Ladies and gentlemen, good day, and welcome to Dr. Lal PathLabs Q1 FY 2025 Earnings Conference Call. 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. Siddharth Rangnekar of CDR India. Thank you, and over to you. Good evening, everyone, and welcome to Dr. Lal PathLabs Q1 FY 2025 earnings conference call. Today, we are joined by senior members of the management, including Honorary Brigadier Dr. Arvind Lal, who is the Executive Chairman, Dr. Om Prakash Manchanda, Managing Director, Mr. Shankha Banerjee, Chief Executive Officer, and Mr. Ved Prakash Goel, the Group Chief Financial Officer. Sorry. My mistake. I would like to share that 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 statement in this regard is also available in the results presentation that is available on the stock exchange website and has been separately circulated to all of you. I would now like to invite Dr. Arvind Lal to share his perspectives. Thank you, and over to you, Dr. Lal. Thank you, Siddharth, and good afternoon, and a warm welcome to all participants of this call. We are here to discuss the Q1 FY 2025 earnings performance of Dr. Lal PathLabs. I would like to commence by sharing my insights into the changing market dynamics and the advancements we have achieved. This year also marks our 75th anniversary, where Dr. Lal PathLabs continues to be a trusted healthcare partner, renowned for its commitment to quality, accuracy, accessibility and affordability. The diagnostics market in India is expected to grow as people live longer, more tests get prescribed, and the shift from unorganized to organized sectors builds momentum. Our unyielding attention to excellence in diagnostics has earned us the trust of both patients and physicians over the years. Utilizing our digitally enabled network infrastructure, we remain agile to service growing demand for testing. Our custom-built logistics solution further enhances our capability to serve our patients more efficiently. The integration between Dr. Lal PathLabs and Suburban Diagnostics is progressing as per our expectations. With the Suburban brand, we are making volume expansion a priority. We are making a strategic investment in both marketing and process efficiencies to fortify the brand while enhancing the patient experience. We are creating opportunities to grow sample volumes with the help of hub labs in important clusters around the rest of the country. Our synergistic approach enables us to provide patients with a comprehensive array of tests across multiple categories with speed and precision. Looking ahead, our growth trajectory will be driven by the ongoing transition from unorganized to organized sectors, heightened awareness of accurate diagnosis, and emphasis on wellness, among others. We remain dedicated to expanding our network and enhancing our service standards through operational excellence and innovative technological advancements. I am confident that the capabilities that we have created to achieve sustained growth and further consolidate our market share. Thank you, and I would now like to hand over to Dr. Om Manchanda. Over to you, Om. Thank you, Dr. Lal. Welcome to our call today. I shall walk you through the evolving industry scenario and progress on our strategy. I'm pleased to report that we have achieved 11.3% growth rate on a year-on-year basis. This is a result of consistent execution of strategy of expanding presence in identified towns and cities where our brand, brand enjoys salience, particularly in rest of North, Central, East and across the rest of the country. The contribution from Suburban Diagnostics to the top line is scaling up in line with the initiatives that we are driving on franchising and brand communication. We continue to prioritize broadening and deepening the brand geographical presence in order to derive sustainable volume and value growth. Our focus, therefore, is on scaling the next year, expanding into Tier three and Tier four towns with lab infrastructure. We are establishing 20 new labs to broaden our reach, with plans to add more labs as the year progresses. DLPL is present in most prominent cities, where we continue to densify our PSC network. Suburban is the fulcrum for the thrust into Mumbai, parts of Western India, including Goa and Pune. We are actively exploring opportunities to expand our footprint there, focusing on assets that align with our core values and strategic goals. Our first direct brand, a steady revenue contributor, has delivered around 25% of the total revenue and continues to expand. The Medical Centres of Excellence, which we have established, are scaling effectively, enhancing patient engagement and outcomes. Driven by a strategic emphasis on sustainable volume growth, these efforts aim to draw patients from