Ladies and gentlemen, good day and welcome to Dr. Lal PathLabs' Q4 FY 2023 earnings conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar of CDR India. Thank you, over to you, sir. Thank you, Roman. Good evening, everyone, welcome to Dr. Lal PathLabs's quarter four and FY 2023 earnings conference call. Today, we are joined by senior members of the management team, including Honorary Brigadier Dr. Arvind Lal, Executive Chairman, Dr. Om Prakash Manchanda, Managing Director, Mr. Bharath Uppiliappan, CEO, Mr. Ved Prakash Goel, Group CFO, and Mr. Shankha Banerjee, CEO of Suburban and other group companies. I would like to point out our standard disclaimer here. Some of the statements made on today's call could be forward-looking in nature and actual results could vary from these forward-looking statements. A detailed disclosure in this regard is available in the results presentation, which is available on the stock exchange websites. I would now like to invite Dr. Lal to share his perspectives. Thank you, over to you, sir. Thank you, Siddharth. A very good evening and a warm welcome to everyone present on this call. We are here to discuss Dr. Lal PathLabs' Q4 FY 2023 earnings. I would like to take you all through the key developments and updates during the period under review. India requires quality diagnostics of scale. Over the years, we have tracked the gradual evolution of the way doctors and patients manage disease and health. Accurate diagnostics is increasingly contributing throughout the treatment process, including health management, disease detection, prognosis, diagnosis, treatment planning, and post-treatment monitoring. We therefore continue to invest in creating an efficient technology-backed network that can align with the growth in sample volumes. To start with, I am delighted to share that Dr. Lal PathLabs has stocked 15.5% growth in the non-COVID revenue in FY 2023. We have proudly served about 27 million patients in FY 2023. This has come on the back of a sharp focus on core operations across country, including tier two and tier three cities and investments in digital infrastructure. We have continued to make progress across our three strategic pillars. That is geographical expansion, creating a unique and specialized portfolio, and augmenting the technology infrastructure for the future. The highlight was the unveiling of our Mumbai reference lab at Vidya Vihar in January this year. This has immediately resulted in the increased testing of the high-end tests, and it is also the first private lab in West India to have a BSL level 3 biocontainment lab. This speaks leaps and bounds of our commitment to offer best-in-class services to our patients by bringing accurate diagnosis at reasonable prices to the fore. We also added a second electron microscope at our national reference lab in Rohini in Delhi. At this point, I would like to remind you that Dr. Lal PathLabs already has the world's largest histopathology testing center or load, processing up to 1,400 biopsies a day, and also the largest kidney biopsy testing center. We were the first private lab in South Asia and Southeast Asia to have an electron microscope way back in 2016. I am pleased to share that we continue to work towards enhancing our technological capabilities. We have begun implementing an upgraded lab information system and advanced tools like artificial intelligence and data mining. These have enabled us to achieve enhanced operational efficiencies and quicker turnaround times or TAT. We continue to add new tests to our test menu and diversify reach, and diversify our reach to a higher franchise share of patient service centers. Our processes are tuned to drive trust towards our brand, and therefore, I think we are uniquely placed to both drive and benefit from the expansion in consumption of diagnostic services going forward. Thank you very much, and I would now like to hand over the floor to Dr. Om. Over to you, Dr. Om. Thank you, Dr. Lal. Welcome, everyone, to Dr. Lal PathLabs' Q4 and FY 2023 earnings call. I hope that you and your loved ones are keeping safe and healthy. I'll share a few of the industry and business insights that I see emerging based on FY 2023 results. During the entire FY 2023 in quarterly commentaries, I have always been highlighting that we should analyze annualize instead of quarterly trends. Since the financial year is over, the entire analysis becomes a bit more meaningful as we have full year numbers in front of us. Let's have a quick look at FY 2023. While FY 2022 was operationally very challenging due to very high incidence of Delta and subsequent overhang of travel-related test requirements and various waves like Omicron, et cetera. In contrast to FY 2022, we experienced FY 2023 turned out to be financially very challenging for the entire industry due to the following reasons. Number one, nearly 80%-90% decline in COVID and COVID-related revenues. The higher the contribution of COVID testing to the total revenue, bigger the challenge. The second is inability to roll back capacities and manpower and reagent stocks due to unpredictability of the future COVID demand pattern. On the other hand, FY 2023 also experienced uneven quarterly base, and coupled with aggressive competitive activities, further made it difficult for all of us in understanding the underlying growth trends. Since FY 2023 is over, I am clearly seeing few trends, my take is the following. Number one, bundled packages have become way of life in our industry. Our contribution of SwasthFit to LPL total revenue has further gone up to 22% in Q4. We are doing higher number of tests per patients, and that's very clearly visible in our sample volumes as well. Number two, our CAGR trends based on, this is our internal estimates of few large players, their data is in public domain, that also include their inorganic assets and residual FY 2023 COVID revenues. Over four years suggest that some of these players have experienced all put together about growth rate of 10%-11%. This may not be reflective of entire industry growth, but if I look at all the data put together of in public domain, I am seeing CAGR of 10%-11%. Number three, after a long gap, we saw in Q4 some of the players have taken price increase. We also did a little bit in the month of February. We will talk about that. Number four, as the pressure on margins build up in the industry, especially on smaller and mid-sized players, we do see consolidation opportunities emerging in times to come. However, valuation expectations and unavailability of quality assets will make this journey a little difficult. On