Ladies and gentlemen, good day, welcome to the Q1 FY24 earnings conference call of Dr. Lal PathLabs. 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. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki of CDR India. Thank you, over to you, Mr. Solanki. Thank you. Good evening, everyone, and welcome to Dr. Lal PathLabs Q1 FY24 earnings conference call. Today, we are joined by senior members of the management team, including our dedicated Dr. Arvind Lal, Executive Chairman, Dr. Om Prakash Manchanda, Managing Director, Mr. Bharath, CEO, Mr. Ved Prakash Goel, Group CFO, along with Mr. Sankar Banerjee, CEO of Suburban and other group officers. I would like to share our standard disclaimer here. Some of the statements made on today's call could be forward-looking in nature, and the actual results could vary from these forward-looking statements. A detailed statement in this regard is available in the results presentation, which has been circulated to you and also available on Stock Exchange website. I would now like to invite Dr. Arvind Lal to share his perspective. Thank you, and over to you, sir. Thank you, Nishid. A very good evening to everyone. I welcome you all to Dr. Lal PathLabs Q1 FY24 earnings conference call. I will commence by shedding some light on the evolving market situation and the progress that we have made. India's diagnostic industry remains vibrant, presenting abundant opportunities in the future. In contrast to other nations, India's healthcare expenditure related to its GDP is reasonably low. However, a shift towards evidence-based medicine has come of age after the pandemic. The industry is undergoing a transformation from unorganized to organized, more so since the onset of the pandemic. This positive shift continues and is attributed to multiple reasons, including higher awareness and increasing preference of customers or branded players that offer superior quality and efficiency. I'm happy to share with you that the Newsweek has recognized Dr. Lal PathLabs as the 15th of the 100 Global Most Loved Workplaces 2023 across the world. There are only two other Indian companies in the list, which were ranked much below us. As a leader in the diagnostic industry, we have consistently strived to deliver superior patient experience by expanding our test menu and penetrating deeper in our core markets as well as pouring into newer markets. The synergy between Suburban Diagnostics and Dr. Lal PathLabs brand has further enhanced, helping us garner incremental share in our high-potential western market. We are constantly focused on expanding our presence to reach a larger number of customers, especially in the tier three and four cities. While doing so, we remain committed to continuously improve our testing capabilities, quality, and patient experience. We have implemented Total Lab Automation or TLA, which is supplemented with digital intelligence. We have also reduced the requirement of aliquots or what are sub-samples by 93% by using inbuilt advanced sorting logic and aliquoting algorithms, which resulted in saving of more than 1.3 million aliquots and more than 5,200 tons of plastic waste in our National Reference Lab at Rohini, New Delhi. This underlines Dr. Lal PathLabs' strong commitment towards sustainability and creating a greener environment. Our investments in strengthening the digital infrastructure have started yielding positive results as anticipated. This will help us in consistently meeting patient expectations on service parameters while driving volume growth. Given our strong operating model and brand affinity in both B2C and B2B segments, I see the company continue to gain significant market share. Thank you very much. I would now like to hand over the floor to Dr. Om Manchanda. Over to you, Om. Thank you, Dr. Lal. Welcome to Dr. Lal PathLabs Q1 FY24 call. I shall share the broad industry trends. The first one is, at an overall industry level, the contribution from COVID testing has further declined. We are now mainly left with COVID allied testing, and this sub-group within COVID sale has a very strong overlap with non-COVID testing. Tracking and reporting sales with and without COVID separately does not make sense anymore. We have also removed this chart from investor deck, where we were showing these numbers separately. The good news is that in some ways this reduces the complexity and helps us analyzing business trends better. The second point is, the Suburban Diagnostics now enters into phase two of integration, where we have started looking at common lab infrastructure between the two brands, that is Dr. Lal PathLabs and Suburban. Number three, Swasthfit continues to ride the momentum of preventive health checkup sales. The contribution has further gone up in this quarter. That is showing a strong positive impact on tests per patient as well as higher realization per patient. Added advantage of this increase in contribution is also seen in simplified operations. Number four, widening our footprint, both in terms of depth, that is going deeper into Tier 2, Tier 3, and Tier 4 towns. As well as in terms of width, which is both through organic as well as the organic scheme, is and will continue to be the scheme of our strategy of Dr. Lal PathLabs. With that, now I hand over to Bharat for further update on Q1 results. Over to you, Bharat. Thank you. Thank you. A very good evening to everyone present here. I warmly welcome you all to Q1 FY24 earnings conference call. I will now take you through some of the operating and business highlights of our company. In Q1 FY24, we recorded a revenue of INR 541 crores, which is a growth of 7.6% over last year Q1, and the non-COVID revenue grew by 9.7% YOY. The COVID RT-PCR testing revenue declined by 81% in Q1 FY24 to INR 2.3 crores from INR 12 