unorganized labs, promoting the adoption of a quality and accuracy-backed approach to testing. Our investment in technology and into infrastructure are delivering concrete outcomes... strengthening brand visibility and facilitating smoother interactions with patients. Patients today access our services across channels, and our infrastructure naturally has kept pace with these requirements. As this matrix evolves, brands like ours are in a strong position to access growth. We remain attentive to market dynamics, adapting our approach to ensure sustainability of outcomes. Moving forward, maintaining a solid financial foundation is crucial. To focus efforts, we aim to maintain our robust operating metrics and drive a strong cost structure that will form the basis of the growth initiatives. I now hand over to Shankha to delve deeper into initiatives and operational highlights. Over to you, Shankha. Thank you. I welcome all participants joining this call today. I will proceed to share the business and operating highlights with you. We are pleased to announce a strong start to the year, achieving robust performance in both revenue growth and profitability. In Q1 FY 2025, we achieved a revenue of INR 602 crore, representing 11.3% growth over Q1 last year. This growth in revenue is driven by patient volumes, which is at 7.2 million and 21.1 million samples. Patient volume growth for Q1 FY 2025 is 5.5%, and sample volume growth is 9.6% over Q1 FY 2024. Notably, we saw a 10.4% increase in patient numbers in Q1 FY 2025 as compared to Q4 FY 2024. Our Q1 FY 2025 revenue per patient stands at INR 833, which is same as Q4 FY 2024. We are strengthening our digital infrastructure and capabilities, encompassing cutting-edge data analytics in order to enhance testing and service outcomes for patients. This is going to be a focus area for us. Dr. Lal PathLabs and Suburban are driving the omni-channel experience forward with the help of technology. In the period to come, we expect a combination of volume gains and revenue and realization mix to drive the revenue growth. This shall include favorable test and geographic mix. Attraction in bundled testing and buildup in volumes in specialized tests shall also contribute to this. In conclusion, I would like to emphasize that we are progressing as per plan on our growth objectives. Our future performance will be guided by expanding our footprint in identified clusters, enhancing our digital capabilities, and enhancing patient service outcomes. Thank you for your ongoing support and trust in our journey. This concludes my opening thoughts. I would now request Ved to take you all through the financial performance. Over to you, Ved. Thank you, Shankha. Good afternoon, everyone, and warm welcome. I'm sharing some of the key financial highlights for Q1 FY 2025. Revenue for Q1 FY 2025 came in at INR 602 crore, against INR 541 crore last year, same quarter, a growth of 11.3%. Revenue per patient for Q1 FY 2025 is INR 833 versus INR 789 in Q1 FY 2024. Samples per patient for Q1 FY 2025 is 2.92, with a growth of 3.9%. EBITDA for Q1 FY 2025 came in at INR 170 crore versus INR 146 crore in Q1 FY 2024, and registered a growth of 16.2%, with a EBITDA margin of 28.2%. PBT for Q1 FY 2025 came in at INR 150 crore, registered a growth of 27.6% with PBT margin of 24.9%. PAT for Q1 FY 2025 came in at INR 108 crore versus INR 84 crore last year, same quarter, registered a growth of 29.1% with PAT margin of 17.9%. EPS in Q1 FY 2025 is INR 12.8 versus INR 9.9 in Q1 FY 2024. Net cash and equivalents as on June thirtieth, 2024, is INR 1,044 crore. We are pleased to announce that the board of directors has approved an interim dividend of INR 6 per share for FY 2025. With this, I conclude my opening remarks, and I would now request the moderator to open the forum for Q&A. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Rahul Aggarwal from Ikigai Asset Management. Please go ahead. Hi, good evening, everyone. I have three questions. Firstly, Om, on the Tier three, Tier four markets, as you're expanding infra, I just wanted to know, any learning from patient behaviors there? Like, how are these patients different from metro and Tier one? What are they seeking for from a brand like yours? ... You want, I'll ask Shankha to respond to this question, Rahul. So, so in terms of, you know, expansion into Tier three, Tier four, primarily, you know, the... It's a lot about looking at, you know, local unorganized players, and we are going to compete with them. And, you know, our offering there is quite similar to what we offer in Tier two and Tier one cities as well. So it's, we lead with quality and service, and obviously we are finding quite a lot of, you know, patients and clinicians who are embracing us in these