Suburban Diagnostics as a platform, we are now set for next phase of integration. As Dr. Lal mentioned, that we built a state-of-art reference lab in Vidya Vihar in the month of January this year. Second is, as all of you know, that COVID contributed nearly 50% of the total revenue of Suburban in FY22. It is now down to just 6% in FY23. The stage is definitely set for next phase, wherein we plan to bring in now backend synergies between the parent company, LPL, as well as Suburban Diagnostics, and go further aggressive in Mumbai and Western region. In the end, I would say the brand that has the trust of the patients and medical fraternity, holistically invested in network creation, infrastructure scale-up, patient services, et cetera, will sustain and grow in the long run. With that now I would like to invite our CEO, Bharath, to continue this conversation. Thank you, and over to you, sir. Thank you, Om. A very good evening to everyone present here. I warmly welcome you all to our Q4 FY23 earnings conference call. I will now take you through some of the operating and business highlights of our company. In Q4 FY23, we registered 6.3 million patient visits, generating a total revenue of INR 491 crores. COVID and allied tests declined 83% and contributed to only INR 11 crores, that is just 2% of the overall revenue. During the full financial year, we registered 26.9 patient visits and generated a total revenue of INR 2,017 crores. You would remember last year in Q4, we had a pronounced Omicron wave of COVID, with high testing volumes comparable to the end of Delta wave. As a result, test mix profile shifted significantly. Hence, for analysis purposes, one must look beyond YOY growth and use other metrics like sequential and three-year CAGR numbers. Our non-COVID revenue at INR 480 crores registered a YOY growth of 14.4% and followed historical sequential trends between Q3 and Q4. The tests per patients also moved up from 2.48 in Q4 FY22 to 2.76 in Q4 FY23, representing 11.2% growth in non-COVID tests conducted. Underlying non-COVID patient visits in the organic business grew near 8%. As you are aware, we had taken some price corrections in the month of February 2023. The same has got settled and has been absorbed by various segments of our customers. According to our estimate, this price correction has had a 1.7% impact in this quarter and 2.5% on an ongoing basis. We have been focused on four strategic programs: building a bundled test portfolio, SwasthFit; super specialty business; enhancing digital capabilities; and geographic expansion, including serving tier three and four cities. Like Om mentioned, our bundled test portfolio SwasthFit continues to do very well, and it contributed nearly 22% of Q4 FY 2023 of non-COVID business. Overall, SwasthFit portfolio generated a revenue of INR 370 crores in FY 2023. Our super specialty portfolio led by genomic testing division, Genevolve, Center of Excellence for Reproductive Diagnostics, L-CoRD, and Center for Autoimmunity Excellence, L-ACE, is becoming similar to the SwasthFit portfolio in size and growth rates. Our expansion program aimed at reaching the interiors of the country in tier three plus towns of Bharat continues unabated. We now have 277 labs at the year end, including 70 labs at tier three towns like Siwan, Murshidabad in east, and Sultanpur in the north. We continue to invest in scalable and profitable digital programs, combining medical excellence and leveraging digital analytical capabilities to improve patient journey. I would like to talk about three digital properties recently launched and scaled up. Today, namely CHIPS, recommendation engine, and patient wallet. Our CHIPS, Customer Health Improvement Plans, is designed to engage our patients digitally with personalized digital interventions—digital diagnostic interventions. Further, we have built a recommendation engine that shares the specific tests at the point of sales. All these programs, combined with the patient wallet, will provide personalized, scalable digital customer relationship management programs. We are receiving good customer traction on these programs since their launch. We believe we have the right set of building blocks which we have put in place in the marketplace, with a few more in the pipeline, these we believe will help us deliver industry-leading growth rates. With that, I would like to invite Ved to take you all through the financial performance. Over to you, Ved. Thank you, Bharat. Good evening, everyone, and thank you for joining this call. I'm now sharing some of the key financial highlights for Q4 and FY 2023. Our non-COVID revenue for Q4 FY 2023 came in at INR 480 crore versus INR 420 crore last year same quarter, a growth of 14.4%. Whereas FY 2023 non-COVID revenue came in at INR 1,954 crore versus INR 1,691 crore last year, a growth of 15.5%. Total revenue for Q4 FY 2023 came in at INR 491 crore against INR 486 crore last year same quarter, a growth of 1.1%. Total revenue for FY 2023 came in at INR 2,017 crore versus INR 2,087 crore in FY 2022. Revenue realization per patient for Q4 FY23 is INR 774 against INR 728 last year same quarter, an increase of 6% led by price increase, test mix, and higher contribution of SwasthFit. Normalized EBITDA after eliminating the impact of RSU, CSR, and one exceptional expenses for Q4 FY23 came in at INR 131 crore and INR 528 crore for FY23. Normalized EBITDA margin for Q4 is at 26.6% and 26.2% for FY23. Normalized PBT after eliminating the impact of notional depreciation on account of consolidation of Suburban Financials for Q4 FY23 came in at INR 102 crore versus INR 94 crore in last year same quarter. INR 400 crore for FY23 versus INR 494 crore in FY22. Normalized PBT margin is 20.8% for Q4 FY2023 and 19.8% for FY2022. sorry, FY2023. Normalized PAT for Q4 FY2023 came in at INR 76 crore versus INR 73 crore in Q4 FY2022. Rupees 297 crore for FY2023 versus INR 369 crore in FY2022. Normalized PAT margin is at 15.5% for Q4 and 14.7% for FY2023. Cash and cash equivalents as on March 2023 is INR 838 crore. Net of borrowing, it is INR 601 crore. I am pleased to share that our efforts towards optimizing cost and increasing the operational efficiency by using the technology and digital tools has resulted in reducing our debtor outstanding and inventory to 28 days now. One side we are doing efforts on front end patient side, as Bharath mentioned, that digital or technology has given the edge. Another side, on the operational side, we are taking technology and tools to optimize the cost. Finally, we are pleased to share that the board of directors has proposed a final dividend of INR 6 per share. With this, the total dividend for FY 2023 is INR 12 per share. Final dividend will be paid after the shareholders' approval in the upcoming AGM. This brings me to the conclusion of my opening remarks, and now I would request the moderator to open the forum for Q&A. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Yeah. Hi, good evening. Thank you for the opportunity. Two questions. firstly, I noticed, revenue mix, you know, largely shifting to outside Delhi NCR, obviously other geographies are doing better. B2B is bit higher YOY, and SwasthFit is obviously growing faster. All of this combined, Om, the question is for you that does this result in margin dilution for fiscal 2024 YOY? That's my first question. Margin dilution for FY 2024, you said? Yeah. We don't think so. Our margins, if you look at, are nearing our pre-COVID levels. The COVID impact is out. Even in FY 2024 also, we believe that we should be able to sustain a similar level of margin. In spite of these three things, gaining revenue share, outside Delhi NCR, B2B and Suburban? Yeah. You see, outside Delhi NCR, one must realize that as the scale picks up, there are, there are markets which actually mimic like Delhi NCR. If you notice in the last sort of four to five years, our expansion through lab network is actually not that fast as it used to be earlier. Because most of it is now building through hub labs, where our tendency is now to open more collection points and labs. I think we are actually optimizing the lab costs in such a way that our margins don't get diluted. That's the way we see it. In any case, if you look at earlier portfolio mix, we always had some markets which are operating on lower margin, but our rest of lot now is fairly scaled up, where margins are pretty healthy there. Perfect. Got it. Secondly, again. Variation is not material enough, so that's the way I would look at it. Got it. On the growth side of it, obviously the starting Q1 of fiscal 2024, the base is supportive because we no more have very large COVID revenues. Life coming back to normal, obviously that helps in getting normal diseases and hence normal testing for non-COVID should pick up. Employee attrition is generally low now in favor of digital lab, from what I understand from my channel checks. Growth outside Delhi NCR is faster than Delhi NCR. Combined of all of this, do you see 13%-14% revenue growth next year? I think, instead of me putting a number, clearly I do believe that we entered in FY 2023 on a much more difficult outside environment than FY 2024. As you outlined it very well, pressure on attrition is very low. Our ability to take price increase there, we have demonstrated that. COVID pressure of, should we roll back capacity or not? Should we buy some more stock, et cetera? I think now that is also behind us. The good news is that we are now entering into FY 2024 with cleaner slate, with the less sort of, headwinds compared to what we saw last year. I think overall it augurs well. I mean, the growth rate is very difficult to put a number right now, but I definitely do believe that we should do better than what we've done previous year. Got it. Perfect. Lastly, just a bookkeeping. The 26.6 million patients, non-COVID, for full year, could you break down that into Dr. Lal and Suburban separately, please? For FY 23? Yeah. 26.6 million patients. Do you have that number separately? Rahul, because we have not, This Suburban was not fully baked in this year. Probably these numbers may not give the right picture. At this point, I think this is the consolidated number we have. For us, if you look at Suburban so far, our tendency was to show separately because in some quarters we didn't have a base. Now since that sort of issue is no more with us, we want to operationally see it as if like both parent and Suburban, they go hand in hand together. We would want to actually report, not highlight Suburban separately. That's the way we look at it. Can I get it for Q4 in that case? That's the YOY comparison, right? I'll come back, to you, sir. That number I think is immediately not available with us. We'll come back to you. Okay, perfect. I'll come back and meet you. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead. Yeah. Thanks for the opportunity. A couple of questions from my end. You know, there have been price hikes in the industry by new-age players. Any change in competitive landscape we are witnessing? Given that growth rates in industry have generally come down post-COVID, any acceleration or any trends, you know, we are witnessing or sensing, say from unorganized or, you know, shift from regional players for national players like us? That is the first question. We've also, you know, taken some price hikes in our portfolio. If you could help us understand the impact of revenues for FY 2024, and is it, you know, in speciality, is it in packages, is it in specific geographies? If you could highlight that. The third question is, you know, in our endeavor to drive organic growth, what should, you know, be the key drivers for that in FY 2024 and beyond? Obviously, Suburban scale is one of the factor, but, you know, how is non-metro contribution shaping up? How is new patient addition happening, new test menu? Some of these points will be helpful if you can clarify. Hi, Prakash, this is Bharath here. Hi, Bharath. Let me start with the first question on, you know, how the competition intensity is shaping up in the industry, right? Yeah. There are two, three ways to look at it. One is that, you know, the incumbent players, and let us say some of the newer, traditional players. Model players, let us say, for sake of any other better word, continue to intensely be competitive in the marketplace. There is no letdown on that count. Including new entrants, regional lab chains, et cetera, all continue to compete very aggressively in the marketplace like in the past. What we are seeing is that some of this new age e-com based, Google advertising, Facebook advertising-based companies, because of, A, maybe funding pressure or because they're not able to see the traction themselves, are scaling down, let us say, deep discounting because patients are also now realizing that the deep discounting are actually a clickbait operation. That is when they finally end up paying the money, they pay similar money to what they would pay to one of the incumbent players. Players. Right. I think, you know, it is all catching up and industry is in a bit of a transitionary phase. Everyone's trying to innovate and try and do the best they can. That is the way to look at the competitive