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Private diagnostic players minted great sums of money during the covid-19 scare.


However, there's one listed company which follows a slightly different business model than others in the diagnostics space. The company is Krsnaa Diagnostics and is one of the largest players operating on the PPP (Public Private Partnership) model.

We decided to dig deeper into the company to understand the business model better.

Below, we have shared details from the Q3 FY 23 con-call of the company:


Before that, some good news for medium-long term investors

Individual investor participation in shares dropped to 34 months low in Jan'23. Google trends - Multibagger chart also indicating low investor interest

To know why this is good news if your investment horizon is 3-4 years - Click HERE


Krsnaa Diagnostics - Notes from Q3 FY 23 con-call

General Points

  • Today, the Indian diagnostic market is valued close to $15 billion and projected CAGR of 11.5% in coming years
  • The Government of India has allocated Rs 88,956 crore to health care expenditure
  • Government in various states are continuously evaluating PPP as a viable and best alternative for their goal of providing high-quality health care and diagnostic services at affordable prices
  • As of today, Krsnaa is a leading PPP diagnostic player with 127 radiology centers, 1,522 tele-reporting centers, 97 processing labs and 741 pathology collection centers


  • EBITDA margin were partially impacted due to additional costs incurred on onboarding team to operate and run the newly launched centers. The margins are expected to improve in coming quarters with the maturity of the centers

Punjab tender

  • We have operationalized 24 out of 25 radiology centers and the remaining 1 radiology center will be operationalized by Q4 FY '23. All the 30 laboratories and 95 collection centers in Punjab are now fully operational
  • All the subsidiaries are linked to Punjab tender
  • So Punjab, we expect about close to Rs 60 crores to Rs 70 crores annualized revenue in the next fiscal

Other projects

  • We have operationalized entire pathology project in the state of Himachal Pradesh, and additionally, we have also successfully implemented the tele-reporting project in the state of Tripura
  • During the quarter, we have added 7 radiology, 33 tele-reporting, 25 pathology labs and 64 collection centers

Rajasthan tender

  • The Rajasthan tender, what we were doing was about INR 70-odd crores annually. After the tender, we also got an extension and we served the extension period
  • Rajasthan, we have discontinued from or the tender got completed in mid of August '22. In Q3 FY 22, it contributed 11-12 crore to revenue
  • Now the government has come up with a much larger tender, which has more collection centers and more labs. We have currently bid for the same, and we are awaiting the results
  • It's roughly about 450-500 crore spread over a couple of years

New tenders awarded

  • Krsnaa has been awarded with two major pathology tenders, one in the state of Maharashtra for setting up one lab and 600 collection centers. BMC, where we are looking for annualized revenue of INR 30 crores to INR 40 crores
  • One in the state of Odisha for setting up 5 labs and 386 collection centers. Orissa, INR 50 crores to INR 55 crores annualized revenue potential
  • Both projects put together INR 20 crores to INR 22 crores approximately capex


  • We have launched wellness packages at affordable rates, which will help us to expand in the B2C side. The wellness package is Ayaksham, which covers basic tests as well as special test
  • We shall be launching the website for the B2C segment in the next month

Margin and ROCE difference between Pathology and Radiology

  • Pathology margins, EBITDA margins are a bit lower than the radiology. But I think the difference will not be significantly high between radiology and pathology, over around anywhere between 5% to 7%
  • We want to have a healthy balance between radiology and pathology
  • From an ROCE perspective, pathology is better compared to radiology

What is fees to hospital component

  • One is we are also currently tied up with various medical colleges and private hospitals, where we have a center. So there's a certain revenue share that we do to these hospitals for the space they provide us
  • 2nd, in some of our bigger projects like Punjab or Rajasthan locations, where we have business associates as we call them, with whom we work in serving these patients. These are very remote locations

Receivable days

  • If you see the receivables normally in this time of the year, which is around Q3, the receivable days go around 94, 97 days, which is a typical trend we see in our line of business
  • The reason why this happens is typically, if you see from Q3 onwards to Q4, the authorities will start basically closing out their whatever processes so that before March end they can complete the payments so that their next year budget doesn't get impacted


  • So FY '24, I think from a guidance perspective and considering the Punjab experience, we are looking at about INR 700 crores, INR 750 crores is what we are currently looking



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Disclaimer: This is not a recommendation to buy/sell Krsnaa Diagnostics. These notes are as announced by the companies on exchanges and only for the purpose of information and education.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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