cities. So the offer is really not significantly different from what we are doing in our other cities. Is the pricing very different or even that remains the same? So, Rahul, you know, I'll probably slightly give you a higher level perspective. You know, what we've seen is that most of these smaller towns, their behavior is influenced by prescription, nature of the prescription by doctors. What we are seeing is that the healthcare is now traveling to Tier three, Tier three, Tier four. And I think my... It's a bit of a qualitative comment. I think overall quality of medical manpower is also going up. As more qualified doctors settle down in smaller towns, they tend to prescribe tests which are also of higher order. So I think this is a more, a market evolution, where we will see a level of testing going up with time, and directionally it's quite visible in our numbers as well. So I think that's where I would want to make comment. Got it. Got it. Secondly, on this Medical Center of Excellence, you know, just wanted to know, could you elaborate, what is this exactly? Are we putting up a different infrastructure here, or is just the current lab is getting transformed into something else? No, no, I think it's a good question. I'll explain to you. I think you guys cover a lot of pharma businesses. So, what tends to happen, if you look at the journey of this entire pathology, most of the differentiation in the past has been service, branding, brand awareness, top of the stuff and all that, right? But as we have progressed in the last 20 years, the market has grown, more competition has come, so everybody's offering the same thing now. The only way you differentiate is that you start looking at different segments. Like in pharma, you have a gastro division, you have an onco division, you have that, you have this. So right now, it's more... The answer to this question is, we are trying to segment the market and look at broad segments. Especially on the high end, the segmentation is done based on disease state. That's how we have identified certain segments like onco, autoimmunity, reproductive diagnostics, and trying to get more focus from the corporate side, so that whether it's introduction of newer tests, whether it is introduction of new communication with the medical fraternity, organizing seminars or creating patient cohorts. A lot of those activities in a focused manner, we are trying to create these categories, and that's the whole idea. Operationally, though we have some people on ground, but it's not really, we are not trying to create different teams for these, these segments. Right. So these are, these are like e xisting people working at different labs, which are identified as where you want to increase communication and you want to focus on specific specialty. Is that correct? Yeah, it's higher. I would say higher focus on marketing efforts. Everything else remains the same. That's it. Okay, cool. And lastly, on this Swasthfit specialized portfolio, just wanted to know, I know that it's small right now, but what kind of scale or total mix, you know, into overall Swasthfit do you visualize over the next three years? For Swasthfit? Swasthfit, specialized. Yeah, Swasthfit, specialized portfolio. So the Swasthfit, specialized portfolio is primarily, you know, aimed towards clinicians, and, and we are, we are still kind of working on it. It's not something which has reached the level of scale for us to differentiate and start reporting those numbers separately. So Shankar, I understand. What I was asking was, is more like a three-year view. Would you visualize, like, what kind of a specialized mix would you have within Swasthfit? Would you have that? So, right now- This is Dr. Lal here, Rahul. You know, the people around India, especially in these Tier 3 and 4 towns, they have not realized the importance of, you know, these so-called non-communicable diseases and lifestyle diseases, which we are trying to make an awareness in. Yeah. So this is Dr. Lal. Rahul, I was trying to tell you that the importance, you know, is of the non-communicable or lifestyle diseases, which we are trying to awaken these Tier 3, Tier 4 towns. And that is also a part of why the Swasthfit is doing well. All right, all right, I'll take it more offline. Thank you so much for answering my question. Best wishes and call back in the future. Thank you, Rahul. Thank you. We have our next question from the line of Kartik Chellappa from Indus Capital Advisors, Hong Kong Limited. Please go ahead. Yeah, thank you for the opportunity. Sir, I have three questions. Sir, we are unable to hear you. Can you speak louder, please? Okay. Is this any better? Little better. ... Okay, great. Sir, I have three sets of questions. The first one is: If we were to