landscape today. Yes, the advertising intensity has mildly come down, at least from a ATL above the line perspective. Okay. Digital media competition still continues very intensely. Okay. Okay. Right. I think that's the way to. This will take time. Bharath, effectively, you're saying this would take time, and there is no major shift. It's maybe the pace has decreased, but it remains as competitive as it was. Yeah, yeah. It is sort of as if the world has come to a new age, new world wherein, you know, it's all less competition and everything's back. It is still intensely competitive, all of us fighting for a share of the business. Yes, some segments of competition have kind of come down. Okay. Okay. Right. The second question revolved around, just remind me on. It was about price hikes which we've taken. Is it, you know, for specialty portfolio? Is it specific geographies? Yeah. the impact of that, if any, on next year and going forward. We have not taken any price increase on routine tests, the most commonly ordered tests, including packages. That is the first statement I'd like to make. We have taken price increase on, you know, what is really exotic tests, high-end tests done in reference lab only and so on and so forth. I talked about that in the what I would call the opening speech of 1.7% impact for this quarter and 2.5% estimated going forward, assuming the mix holds up. Okay. Okay. Right. Understood. It is not geography specific, it's pan-India basis. Really, tests which are less frequently ordered, so consumers and patients don't feel the pinch of that. The good news is that all our B2B partners from where the samples predominantly come from, have largely accepted the price increase. We are not finding any major impact or pushback as a result of this. It's been long overdue, and they also realize that they have also taken up prices, so I think it has gone well in the execution was planned for. Sure. That's it. On the third question of growth levers, going forward, Dr. Lal covered this, Dr. Om covered this, I also covered this. There are three or four ways to look at it. One is geographic expansion in tier three, tier four cities, along with strengthening our metro city presence, either in where we operate in northeast or also including Mumbai. There is a geographic expansion plan. Second is differentiated channel management programs. We talked about that, I think, in the last quarters also on how do we manage B2B separately than B2C. A lot of work is going on channel management programs and driving growth through channel partners. The third obviously we spoke about today, high-end testing, either the genomic testing or the centers of excellence on reproductive diagnostics or autoimmunity. Those are all key ways to differentiate your business while delivering value to all stakeholders. The fourth is obviously getting the tech stack up to shape so that we constantly innovate to provide a wow factor to the patients, saying something new has happened. We spoke about the CHIPS program today, we spoke about the recommendation engine and also the wallet. Right. Right. Right. Right. It's a combination of what we have done traditionally, which is geographic expansion, combining with, obviously source weight and, you know, super specialty portfolio and layering a tech component to that. Right. Right. Right. Fine. Fine. That's helpful. I have one or two more questions. Maybe I'll join back the queue. Thanks. Thank you, Prakash. Thank you. Before we move to the next question, I'd like to remind our participant to limit their question to two per participants. If time permits, you may join the queue for any follow-up. Thank you. The next question is from the line of Bino Pathiparampil from Elara Capital. Please go ahead. Hi. Good afternoon. Just a quick clarification. When you say the price increases you took will have an impact of 2.5%, is that on your overall revenue or on just the portfolio on which you have taken price increases? On the overall revenue. Okay. What are your plans for addition of labs, FY 24 and 25? Our lab expansion program continues. The rate has always been about 10-15 labs, predominantly in tier three, tier four cities, spread across northeast and some portions of south and west. Understood. Great. Thank you. Thank you. The next question is from the line of Lavanya from UBS. Please go ahead. Hi. Thanks for the opportunity. I just wanted to understand the margins for Suburban in this quarter, just because last quarter we have seen a meaningful hit. Normalized EBITDA margins for Suburban for this quarter is about 11.2%. For full year it is 12%. Oh, okay. We are still seeing the impact of the new franchise opens on the margin from Suburban. No, I think on Suburban, if you go back pre-COVID times, that was the trajectory of the business in any case. I think during COVID times they experienced very high leverage because Suburban has experienced very sharp drop of COVID revenue this year. From nearly INR 113 crore, it has fallen to just INR 9 crore. The PNL shape is very similar to, let's say, what it used to be pre-COVID times. The important thing is that this has a yearly platform of nearly INR 155 crore of revenue. 80% of that comes from city of Mumbai. Now with the sort of support of centralized lab and LPL parent support, we are basically hoping to drive this both revenue synergies as well as the cost side synergies. We realize higher margins, but this is the margin which it used to have pre-COVID times. These margins, please note that, we have launched this reference lab, big reference lab in Mumbai. This quarter, all the, you know, impact of that reference lab has also in. Baked in now. Yeah, yeah. Okay. Got it, got it. One more thing on the exceptional expense that you have seen in the current quarter. What was this related to? I just wanted to understand the tax rate guidance that you give for next financial year, FY 2024. This exceptional item is one item, one large amount is receivable from BMC, Mumbai Municipal Corporation. As per policy we have provided, we are hopeful that this money will come to us very soon. Second, a small amount which has been provided on account of COVID inventory, which is going to expire. These are the exception items. Okay. On the tax rate. Tax rate, we have normal tax rate, which is about 25% for the corporate. There is nothing which is, you know, exceptional here. Normal tax rate. Got it. Thank you. All the best. Thanks for the opportunity. Thank you. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi, good evening. First question is on, just trying to understand the price increase. You mentioned it is for specialized tests. How has been the experience versus the competition? Has the competition followed you, or have you lost some business because of price hike or it is status quo and it is value accretion? Hi, Bharath here. two, three things. One is that this price increase has gone relatively well. We were skeptical in the beginning, but I think the execution was near perfect in communicating to customers on why this price increased. In the context of the overall tenure of the price increase, this seemed to be logical and reasonable to them. Number two, we explained the impact is over 2.5% on an ongoing basis on the overall portfolio. Given the mix of the portfolio on which this price increase has been taken. Yes, now, we also have not taken price increase on the routine portfolio or the most commonly ordered test portfolio, or the health packages and so on, or the bundled test packages. Now, with competition follow, each company will follow its own, what I would call, policies, procedures, priorities, et cetera. Given the inflationary situation, the lowering of COVID volumes, I do expect that everyone will take price increase as per their, what do you call, areas of strength and what they think they should be doing. Yes, in industry price table should start to move up. Okay. The price increase would be only for your specialized, which is about 30%-35%, or lower in terms of total volume value? It's on value basis. It is about nearly 50% of the portfolio is on which we have taken. Okay. 50% you claim is your specialized testing menu? It is not only specialized. Specialized plus, I said less frequently ordered tests and so on. Okay. Okay. Fair enough. Okay. The second question was, trying to understand the competitive environment in the B2B segment. We hear that, you know, the lot of new players are getting very aggressive, especially on the B2B side. Your progress on the south, please. Thank you. On the B2B side, my response is that, yes, it is as competitive as ever. We have actually put in place multiple programs to better manage this channel and segment this channel like we do for patients. We have a B2B channel program which is very intense and very well appreciated. In fact, B2B is one of our fast-growing channels today as well compared to historical averages. We are very pleased with the progress, this whole approach of a channel management program, on the overall revenue growth rates. On South also our progress is, you know, continuous. We grew South at a reasonable pace, compared to what I would call it, the company growth rate. It grew ahead of the company growth rate significantly. I think, yes, we'll continue to build deeper penetration in South and the geographies that we currently operate in. B2B you would have growth, is what you're saying. You've done very good. Yes. We have good growth rates on B2B. Margin accretion or flattish? Yeah, yeah. If you manage the mix well and the cost structure well, and there is also scope to negotiate the back-end cost, I think it plays out well enough. Also, as the volume grows, our testing efficiencies come in. We are able to amortize a lot of control calibration costs, et cetera. Okay, fair enough. Okay. I have no question. I'm done, Dr. Sir. Thank you. Thank you. Thank you. The next question is from the line of Aneesh Deora from Nomura. Please go ahead. Hi. Thanks for the opportunity. Sir, I'm looking at the quarter-on-quarter sequential data of Q4 over Q3. While the realization per patient has improved, and even the number of tests per patients and the number of samples processed have shown an uptick. If you see the number of patients, that is the patient volume, they have shown a decline over Q3, which was supposed to be a seasonally weaker quarter over a strong Q4. Can you share your thoughts around this decline? Is it, you know, pointing out to any particular trend that you are seeing that may have a bearing on the coming periods? On patient visits, I don't think we should get swung by quarter-on-quarter movements. There's a lot of base issue last quarter, this quarter, last year, this year, et cetera. Like I mentioned in my opening comments, our underlying patient visit growth rate is near 8% visits. Number of tests performed is at 11.2%. Revenue is obviously highest. Okay. Got it. All right. That's it from my side. Thank you. The next question is on the line of Nitin Agarwal from DAM Capital. Please go ahead. Sir, thanks for taking my question. Two questions. One is on the operational bit. you know, we've seen some reduction in employee costs on a YOY and a QOQ basis. Likewise, if I adjust for the, you know, the one-off that Jassy mentioned about INR 7 odd crores, even other expenses are down. What would we attribute to these reductions to, you know, given the fact that business has been growing? You know, while Ved gets into specifics, at an overall level, you know, Ved, in his opening comment, talked about use of technology in automating a lot of processes, et cetera. That has given us a large headcount, you know, what I would call leverage. Specifics around the rest of the equation, Ved, you want to take on? Nitin, this is primarily because of our restructuring costs, which is lower than, you know, last year. That is the precise reason for the, you know, compensation or employee cost. This is one. Other expenses, obviously, we had lot of, you know, programs run in this year, I mean, last year where the efficiency has been created. As in my openings remarks also, I've said lot of use of technology tools, we have created and duplication of the repetition of the work which can be used by technology tools. Those are given some advantage, and that's why we have got some advantage on other expenses. Secondly, you know, Now since we have the full year numbers and you have some more clarity on the post-COVID trends, what is a realistic, you know, a ballpark range that one we should work with in terms of the patient testing volume growth for us? Volume means patient, you are saying? Yeah, patient volume growth. Yes. Going forward. I mean on a, on a directional basis, you know, it's late single digit, early double digit, mid double digit. I mean, what is the realistic number, you know, that one given the industry dynamics we can work with? See, it's very difficult to put a figure, but I think the first question which was asked is that we do believe that FY 2024 numbers should really be better than last year figures. I think all sort of variables are pointing towards that. We will not have that sort of a competitive scenario as we experienced last year. As you mentioned