already mentioned that we are considering a price increase early next year and the basic groundwork is happening as we speak and it takes a bit of a time. And we do it normally for B2C. And then different market, micro market may have a different price revisions. So early days, but maybe in the next month, four to six weeks' time, we'll be able to do the whole working, and then we'll be able to get this going maybe early next year. I understood. Thank you so much. All the best. You. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session.

58:36 I now hand the conference over to the management for closing comments. Thank you all for joining us today for this Q2 earnings call. As you can probably hear from our chat this morning, we feel very confident and positive about the direction that we are heading in. We feel not only our execution levers have become stronger, and therefore, the growth rate has moved to a different benchmark than before over the last four to six quarters regularly. We've also been able to do this with a very strong margin we're we're the the in a business. Business. And seeing services in preventive the health care and otherwise.

59:23 And as we go through these pilots, we'll be happy to come back with information and inputs around if we are planning to scale them. But we are going to be making some of these investments, which are asset light over the next couple of quarters so that it creates potentially a second growth engine for Metropolis besides pathology as well. So thank you, and we look forward to chatting with all of you at the end of Q3 in early Q4. Thank you so much, and happy Diwali to all of you. Thank you. On behalf of Metropolis Healthcare Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.