look at our volume growth, let's say of about 9% or so, could you give us some sort of perspective on geography-wise, how that is faring? I mean, which are like the geographies driving double-digit, and which are the ones which are still lagging? So, Kartik, I think we are not giving geography-wise split quarterly, but once in a year, we are giving. Having said that, the geographies like which is rest of North and East, which obviously are performing well and they are doing better than our company average. Where we are going much deeper, which is, let's suppose, rest of North and especially UP, where we are going Tier 3 and plus, that, that is obviously the higher growth as compared to company growth. Okay, got it. My second question, sir, is what would be the like-for-like price increase that we have taken on a year-on-year basis across tests? We have, we took last price increase, that was in February of 2023. 23. And we completed one full year of cycle of that in February 2024, and we have not taken any price increase and neither we have intent to take as of now. Got it. Which means if I were to look at, let's say, the realization per test, which is probably up 2% year-on-year, that's probably driven more by mix, right? Rather than anything else on a like-for-like a bsolutely. You are right. Okay, great. It is mix that is driving this revenue. Sorry, sir, I just missed the last part. No, you are right. This is a mix which is driving this revenue per patient now. Okay, got it. Last question, sir. Would you be able to share the revenue and EBITDA margin for Suburban this quarter? Yeah. So, Suburban growth this quarter is about 8%, and EBITDA is about 14%. Okay, 8% revenue growth and 14% EBITDA margin. Okay, got it. Thank you, sir. Thank you very much, and wish you all the very best for the remaining quarters. Thank you. Thank you. We'll take our next question from the line of Binay from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. The 8% growth in Suburban, you commented, is YOY growth? So basically you would have done around INR 40 crore or so of revenue. Is that YOY number that you gave? Yes. It's YOY. Yes. Same quarter last year. Yeah. Any reason for Suburban growth to be lower than your overall growth, because you're... Or is it any comments on that? So actually, you know, I'm, I know this is a question which is on everyone's mind. So we are, I think the number doesn't show, but we are not unduly worried about this. I think the fundamental thing, what has happened in Suburban is there's a very strong strategic shift that is taking place in that company. This company used to be more driven through doctor network in the past, own infrastructure in the past. We are strictly going by franchising infrastructure, direct to consumer. There was a lot of the business of CRO also, which actually was, was not a business, which was very B2B, not a sustainable thing. So we are trying to build this, company more direct to consumer, make sure that health checkups and things like that. So I think, overall, directionally, 8.3 is definitely an improvement from what we've experienced in the past. So, directionally, I think we are getting more confidence about Suburban, so I'm not really too much worried about this number. I think... Sorry, what is it? More from the growth, please. I said, no, okay, Ved is telling me core business growth is 13%. So I, I don't want to get into this. To me, one number is where we stick to. We don't really slice this number into core and non, non-core. I, I, I, I stay very confident on Suburban. That's the way I would say. Right. This business is, uh... see, it's actually not run quarter-on-quarter. It's a need-based business. Uh, you just keep doing your work slowly, slowly, you will one get the results. So I'm very, very sure about this, that, look at margins now, 14.1%. There was a time this company never actually, before COVID, even before our transition, also pre-COVID, had single-digit margins. So there is a improvement which is visible. There are green shoots here. Right. And just secondly, on your own margins, you know, could you talk a little bit about, because in the past we've always seen that quarter two is usually the strongest quarter for the company. And given revenue leverage that falls in, so margins also tend to be the highest in quarter two. Would you sort of expect a similar trajectory into this year also? Yeah, quarter two is always higher. You're right. So quarter two, actually, yet to obviously, most of the spike actually happens around September. So, but there is no reason why it should not happen because the season, the rains, et cetera, all that happens every year. But as the revenue tends to be in absolute terms, also higher in Q2, everything just flows into the