crores in Q1 FY23. Revenue per patient for Q1 FY24 was at INR 789. This was sequentially higher versus the preceding quarter by 1.9%, led by higher contribution from Swasthfit, Delhi NCR region, and full quarter flow through of price adjustments. In Q1 FY24, we recorded 6.9 million patient visits, which is a flattish at our overall level, led by an unusually high base in Q1 last year. Net of COVID-related testing, we grew patient volume sequentially by 8%. On a four-year CAGR basis, the patient volume growth for Q1 FY24 stood around 7% for the organic business. We also recorded a 6.1% growth in samples. To 2.8 in Q1 FY24, representing a 7% growth. Let me give you some update on few of our strategic initiatives. The first one is on increase in marketing efforts. In this quarter, on the organic business side, we launched a new marketing campaign, Bharat Ka Vishwas, with quantifiable reasons to believe why millions of patients and doctors trust Dr. Lal PathLabs. We believe that this campaign, over a longer period of time, will help pivot the conversation to the underlying drivers of this category and not just on pricing and discounting. This, combined with our digital-led initiatives like CHIPs, recommendation engine, supported with on-ground activation programs, are driving growth in the stronghold markets of North and East. Delhi NCR region also recorded strong growth rates in Q1 FY24. In the city of Mumbai and Pune, under Suburban, we have launched a strong direct-to-consumer program supported by thematic above-the-line campaign. The second strategic initiative revolves around our portfolio. Our bundled test portfolio, Swasthfit, continues to perform well, and I'm happy to share with you that we have registered highest ever quarterly revenue from Swasthfit of INR 112 crores in this quarter, with a contribution of 22% to the total revenue ex-Suburban. Our super specialty business continues to do well with strong growth rates supported by new initiatives. We are also creating variants of common tests like lipid profile and making it medically more relevant to patient subsegments like diabetics and heart-related ailments. Higher Delhi NCR contribution and above average growth rates in Swasthfit and super specialty, coupled with reinvigorating our routine portfolio, have positively contributed to revenue per patient and margin profile for the quarter. Number three strategic initiative revolves around geographical expansion. As stated in our previous calls, our strategic expansion in tier three and four cities of the country continues as per plan. In addition to the three labs we opened in the preceding quarter at Siwan, Sultanpur, and Murshidabad, we have commenced operations at four of our greenfield labs in Jind in Haryana, Una in Himachal Pradesh, Tamluk, and Hooghly in West Bengal. We've continued building blocks, coupled with the Pan-India presence and the digital infrastructure that will help us deliver industry-leading growth rates for a long period of time. With that, I would like to invite Ved to take you all through the financial performance. Over to you, Ved. Ladies and gentlemen, thank you for being on hold. The line for the management is now reconnected. Thank you, and over to you, sir. Thank you, Bharat. Hello, everyone, thank you for joining this call. I trust each of you and your family are safe and healthy. I am sharing some of the key financial highlights for this quarter. Our non-COVID revenue for Q1 FY24 came in at INR 528 crores versus INR 480 crores last year, same quarter, a growth of 9.7%. Total revenue for Q1 FY24 came in at INR 541 crores against INR 503 crores last year, same quarter, a growth of 7.6%. Revenue realization per patient for Q1 FY24 is INR 789, as against INR 727 last year, same quarter, an increase of 8.6% led by price increase, test mix, and higher contribution of Swasthfit. Normalization, normalized EBITDA after eliminating the impact of RSU and CSR for Q1 FY 2024 came in at INR 154 crore as compared to INR 125 crore in Q1 FY 2023. Normalized EBITDA margin for Q1 FY 2024 is 28.4%. PBT for Q1 FY 2024 came in at INR 117 crore, versus INR 81 crore in last year, same quarter. PBT margin is 21.7% for Q1 FY 2024. PAT for Q1 FY 2024 came in at INR 84 crore, versus INR 58 crore in Q1 FY 2023. PAT margin is at 15.4% for Q1 FY 2024. Cash and cash equivalents as on June 30th, is INR 877 crore. Net of borrowing, it is INR 731 crore. I'm pleased to share that our continuous efforts towards optimizing material costs and improving operational efficiency, has enabled us to invest more into A&P and technology. At last, we are pleased to share with you that the board of directors of the company have approved an interim dividend of INR 6 per equity share. This brings me to the conclusion of my opening remarks. 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hand signs while asking a question. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants, please limit your questions to two per participant. 