that, since COVID is not there, it's actually in one way good news that we are done with it and made money out itself. Otherwise, we would have been struggling with this base effect. Now we can completely focus on non-COVID business. I think the only thing we are now carrying with us is I think INR 63 crore of COVID. Yeah, yeah. INR 63 crore. COVID and allied. INR 63 crore COVID and allied business in our base. We don't know, it's highly unpredictable. It can actually be as good as zero as well. It could be same. I think if I take this out, we definitely are hopeful of improving our performance in FY 2024. Just last bit on that. you know, Typically, from a seasonal perspective, isn't Q4, expect supposedly a better quarter for the diagnostic business than Q3? No, no. Yeah, I mentioned in the opening speech saying that, sequentially Q3 and Q4 are similar for us. I think it's a fair... I think we've also made this comment in the past. I think for the last two, three years, I'm seeing that even the variations come due to due to infections. For some reason, I find that you are not following the pattern because Q3 is no more a season anymore. Even in Q3 also we are having a lot of infections. In some way, Q3 actually has moved up, while Q4 may have been similar. That's why the difference you see is much less than before. Let's see how it happens this year, because this COVID thing has always been there, right? In fact, this whole respiratory infection in general has been there in the population. I think let's just wait out for FY 2024. You're right, FY Q3 is generally a softer quarter, but we have not seen that trend for the last couple of years. Since you mentioned that point, infections, you know, we've seen very high in-intensity of incidents rather of infections, the whole of FY 23, which is reflected in, I guess, the pharmaceutical sales of anti-infectives and all the cold and cough preparations. I mean, has it had, in your assessment, any tailwind for our business also? Respiratory infections in general do not really directly lead to very high jump in testing. While we were all talking about during this month of April and even in March also, we talk about COVID, et cetera, we didn't see a direct sort of jump in COVID testing. I think one test which normally tends to work in situations like this is CRP, which is inflammatory marker. That is one test we have seen a very significant jump in this, in Q4, right? Yes. CRP is one test we saw a big jump. Lastly, on the realization per patient, obviously with the bundling that we are doing, that's sort of going up. We are if, what, INR 780 or thereabout for this quarter. I mean, how does one look at this number? Is there significant scope for appreciation from these levels on this number? I don't think so. It has Suburban factors. Yeah. Oh, sorry. I think there are a few things that have gone into this. One is, of course, bundle packages now contribution going up to 22%. I don't foresee a very sharp jump again in the contribution. I think it should stabilize around this number. Suburban in general has a higher realization than Dr. Lal PathLabs, so that also has gone in for the full year impact. I think whatever little will come now is due to price increase that we have taken in the month of February. Maybe that will have some marginal impact. Mix may not change. My gut says that we will not see a very sharp jump on this in FY 2024. Thank you. Best luck. Thank you. The next question is from the line of Sameer Baisiwala from JM Financials Limited. Please go ahead. Thanks, Sudir. Am I audible? Yes. Yes. Right. Yeah. If we are looking at the volume growth, you in your opening remark, quite interestingly highlighted the Mumbai lab. We know our earlier labs, whenever they have come, they have given us a good traction. What do you think about the Mumbai lab, how it will contribute to our overall patient growth? Like, how should we relate this, if you can help us understand this? Right. Hi, this is Shankha here. The Mumbai lab has been launched in January. You know, the thing is, it's going to be a slightly longer wavelength compared to the other reference labs. Because from the Suburban point of view, it's kind of starting a completely new vertical, so to say, in terms of the specialized business, and also trying to get a completely new customer client profile, you know, to be built under the portfolio that we are currently doing. From that point of view, yes, we from the last few quarters, it will definitely have better impact in terms of patient growth. It may not be exactly comparable in terms of the things which we saw in, east, Calcutta or Bengaluru. It might take a slightly longer wavelength. Understandable. In your opening remarks, you also mentioned about a slightly higher cost base that we carried for the entire FY 23. Now if we look at our cost base versus the growth that we have seen, at least the normalization that we have seen in FY 23, do you think the upcoming year, FY 24/25, this cost base will support us on the growth? We should see some operating leverage also? Yeah. Sameer, Ved here. Definitely, see, that's the idea because one is, you know, launching this reference lab, which will obviously give advantage and what Shankha is saying on B2B side. Another because, you know, all the infrastructure is in place, and I think you also have visited that lab. Now we have to leverage this infra. In our view, the effort is on, you know, more on top line, but similarly, the operating leverage will also come on the bottom line. I believe that margins from here should improve. Okay, that is helpful. If we try and understand the overall marketing scenario today, you highlighted that there is some sluggishness, intensity continues. We have taken specialized price increases. The specialized price increase should reflect across the entire year, right? I mean, we just started in month of Feb. Is that understanding correct? Yes, indeed. Okay. Okay. Thank you so much for my questions. Thanks a lot. Thank you. Thank you. The next question is from the line of Rishi Modi from Marcellus Investment Managers. Please go ahead. No, my question's been asked earlier. I tried removing myself from the queue, but it didn't. Thank you. The next question is from the line of Tanmay Gandhi from Investec. Please go ahead. Yeah. Hi, sir. Thanks for taking my questions. Sir, first question is on the sequential growth, right? If you historically look at sequential growth in Q4, it had raised between 3%-5%, right? This time it was flat. So anything, you know, worth highlighting there? We couldn't hear your question properly. Could