Vijaya Diagnostic hits new high, stock up 65% in 4 months on strong Q2 nos

In Q2 the company delivered impressive 31.8% YoY revenue growth, of which 23.0% was organic, driven primarily by volume, with contributions coming from both its existing and newly launched centres.

Shares of Vijaya Diagnostic Centre hit a new high of Rs 1,202, as they rallied 5 per cent on the BSE in Friday’s intra-day trade on healthy outlook. In the past four months, the stock of the healthcare service provider has zoomed 65 per cent on strong earnings.

 

In the September quarter (Q2FY25), Vijaya Diagnostic Centre delivered a robust quarter, achieving an impressive 31.8 per cent year-on-year (YoY) revenue growth, of which 23.0 per cent was organic. This strong performance was driven primarily by volume, with contributions coming from both its existing and newly launched centres. The company’s profit after tax grew 25.9 per cent YoY at Rs 41.94 crore. Earnings before interest, tax, depreciation, and amortisation (EBIDTA) margin improved 22 bps to 41.5 per cent.

 

Vijaya Diagnostic Centre majorly focuses on B2C business with a very small share of the revenue coming from B2B business. Even in the B2B segment, there is a potential for patients from hospital tie-ups to become direct customers in future due to brand recognition in radiology.

 

The continuous investment in technology - Vijaya has recently invested ~Rs 4 crore in IT systems to strengthen their technological backbone. Even after significant technology costs, the company is able to protect the EBITDA, according to JM Financial Institutional Securities.

 

The company’s radiology is a business segment that is difficult to scale up due to technician dependence. Since customer experience is critical in B2C and the company has to uphold a high standard of quality, the major challenge for scaling up is the requirement of a skilled workforce.

 

Even though the company has constantly delivered more than the guidance, they believe in a sustainable volume-driven growth of 15 per cent YoY with ~13 per cent growth coming from volume (3-4 per cent from new centres and 8-9 per cent from older clusters) and the rest coming from price, the brokerage firm said.

 

The first centre in Kolkata was able to reach break-even in 9 months, even after high competition in the city Vijaya was able to attract customers with cutting-edge equipment and specialised doctors. Currently, two hub centres have been operationalised in Kolkata with 5 more hubs in the pipeline, it added.