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 so much for the opportunity. firstly, just your thoughts on the quarter, 10% revenue growth, I think both YOY and four-year CAGRs look similar. what did well and what did not, versus what you expected? Let me first talk about what did not do well, rather than what we did well, what did well. One is, I think, we would have loved to see a slightly higher volume growth. That's something we fell short, but I think what did well on volume front was number of samples growth or test growth, because test per patient has gone up very sharply. Second is contribution from Swasthfit continues to do well, and I think this is a very strategic sort of initiative from our side. We believe that trust is very important in diagnostics, and more and more people do health checkups, and as healthcare awareness goes up, this segment will continue to show growth, and that's a very big positive sign. I think the COVID part, in any case, was declining and we are happy that it's almost going away. Our life becomes little simple to analyze the trend. That I think is a positive part. On the financial side, I'm sure you would have seen that our margins are much better than what we expected. I think these are all broad takeaways as far as results are concerned. Right. Got it. Yeah, because I was thinking 10%, I thought we should do better 1 Q, not because it was a very strong season for us, but just purely because QOQ, we were seeing improvements into non-COVID. It looks like last quarter versus this quarter, there's hardly been any improvement on non-COVID. That's what it reads like. Is that correct understanding? I personally, and I think I've repeatedly been saying that, these are gradual improvements that happen in our space. Suddenly, overnight jump, one should not expect. I think the good news is, trajectory is moving upwards, because there was a time when we were a little concerned about hyper competition, whether we can sustain this growth. I think overall, now signs are very positive, so as we go forward. Got it, sir. Secondly, on the operating expenditure, looks like that's not grown in proportion to business growth, which is good news, and hence, margins are up. I also understand that, you know, generally, first half for Dr. Lal PathLabs has higher margins, and then through the year, it comes down second half. Any specific efforts you'd like to highlight on cost savings or some details, please? Maybe I'll hand over this question to Ved to talk about. Ved, you want to take it further? Yeah. Rahul, there are two major, you know, initiatives. One is on the material cost side, which obviously, there is an impact of mix and portfolio change. Second is obviously, we are looking how to optimize this cost, because this is the biggest cost in our P&L, so this definitely helps us in this quarter. Second is, you know, last year, same quarter, we had some provision against debtors, which is not there in this quarter. That is another reason which we have taken. What was the quantum for the provision, sir? It was about INR 5 CR. Okay. This was PMC provision we had made, you know, against, you know, suburb, against recovery for the Suburban. Got it. Got it. Lastly, on Suburban, how did that do during the quarter? Some color on, you know, whatever you could share, you know, net of India's revenue, patient volumes or, you know, revenue per patient and, you know, overall business. You are expanding into South Bombay. What's really happening on Suburban, please? Thank you. I think, for one, what we are doing now is seeing whether what kind of synergies we can draw between the two companies and two brands. We are looking at very carefully some synergies that can come out of lab infrastructure that exists between the two companies. I think that's the update we have. Secondly, in terms of marketing activities, we are a little more aggressive than before in Mumbai. We are trying to see how we can improve our B2C contribution in Bombay market. Sir, any top line number and volume number you could share, please? Yeah, I think, right now, I would actually say volume growth is slightly muted, there, but we will probably share as we go along. Okay, no problem. Thank you so much. I'll come back and with you. All the best. Thank you. The next question is from the line of Aneesh Deora from Nomura. Please go ahead. Yeah, thanks for the opportunity. Firstly, on the margin, it was 27% for this quarter, the EBITDA margin, which is higher than the full year guidance of 25%. Does this guidance level still hold, and how do we think about margins for the coming quarters? This is the, again, as, Rahul mentioned, you know, previously, that generally we have, first half, where margins are higher than second half. We have to wait, but we are holding that statement, that we should maintain our pre-COVID margins, going forward. Right. What is the reason for the margins being higher in the first half of the year for Dr. Lal PathLabs? First half, usually our revenue, if you look at the trends historically, they are always higher. We've also seen the mix of tests also is more drifted towards certain kind of tests where gross margins are higher. Okay, I see. All right. Secondly, on the... We have implemented the price increases, which is being adequately reflected in the revenues per patient, which has inched up quarter-on-quarter. When we look at the revenue per test, that has largely remained flat. How do you think about this, and what are the dynamics around it? Like, one would ideally expect that the revenue per test would also, you know, inch up proportionately, but that has not happened. Any thoughts around this? Hi, this is Bharat here. Revenue per patient, you know, sequentially, there was a positive impact of about 1.2% led by price flow. Revenue per test is actually a mix of multiple things. You know, I'm not sure if you know how I'm not going to respond, but give us, give me some time. If it comes up later in the queue, I'll kind of come back. I'll probably add to this. See, the revenue per test will continue to be lower because as the contribution of Swasthfit keeps moving up, because Swasthfit has a lot of test in it, you'll always see that situation. I think we have to look at economics from an overall standpoint, because we don't mind revenue of Swasthfit going up, because marginal cost on the increment on additional test is very, very low. We are able to pass on that benefit through a bundle packages to the patient. In that case, you'll always see, not only for us, I think the industry itself is seeing that the