Summary
HealthCare Global Enterprises Limited - Q3 FY26 Earnings Call Summary Monday, February 09, 2026, 4:00 PM IST
Event Participants
Executives 1 Dr. Manish Mattoo (Executive Director and CEO)
Analysts 7 Aditya Khemka (InCred Asset Management), Aliasgar Shakir (Motilal Oswal Mutual Fund), Aryamaan Pawar (Prudent Investment Managers), Devang Patel (Sameeksha Capital), Gaurav Tinani (Ambit Capital), Nitin Agarwal (DAM Capital), Rajat Srivastava (Tata Mutual Fund)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹633 crores | +13.4% YoY; grew despite seasonal softness and state scheme disruptions in Andhra Pradesh. |
| Adjusted EBITDA | ₹111 crores | +20% YoY; margins expanded by 100 bps to 17.5% due to operating leverage. |
| ARPP | ₹84,000 | +5% YoY; growth driven by improved case mix and payor mix variations. |
| Volume Growth | 8% (Total) | +11% YoY in South (ex-AP) and West; East grew 16% YoY. |
| Digital Revenue | ₹170.9 crores* | +26% YoY; Website contributed 67% and Mobile App 13% of digital revenue. |
| Net Debt | ₹680 crores | As of Sept 2025; management proposed a Rights Issue to strengthen capital structure. |
| Pre-tax ROCE | 13.3% | 9M FY26 figure; management targets 20% in the next 4-5 years as centers reach maturity. |
*Calculated based on 27% share of digital revenue mentioned in transcript.
Geographic & Segment Commentary
- South Cluster: Reported 9% YoY revenue growth. Performance was impacted by a 20-25 day strike/disruption in the Andhra Pradesh state-sponsored scheme (Aarogyasri), which has since been resolved. Volume growth excluding AP was healthy at 11% YoY, supported by high-end medical oncology (CAR-T, Immunotherapy) at the Bangalore CoE.
- West Cluster: Delivered strong revenue growth of 17% YoY and volume growth of 11% YoY. Performance was led by Ahmedabad capacity expansion and key clinician additions. Mumbai showed “exponential” EBITDA growth and remains a key area for brownfield expansion.
- East Cluster: Revenue grew 12% YoY, driven by strong volumes (+16% YoY) in Cuttack and Ranchi. ARPP declined 3% YoY due to Odisha state scheme transitions and case mix changes. A new regional business head was appointed to stabilize Kolkata operations.
Company-Specific & Strategic Commentary
- Network Capacity Expansion: HCG plans to add ~1,000 beds to its current ~2,500-2,600 bed capacity. This includes North Bangalore (120+ beds) and Whitefield greenfield projects, plus brownfield additions in Cuttack (60 beds), Vizag, and Mumbai.
- Digital Engine & Conversion: Digital revenue grew 26% despite lower paid media spend. Efficiency improved with campaign-led revenue up 38%, while dependence on aggregators fell from 12% to 9%.
- Clinical Differentiation: Management highlighted treating a tumor encircling the optic nerve via Cyberknife and performing R0 resections on a 97-year-old patient. HCG is positioning itself for “high-complexity” cases as its primary moat.
- Operational Efficiency: Corporate-led initiatives focusing on revenue leakage, procurement optimization, and clinical density are driving the current margin expansion trajectory.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15%+ CAGR | Driven by 10% volume growth and 5% ARPP growth; management views this as conservative. |
| EBITDA Margin | 23% - 24% | Target for the next 3-4 years; mature centers already operate at 26%-27%. |
| ROCE | 20% | Target for 4-5 years; expected as centers cross the ₹10 crore/month revenue threshold. |
| New Capacity | Q4 FY26 / FY27 | North Bangalore facility (MR-LINAC equipped) to start in Q4 FY26; Cuttack expansion by FY27. |
| Capex | ~₹310 - ₹315 cr | FY26 expected at ₹275-280 cr; FY27 likely 10-12% higher. |
Risks & Constraints
| Risk | Context |
|---|---|
| State Scheme Volatility | Disruptions in Andhra Pradesh (Aarogyasri) and Odisha schemes impacted Q3 volumes and ARPP. While resolved, future policy shifts remain a variable. |
| Margin Dilution | Increased mix of Medical Oncology/Pharmacy (lower gross margin at 72% vs 75% historically) can dilute margins, though partially offset by operating leverage. |
| Competitive Intensity | Management cited competitive intensity as a reason for maintaining a “conservative” 15% growth guidance despite higher theoretical capacity. |
Q&A Highlights
Capital Structure & Rights Issue
- Question: What is the rationale for a Rights Issue given comfortable leverage? (Aliasgar Shakir)
- Answer: Equity infusion at this stage is intended to strengthen the balance sheet and capital structure; specific details will be shared after the Board meeting (Dr. Manish Mattoo).
Margin Trajectory
- Question: Can HCG reach the 25%+ margins seen in multi-specialty peers? (Aliasgar Shakir)
- Answer: Mature centers are already at 26%-27%. The company-wide goal is 23%-24% within 3-4 years as younger centers (50% of network is <10 years old) scale (Dr. Manish Mattoo).
Medical Tourism
- Question: Why is medical tourism only 3.5% of revenue versus 10% at peers? (Rajat Srivastava)
- Answer: Historically, the focus was domestic. Non-metro locations (except Bangalore) limited MVT; expansion in Mumbai and Kolkata is expected to double this to 7% over four years (Dr. Manish Mattoo).
Andhra Pradesh Disruption
- Question: Did the strike impact working capital? (Gaurav Tinani)
- Answer: Lost 20-25 days of work in Vizag. However, government payments remain healthy with a net receivable benefit of ₹5 crore in Q3 (Dr. Manish Mattoo).
Key Takeaway
HCG delivered a resilient Q3 FY26 with 13.4% revenue growth and 20% EBITDA growth, demonstrating clinical depth and digital conversion efficiency despite state scheme disruptions in South India. The company is transitioning from a high-capex phase to a period of operating leverage, with 80% of future margin growth expected from existing centers. Strategic priorities include commissioning the North Bangalore facility in Q4 FY26 and adding 1,000 beds via brownfield/greenfield expansions over the medium term. While the Rights Issue suggests a move toward a debt-free balance sheet, the primary focus remains on scaling oncology-specific clinical moats and improving ROCE from 13.3% toward a 20% target. Management remains confident in a 15%+ growth trajectory supported by a strong Q4 outlook.
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