you repeat yourself, if you don't mind? Your line is actually not very clear. Is it better? Much better. My question is that, you know, historically if you look at our sequential growth for Q4, historically it has raised between 3%-5%, right? But this year it is flat. Anything particular you would like to highlight here? That's what I actually mentioned. Your observation is right, that it's not 3%-5%. Normally it's about 2%. The 2% actually is neither here nor there. Sometimes, depending on the infection rate, it is flat. I'm actually seeing this trend for last two years. Even I think if I remember even the previous year also we saw the same thing. My hypothesis is that now it's just evened out in terms of infection rates. Earlier, Q3 was seen as a healthy quarter. I think now because of air pollution, et cetera, all these things, generally. SwasthFit. SwasthFit, which is more screening packages, it's become a little bit of even. Looks like now the pattern that I'm seeing is that Q2 is the highest. All those three quarters are very similar, Q1, Q3, and Q4. That's the observation that I have for last couple of years. Let's see in FY 2024 what happens because at least from here we'll not have this whole variable of COVID. At least we'll be a more cleaner space. Your observation is right, that this time we are not seeing a sequential jump which we normally see. This is not the first time I was looking. Even last year also I did notice that. Okay. Sir, if we understand that, you know, year-on-year growth for this year is not that relevant because of volatile base. Sir, if we try to extrapolate our sequential growth, which we have seen during the last four quarters, right, to FY 2024, then it roughly translates to, you know, mid- to high single-digit growth. Is that the right way to look at it? No, no, I don't think. It'll be... Our estimate is, I know we have done 15.5% non-COVID, but it also has four quarters of some of none compared to two quarters previous year, right? The normalized growth will be how much for this year? 11% or so. 10 point. Eleven, ten to eleven percent. Yeah. We definitely have to better this performance this year. It won't be single digit. Okay. Sir, last question on SwasthFit, right? We have been saying that, you know, largely it has peaked out, you know, and you don't see any sharp jump from this level, right? Historically our revenue growth was largely driven by patient and, you know, central growth. Now, you know, this year it was also driven by higher realization per patient. Going forward, as we expect some moderation in SwasthFit expansion, do you see that, you know, again, our revenue growth would be driven by volume and, you know, and volume growth has actually come down, right? Yes, our efforts will always be to drive the volume growth, patient visit growth. Not volume, patient visit growth. There are various techniques we are using to get better on that count. As a result of bundling, the test per patient is also moving up significantly, about 11% odd in Q4. That trend, you know, being in-house SwasthFit further grows, it will reflect in the numbers. Our intrinsic effort is to acquire new customers and service our existing customers in a better fashion. Understood. A related question. In Q4, did we have any, you know, one-off kind of growth in tax related packages in SwasthFit? Growth, or what did you say? Growth in tax related packages for SwasthFit. Any one-off growth? Tax packages. Last two, three years, I think, Q4, SwasthFit contra, you know, picks up because of this tax advantage. This is a normal phenomenon. It's in the base ourselves. This year growth has been still better than the previous years, led by better distribution, better understanding from patients, acceptance, et cetera. It is more than tax. Okay. Got it, sir. Thank you. That's all from my side. Thank you. The next question is from the line of Yogesh Tiwari from Arihant Capital Markets. Please go ahead. Thank you, sir, for taking my question. Am I audible? Yes. Yeah. My first question is, post-COVID, what would be the growth of the in vitro diagnostic industry? in vitro diagnostics. Yeah. Normally, IVD industry, we refer to the reason suppliers. I presume you're asking for a pathology service, right? People like us, right? Yeah. I, as I mentioned to you, this data which is available in public domain, I just added up at least four or five companies' data. The last four year period, I have removed this impact of COVID years, which is FY 2021 and 2022. The growth rate that I'm seeing is about 10%-11% CAGR over four year or three year period. I personally feel that it should sustain. One variable which probably is going to get added because last four year CAGR may not have very high pricing impact. Since our annual take price increase is now coming back, let's see how other players do. My reading is, it'll definitely be in this range going forward. Sir, what would be the total size of the industry, if you can share your thoughts? What would be the total size of the industry? Yes. There is no published data that people. Normally, we refer that these large players contribute about 15% of the value. I think one crude method would be that divide this INR 5,000 crore by 0.15 would be about INR 30,000-40,000 crore, which is essentially the private lab business. Then you add this to about hospital lab business, which is there. My sense is it should go up to INR 60,000 crore, something like that. That's one of the ways to look at it. Which you mentioned, this is for the Indian domestic, right? Yeah. India domestic market. Okay. That's very helpful, sir. Thank you very much. Thank you. The next question is in the line of Praveen Kumar from Aequitas Capital Advisors. Please go ahead. Hi. Thanks for the opportunity. I had a couple of questions. The first question was on a comment that Dr. Om Prakash Manchanda had made in his opening remarks. He had mentioned that the bundled packages have become a way of life. Just thinking about that comment a little bit more, in terms of bundled packages, the decision-making point could be perceived to shift to the customer, the patient instead of the doctor. And since the doctor connect is a major competitive advantage for Dr. Lal, how do you perceive this, you know, planning out in terms of your competitive advantage? That was my first question. Well, I think that's a great sort of a question. My reading is if it is only limited to preventive health check-up, yes, decision-making is with consumer or the patient. Since a lot of chronic disease patients also are shifting to bundle pack, they will actually upgrade this to