revenue per test is going down, but revenue per patient is going up. Understood. That's helpful. Sir, just a clarification. You mentioned that four-year CAGR for the organic business was 7%, right? If I got that correctly, just want to clarify. Yes. The whole patient growth. For volume, we are talking about. Oh, I see. All right. Okay, thank you. Thank you. The next question is from the line of Tanmay Gandhi from Investec. Please go ahead. Thanks for taking my question. My question is again on the operating expenses. So if you look at the sequential growth, so the revenues have grown by almost 10%, but still our other expenditures have, you know, degrown by 5%. So is there any one-off in the last quarter or, or is there any, you know, postponement of expenses which is there in this quarter? Tanmay, as I mentioned, there was one, you know, provision we took, in the last year. That was the only one item, and, there is no postponement of the expenses in this quarter. The last year, sir, you mean, for QFY 23? Yeah. Q4 or Q1? Yeah, Q4. Okay. Q1. Q1 of last year, right? Q1 of last year. No, no, sir, I'm talking about sequentially. Even sequentially, it has declined by 5%. Sequentially, also. Q4, yeah. Sorry, provision was there in 1 Q as well as 4 Q. Is that what? Yes. Okay. Okay. Yes, yes. Okay. Sir, can you share, you know, margins for Suburban? Have they also improved? Margins for Suburban also have improved for, if you do just non-COVID versus non-COVID, right? Yeah. Yeah. Yeah, yeah. Margins have improved there also. Can you share the numbers? I think the range is between about. 12 to 13. 11%-13%. Exact numbers we don't have, but it's in that range, about 11%-13%. Okay, thank you. That's all from my end. Thank you. Thank you. The next question is from the line of Bino from Elara Capital. Please go ahead. Mr. Bino, your line is unmuted. Please go ahead with the question. As there is no response, we will move to the next question. The next question is from the line of Mehul Seth from Axis Capital. Please go ahead. Yeah. Thank you for the opportunity. First question is around your gross margin. Does your gross margin also has some benefit of that price increase that you have taken of your test? Yes, yes, that's right. It has. Can you quantify, I mean, how much was because of that price increase? This is, it is about 3%, which is for the full year. No, not for margin, 3% revenue, right? No, 3% of. Revenue. Right. Yeah. What we are seeing is that, there is a 3% upside to the revenue, due to price increase. Whatever benefit goes down to gross margin, one can calculate that. Sir, one more question on your expansion side. Do you have any, like, near-term target, which, like you are focusing more on the west and the south now to expanding collection centers? Do you have any near-term targets, how much center you want to add in? I think our near-term target for the West region is how do we create synergy between Dr. Lal PathLabs network as well as Suburban network. Currently we are looking at, we have mapped the lab locations for both the companies and identifying gap areas, so we will gradually fill these gaps. On an overall company basis, usually we put about 10-15 labs, so that effort will continue on organic side, and we will continue to look at the white spaces for our, collection centers. In general, normally we have seen about 10 odd% of infrastructure growth that happens, in our system. That really turns out to be about 20 odd labs every year. Okay. Just last question to Ved. Can you give breakup, like, Suburban sales number, at least, how was total sales, COVID and non-COVID sales breakup, if you have the MD? Yes. Yeah. Suburban revenue is INR 37 crore this quarter, largely it is non-COVID, very small portion. Of which about 36 is non-COVID, 1 is COVID. Thank you. That's all from my side. Thank you. Thank you. The next question is from the line of Cyndrella Thomas Carvalho from JM Financial Limited. Please go ahead. Thanks for taking my question. Congratulations on good set on this. Sir, am I audible? Yes. Yes. Yeah. Also, you, Dr. Om, you mentioned that certain disappointments that you were experiencing were largely on the volume side. Could you elaborate more on that statement? I mean, is it something to do geography-wise, or is it certain segment of the business that you were expecting to be better? See, the thing is, if you look at the patients that we report, technically, they are not unique patients. These are all patient visits. That's how historically we have been tracking this number. We've always had a challenge of tracking unique patients, because patients to in our system come from various channels. They come through walk-ins, they come through collection centers, they also come through pickup points. It's very, very difficult to have one identifier, a patient ID, and then there are so many unique patients. What we are finding is that patient visits probably have been less this quarter, and it led to ask many questions in our mind. One was, we took a price increase, is that impacting it? We did this analysis for those tests where we had taken a price increase. We didn't find any variation between though that portfolio, which has been experiencing price increase, versus the other one where we have not taken price increase. In fact, the growth rate for both sides is the same. That means we have ruled that out, that price increase has impacted it. We also saw it, whether the competition is impacting it. We did this year by analysis, we again found that it's probably uniformly across the thing. We also found that we are very, not very sure, it's an hypothesis, whether because the bundle packages are going up, whether it's impacting the patient visit frequency, we still don't know that. I think the strong, sort of reason that we are able to find out is that last year, I think non-COVID numbers are also impacted by COVID itself, which is very difficult to identify for us. The base of last year is much higher. If you have that number with you, close to 6 point. 25% of the patients are in Q1. Yeah, in Q1. I think right now, probably only analysis that we have is the last year's base is much higher. That probably has impacted this volume growth. We'll have to wait and see for this quarter and maybe, two quarters later. We are very hopeful on an annualized basis, we will see a smart recovery on volume side. I think that's the only thing probably I can say right now. Right, sir. I agree with you on the COVID side. There must be some rub off, I also believe that. Coming to the other point, the recovery should be led by what? What are you putting, in terms of getting these volumes up? I couldn't hear you properly. Can you repeat the comment? Yes. I said that what will drive this volume recovery for us? What are the efforts we are investing in, which could be the current that, you know, we will be able to recover higher volumes? Yeah, come on. Cyndrella, this is Bharat here. Hi, sir. You know, like we talked about in the opening speech, I think we are very focused on new acquisition program, new customer acquisition program. It could either be a physical hunting program or even a digital acquisition program. That is really what we're looking at as one stage. Second is around the whole infrastructure expansion program. We announced new labs. We are putting up collection centers in the regular pace, and we'll continue to accelerate that whole area. That is going to be a second lever of getting new customers in. Third is obviously improving our customer service levels as we move forward as well, so that stickiness increases and visit frequency increases, and recommendation by doctors also increase. The super specialty portfolio also will continue to make more inroads in acquiring new patients, propagating those tests. I think between these four levers which we have, we should be able to see a smart recovery, like what Dr. Oh mentioned, in the full year terms. Right. Thank you so much. One last question. In terms of, the cost, if we look at the cost base, I think that's what the participants are asking. We are, expecting investment, but how somehow the cost base is remaining steady. How should we look at it? Cost is remaining steady. I think structurally, the P&L shape is changing on two, three aspects. One is, if you plot data for last sort of, 10, 12 quarters, our rental costs is directly going down. One of the reason for that is a lot of business is actually shifting to collection center network. People are not coming to as walk-ins, but rather they are going to nearby collection center. That's one change that we are observing. Second is, we are seeing a very volatility on the mix change. I think one of the reasons probably our earlier, last year, our region cost was high because COVID testing was very high, and that led to higher region cost. That receipt, we are probably going back to the lower, sort of a consumption cost. That's one second change that I'm observing. Going forward, you should see two heads going up. Number one is A&P. We are constantly going to increase this number. Gradually, I think as we get a lot of confidence in margin recovery, as we've seen in this quarter, we will try and plow back a lot of money back into the sort of ANP. The second area is the IT cost. We have seen a sharp increase in the last three-four quarters. We will reassess the requirement. If required, we will invest more on IT infra as well. Thank you so much, sir, and all the best. Thank you. Thank you. The next question is from the line of Aashita Jain from Nuvama. Please go ahead. Hi. Good evening, sir. My question is more on the, from the industry side. If I look at the price hikes that you have taken, and, you know, several of your peers have also taken in semi-specialized and high-end kind of tests, will it be possible for us to take price hikes and going forward in line with inflation, at least in these high-end tests? What is your take on that? I think at a macro level, I can only say that there's a bit of a rebalancing which is going to happen on pricing. Traditionally, my experience has been, high-end tests were actually cross-subsidized by routine tests in the past. As the competitive intensity in the routine is increasing, so I think some of these high-end prices will get automatically corrected, because, while sometimes realization per patient in high-end is higher, gross margins are not that high as they are in the routine test. I think first, my sense is industry is going to experience a lot of rebalancing of pricing. Another thing one must realize that the human component on high-end test is much higher. Routine tests are highly automated, machine-driven. That's why you actually see a lot of competitive intensity on routine. You don't see that much on high-end. How we are able to do it? Yes, this is our first attempt in February this year. We will gradually sort of wait and watch and see how we go forward. I think one should be able to correct it, on a periodic basis. Okay. My second question... Yeah. My second question was on the industry growth in general. Recently, in one of the CRISIL reports, they have set the diagnostic industry growth at about 5%-7% for the next 5 years, and this number was around 10% last year. Just wanted to know your thoughts on this. How do you see industry growth panning out for, say, next three-four years? Where organized players like you stand in that? I haven't seen this report, but I would be surprised if an industry growth rate falls to this level. To my mind, tier 2 tier 3 markets are just opening up from