these packages mainly because they see better value for money. Even illness patients are also in bundle packages. Doctor decision-making is still there. Only thing is that doctors also have started prescribing now some of these packages as a part of a normal prescription. Okay. Understood. Thanks for that. I had a second question which was more on the investor presentation, the financials in particular. What I wanted to understand was, you know, the company declares normalized EBITDA margins, where a few items are excluded, one of which is the employee stock compensation or the RSU-based compensation. Just want to understand the rationale for excluding this. Is it that you perceive these to be more one-off kind of expenses? If not, if you perceive that these are more ongoing nature of, you know, compensation-based practices, then in one way or the other, the company is bearing the cost for that. Right? Shouldn't it be part of the overall EBITDA itself, not a specific normalized EBITDA? Thank you. Praveen, there are two reasons. One is, of course, this is non-cash item. It is not really, you know, where the cash outflow from the company. Second, you know, this charge varies depending on the price of the, you know, share. Because if we are granting ESOP at a time where the price differentiate, probably this fluctuate the charge. These are the reason why we are showing separately. Just to understand that, you know, if I look at your past annual reports and other financial disclosures, this cost has varied between 1% to 1.5% kind of a number, right? Just wanted to understand that, you know, It seems to vary in that range. Shouldn't that be part of, you know, this non-normalized EBITDA? I think you have both the figures in any case. Yeah. Yeah. If you have a normalized and if you want to see EBITDA figures also, you can see that. You're right. There is a, there's a baseline number which will stay here, which could be, I think 1.5% is fairly good assumption, yeah. Understood. Thanks. Thanks for the clarity. Thank you. The next question is in the line of Zaid Munshi from Concept Investors. Please go ahead. Yeah. Thank you. My question is related on the hospital-based labs. Do we have any plans to expand, you know, in with partnering with the hospitals for their diagnostic part? As we don't disclose the numbers with, you know, how many of hospitality updates. We have said in the past that we particularly look at HLM as and when, you know, we find a very strategic or a geographic fit available to us. Because expanding into a hospital lab management without like a normal retail business can lead to a lot of other issues like outstanding debtors and so on. It is best to do it with lot of consideration rather than do it on a mass scale. We are selective about the HLMs we enter into contracts with, but yes, we do HLMs. Okay. Currently, main focus is on independent labs and not on hospital labs? Yeah, yeah. I think that is the main focus. Once in a while we get opportunity, we'll do HLM, no problem at all. Okay. Okay. Yeah. Thank you, Jagjit. Thank you. The next question is on the line Sayantan Maji from Credit Suisse. Please go ahead. Yeah, thanks for the opportunity. My first question is on home sample collection. I just want to check, you know, what are the current trends that you are seeing after, you know, normalization in, you know, post-COVID outbreak. Do you see patients coming back to your centers? The percentage of revenues from home sample collection, has it come down? What is it, you know, currently, how much percentage of B2C revenues are coming from home sample collection? In case, you know, this is something which is sustaining even after COVID, then, you know, what are the steps that we're taking to be competitive versus, especially versus the integrated digital health platforms? Two, three points. One is that during COVID, I think the predominant mode of operation itself was home collection, so the number was very, very high. I think close to 20 odd% those days. Pre-COVID, this number of home collection was about 5%. Today I think what we are seeing is, let us say, about 8%, 9% of home collection, which is a better trend than what we had in the pre-COVID days. Significantly down obviously from the COVID days. That is one way to look at the numbers. Second is, you know, underlying thing is about the patients choosing a lab of trust. It is not about convenience. Convenience is one of the way, factors involved in it, but they want to look at lab of a lab which they trust. We continue to enjoy a very trusted position, a very favored position on that count. We're seeing our home collection revenues in line with this thought of ours. Okay. This 8%-9% is of B2C or of the total revenue? Of, I think the, total revenues, yeah. Of total revenue. Okay. In the, in the deck you have mentioned of, you know, variable model. Can you just explain it a little bit? Like what is this variable model which grows with business volume? When did we speak of variable model? Sorry. In slide number 25 of the investor deck, it says that, in the home collection, you know, slide it says that it's a variable model which grows with business volume. Oh, okay. Maybe you wanna just... Sayantan, this is with, this is, you know, one way of hiring people, which is fixed pay. Another way is per pickup. You pay as per pickup. It is not a fixed charge. Like you have our own center versus franchisee center. It is similar to that. Like, we instead of hiring people or, you know, giving fixed contract, it is per pickup base, the payment. Okay. Basically salary of the phlebotomist is entirely dependent on the number of samples, you know, he or she picks up in a day. Yeah. Right. Okay. Got it. Sure. The second question is, you know, bookkeeping one. Now that, you know, FY 2023, is over, what was the total, you know, Ind AS impact on the EBITDA or Ind AS benefit to the EBITDA? It is about 2.5% roughly, which is on account of Ind AS. Okay. Sure. Okay. Thank you for taking my questions. All the best. Thank you. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for the closing remarks. Thank you, and over to you. Thank you everyone for being with us on this call today. I hope we were able to address your queries. If you have any more questions or queries, please feel free to reach out to us or our investor relation team, CDR India, we will be happy to clarify your thoughts. Thank you once again. I would now request the moderator to close the call. Thank you very much. Ladies and gentlemen, on behalf of Dr. Lal PathLabs, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you. Thank you.