a diagnostic perspective. Penetration of diagnostics in this industry on a, on a sort of a qualitative basis, I can say is pretty low. I would be surprised if this number is true, but I'll look up to this report and see what it is. If this has come out recently? ... in one of the annual reports of the healthcare, major, I think they've reported this number, 5%-7% diagnostic. Oh, there's a reference to CRISIL report in that, is it? Yeah. Check with the company. It was from the CRISIL. For my own personal view, I think it's quite lowball. I don't think so. While it may not be still, that high as it used to be in the past, but I think this to me looks low. Right? Okay. Yeah. Just lastly, on the volume side, I mean, there are a lot of questions on that. If I look at your non-COVID sample growth, it's around 6%, which is still lower than what, you know, you have been riding around 8%-9%, and again, lower than what the pre-COVID level. What is the trend that you are seeing on the volume side? Are the volumes picking up, you know, gradual? How should we see this going forward? Actually, you know, volume growth number that we have been talking about is these are patient visits. Sometimes, there's a spike also that happens in volume, because as we enter into high sort of vector-borne diseases like malaria, chikungunya or dengue, et cetera, one patient actually visits multiple times during fever season. Suddenly, when you have a non-fever season, these visits tend to drop also very sharply. I would wait and watch. I won't get perturbed by this number, but I do believe that there should be a gradual jump in these volumes. One of the analysis that we have done is sequentially how it has done. I think diagnostic has done better, right? From a Q4 to Q1- 8%. About there's a jump of 8% in volume, and on a CAGR basis for last three or four years, it's about 6.5%. I think it's just that Q1 of this year versus Q1, these numbers look very low. I'll probably hold on to this. I think as I made an opening comment, it's lower than what we expected, so we'll have to wait and watch as to how we go. Sure. That's a promise, right. Thank you so much. Thank you. Thank you. A reminder to all participants, to ask a question, you may press star and one. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead. Hello, sir. Congratulations, sir, on good set of numbers. Just I want to understand on the EBITDA side of it, I mean, is this number a more sustainable number, can we assume it is a more sustainable number going forward on the EBITDA side of it? Also somebody else also asked this question. This is normally first half, we have higher margins, but full year, I don't think this kind of margins, we are guiding. What we are saying, at least, we are confident that we can maintain our pre-COVID level margins for the full year. Okay. Sir, on the tax rate side of it, what would be a blended tax rate for FY24? I mean, are we shifting to something like 25%, which is normally? We have any, advantage. I mean, normal tax rate is 25%, which is applicable to us. like we have paid, around 29%, if I'm not wrong, for the quarter, right? That was mainly because of notional depreciation, you have seen, but if you see the standalone, it is about 25%. Oh, right. Okay. Thank you, sir. That's all from my side. All the best. Thank you. Thank you. Thank you. The next question is from the line of Omkar Kamtekar from Bonanza Portfolio. Please go ahead. Firstly, sir, my question is with respect to Swasthfit. Swasthfit, over the long term, what kind of proportion of the total revenue do we target for? Currently, it is 22%. Over the long term, how much of the total revenues there could be contributed by Swasthfit? It's a very interesting question. There can be multiple applications for Swasthfit from a what I would call a bundle test offering portfolio. We can create bundles for many other disease conditions. We can get faster diagnosis out. I think, you know, one way to look at it is to create saying we'll grow this portfolio only. Second is to say we will variant this and hence try to grow a variated portfolio. Yes, the future looks very bright. I don't want to put a number, but within 20-25 in the near term, should be reasonably possible as far as estimate. Okay. Okay. We are also looking to create other bundle tests so that, you know, those also contribute towards the growth. That would be the right thinking? Yeah, I think let's look at from a market perspective, there is a need to create this bundling. Okay. I think bundling is also become much more affordable and but doctors are also more of value in LFT, KFT together, which they were earlier prescribing separately. Patients also want to do it together. In fact, I have seen requests coming even for high-end test bundling as well, because they want and see whether they can diagnose it, early. One, which I keep saying, the core problem our industry solves are two. One is, we must diagnose it accurately, and the second is we must diagnose it early. I think accuracy-wise, the industry has done a great job, quality labs have come up. This early piece is being driven by multiple factors. It could be genetic testing, it could be bundling, because you can do the entire testing in one go itself and diagnose it early. I think patients and both medical fraternity and patients are seeing great value in this, because bundling is much cheaper than ordering individual tests. Okay, okay. Lastly, just clarification. In the previous question, when you were mentioning about the tier 2, tier 3 growth, I was not able to hear about it. What was the growth number that you were expecting from this tier 2 and tier 3? I was responding to someone mentioned about industry is going to grow only about five to seven to 10. Yes, so- My thing was that I haven't seen the report myself, but my own gut says that it's lower. It's actually, while one should not see quarterly numbers, but over a long period of time, this whole tier two, tier three market is yet to open up. What would be the number, if you could just have a rough estimate? For me to put that thing, because, the only way I can look at it, you and I see the same numbers, 1.4 billion people. If you draw a pyramid, I think most of this industry is still lying in top end of the market, which is metros and mini metros, but it is still to go down, especially from organized industry point of view. While unorganized sector may still be existing in tier two, tier three towns, but I think organized industry still has to make a lot of inroads in these markets. Okay. Qualitative comment, rather, I don't have any number to which I can say. No, no, sir. Lastly, sir, there is one problem when you generally face into this two, tier 2, tier 3 or lower cities, that generally, patients would only try to go to, you know, a diagnostic center, where the doctor has recommended. You know, you may go to a specific lab or a specific, you know, technician to get the report. How will this be overcome in the come? No, I fully agree with you. This is a challenge, and I think, 20 years back, that was a challenge even in cities as well. I think as gradually more brand awareness picks up, affordability goes up, people would be willing to pay a brand premium for this. As overall cost component goes down, OPD prices go up. I think some of these practices would tend to go away, and then branded players will be able to succeed. That's probably I think it'll happen. You are absolutely right, there are challenges. This market is not there just for us to grab just like that. Okay. Okay, thank you very much. Good point. Thank you. The next question is from the line of Rahul Agarwal from Incred Capital. Please go ahead. Yeah, thank you. Thank you for the follow-up. One question, Om, was, you know, how we analyze into retail businesses. We look at same-store sales growth. I was just trying to apply that to diagnostics. Let's say you had a franchisee network of 3,000 roughly at the end of March 2020. Will it be fair to say that that network is still growing on revenue or most of the top line growth, which we are seeing, is coming from the new network, which is added over the last three years? Any analysis there, please? It's growing all across. In fact, you'll actually be surprised our Delhi NCR has shown better growth, while Delhi NCR has the same store, because there's hardly any store to grow further outlets. Technically, if I look at this geography as a same store, as a concept, it is still showing growth. I think it is all across. The profile of growth may be different in these markets. The same store growth may be coming more because people are shifting to bundling, people are shifting more preventive, while it may be less in other markets, but there is a growth happening in both the segments. Just to correct, Rahul, we have 5,000 plus franchisee, not- No, he just as an example. Yeah, FY 2021. Ved, I'm aware of that. I'll move on to second question, was on cash flow. you know, my sense is our cash profit for the quarter was about INR 120 crores, okay? as I understand, the gross cash you've reported is INR 877, and the debt on the books is about INR 146 crores. If I do a math, net cash is about INR 730. It looks like there's hardly any CapEx done in the quarter. Is that understanding correct? Yeah, you are right. Okay. Lastly, Delhi NCR, you know, you were saying that this is improved and the growth is better. What's the revenue share here for the quarter? it's about 32% overall. Including Suburban, right? Yeah, all put together, consolidated, one figure. We are not going to talk about no COVID to non-COVID separately, one number, all companies as one. All put together, 32% is from Delhi NCR. Perfect, sir. Perfect. Thank you so much, Om, and thank you, Ved. I'll come back. Thanks. Thank you. The next question is from the line of Karan Vora from Goldman Sachs. Please go ahead. Yeah, thank you for the opportunity. My first question is on broadly. You highlighted that from the competitive intensity point of view, the market has kind of stabilized, but is the competitive intensity back to pre-COVID levels or it's still high? And from where is it coming from? Is it still the online players or you are also seeing it from the hospital players? Also, in addition to that, also in the Delhi NCR region, you mentioned a kind of higher growth, but do we think that now that we have reached a sizable scale in this region, going back to pre-COVID volume growth would be difficult? Okay, there are quite a few questions. I think let me first answer, competition. From COVID time, before COVID and post-COVID, whether competitive intensity is same or it has gone up? Answer is yes, it has gone up. But definitely it has come down from the recent past, but it has settled down at a much higher level. I would say it's a new normal that has settled down. Now, where is it coming from? It came from three sides. One was, of course, this new age players, private equity funded. Second was, hospitals, and third was some of the pharma companies. I think as the new normal is settling down, I would put hospitals as number one, sort of a competitive threat to the industry, or rather, which can change the whole construct. I think hospitals are getting more aggressive. Can they be pan-India? I have my sort of a doubt on that, obviously in regional or city level, they have brand equity, they are trying to leverage that, which is what has changed. The second question I think you had was on Delhi NCR growth, right? Yeah, correct. Delhi NCR growth, though it has, it's gone up, but I don't think it is sustainable what we have seen in Q1. Delhi NCR being a very sort of a high market share market for us, so I don't see this growth would be in line with our overall blended growth for the portfolio. I think growth contribution from Delhi NCR will be lower than the rest of India, as we go forward. Slightly better growth that we have seen in this quarter, may be just be an exception. Right. Right. Thanks for that. Next, another question on Suburban. So, you mentioned in the call previously as to, you are in the phase two of the integration journey. So, just if you can throw a bit more color on how many phases do you plan to completely integrate Suburban into? What is the timeline for that? Like, will it take a year or maybe more than that? By when can you expect the margins to cross 20% levels? Thank you. Yeah, I think it's a great question. When we acquired about a year and a half back, that time our thinking was, can we build Suburban Diagnostics as a separate company, as a separate team, and separate unit? We made an attempt doing that. We had put out certain growth numbers. Unfortunately, we didn't see those numbers coming in. Essentially, the idea was, can we just try top line and not worry about rest of the stuff? Slowly we realized as the COVID receded, we suddenly found the margins actually came down very sharply than what we had seen during COVID time, and the growth rates were definitely not as high as what we expected. We quickly have changed our gear, saying that not only this asset has to give us revenue synergy, but it also we have to look at cost synergies as well. The cost synergies started falling in place, we looked at two phases. Phase one was, can we look at our corporate cost of Dr. Lal PathLabs? Can that structure provide some overriding support to this asset? Like finance, HR, marketing, IT, et cetera. That was phase one. The phase two is when we went down to operations, we found that, if we look at rationalize our lab infra, can we can derive some synergies out of this. Currently, we are in that phase. I think the last phase would be when you bring front-end synergies as well, like sales team becoming one and things like that, which to my mind, will happen as we go along. Right now, phase one and phase two is the focus. Okay. Any guidance on the timeline for all of this to happen? I actually would play it by the ear and see how our integration happens, because the integration of lab ops is not that simple, because both the companies operate on different lab information systems, different bar coding systems. I would actually not put any timeline right onto this, but I would want to get it right the first time. Steady in these phases. Okay. Thank you. Thank you. The next question is from the line of Dheeresh Pathak from White Oak. Please go ahead. Yeah, thank you. sorry, I came in late, so my apologies. The way I'm looking at the results is that non-COVID revenue grew 10%. I'm audible, right? Yes, yes. Non-COVID revenue grew 10%, and the patient count is flat, INR 7 million to INR 7 million. Everything is coming from realization increase. There is price increase and there is mix impact. Can you break this 10%, non-COVID, you know, increase in realization into price increase that you've taken on like to like and mix? I think we've spoken enough on this, maybe you were not there when we talked about this. Just to give you a split of 10%, 3% is on account of price increase, balance is on account of mix. Balance is- if you take out, if you take out COVID volumes, then the growth rate is about 2.5% on volume. 2.5% on volume. Volume, if you take away COVID, numbers out of that. Since, since you asked about non-COVID 10% breakup, right? Yes. The non-COVID 10, nine point whatever the number is, 3% is on account of price. Balance is about 2.5% on volume. Balance is in mix. Okay, okay, understood. Thank you so much. Thank you. The next question is from the line of Aneesh Deora from Nomura. Please go ahead, sir. Sorry, actually, my question has been answered. Thank you. The next question is from the line of Omkar Kamthekar from Bonanza Portfolio. Please go ahead. Thanks for taking my question. One question, what is the next geography that expansion? Mr. Kamthekar, there is a lot of background sounds coming in. My question is with respect to what will be the next geography for expansion that you are looking for? One, and secondly, the cash that is on the books of INR 177, will that be used for any inorganic expansion over the next one or two years? I couldn't hear your first question. I did hear your second one. The cash on the books, yes, I think the primary objective is to utilize it for growth, both organic and inorganic. Since our business organically does not require too much of capital, we will primarily use this for inorganic, and we are still digesting our last acquisition that we did in Bombay. As this stabilizes, as a new opportunity comes up, we'll always be open to look at inorganic opportunities. First question, I'm sorry, I couldn't hear that. You were asking something about tier two, tier three towns. No. So which is the region? Are we looking to expand in the western region further, or we go south, which region are we next focusing on for expansion? Okay. South and west, there's no doubt. I think every call that we talk about south and west are gap areas for us. We'll try and go these regions. Thank you. Thank you. That was the last question. I would now like to hand the conference over to the management for closing comments. Thank you, everyone, for being with us on this call today. I hope we were able to address your questions. I would now request the moderator to close the call. Thank you. Thank you. On behalf of Dr. Lal PathLabs, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.