margin. So I presume that Q2 will always remain higher margin compared to any other quarter. Right. So in the sense, you know, margins could at least hold up or inch up on an annualized basis from these levels as you are getting leverage gain, like it's visible in your Tier 3. But it gets knocked down in Q3. So I just don't look at quarter-wise. My always eyes are on the annualized margin. This is where you should really focus. ... sir, lastly, just on competition, like, after many calls, you've not made much comment on competition this time around in the call. Is that because you see it easing or there was not much to add, that's why it was not there in the opening remarks? So I think there are two directions one can talk about competition. One is the intensity of competition, which to my mind will continue to remain. It was always there. I think competition became visible because a lot of private equity money, and I think they had a different format of cash burn, et cetera. They were spending a lot of money on promotion, which to me has eased off. That's why they are not that visible now. So competitive intensity from visibility perspective has come down, but it's not that they are out of the business. They are still there. Correct. Those, those companies that one used to talk about, they continue to operate. But I think that the spend to acquire customers, spend to actually just be visible anywhere and everywhere, that has come down. I think the other intensity in terms of price, predatory pricing, this kind of promotion, this INR 199, INR 99 test and all, all that actually also has gone away. But in terms of number of players, I think that intensity still continues. And I think as the overall market is growing and, you know, a healthy sort of margin profile in the industry will always attract competition. And, I've always maintained competition is good for the industry because it overall brings up the table in terms of quality, level playing field. At the end of the day, organized market still has to grow because it has to grow from unorganized, and it is a very large segment. There is a space for everyone to be there, as long as there is healthy competition. I think to my mind, that extreme unhealthy competition has now become healthy competition, but competition is still there. Right. Great, great. Noted. Thanks, team. Thank you. We'll take our next question from the line of Prakash Kapadia from Spark PMS. Please go ahead. Yeah. Thanks for the opportunity. You know, could you give us some sense of, you know, specialized tests as a percentage of overall revenues, maybe last year? And, you know, do we see that as a differentiator going forward? Because we seem to be investing in R&D, we seem to be doing a lot of work on newer tests. So where are we in our journey? That is my first question. And secondly, on Suburban, you know, what will it, you know, take to get that inflection point? Because, you know, it's almost now three years and, you know, we've been investing in process, we've built the infra, we've, you know, transitioned from being a doctor advocacy to a consumer brand, and I think we are still number three in Bombay. You know, what will it take for us to, you know, grow Suburban at faster than company average? Those are my two questions. Right. Hi, Prakash. This is Prakash, this is Shankha here. Hi, Shankha. I think on the first question regarding specialized, so you know, the specialized portfolio is again the way we define it. Because this specialized portfolio definition can vary from organization to organization. Right. The way we define it, it currently contributes about 23% of our revenue. You know, versus, let's say, similar period last year, the contribution would have grown by about 1-1.5 percentage points. So, so yes, it is, you know, that contribution is slowly increasing. Is it a differentiator? It is, it is a differentiator in terms of our ability to really get into, you know, larger institutional businesses and also, you know, get key opinion leaders, to kind of endorse the brand. Is it a huge volume builder? As of now, like I said, you know, the contribution is more or less stable, maybe 1% up over a similar period last year. Coming to the question on Suburban, I think the way to look at Suburban is that, you know, there is a core geography focus that we talk about, and that geography is slowly and steadily responding for us. But yes, as a one number, when we look at what is happening to Suburban, there is quite a lot of non-core business, which is still a drag on the overall number. And one would imagine that it still would take maybe, you know, a few more quarters for us to start seeing the overall Suburban number growth rates to maybe move to, you know, a double digit and early teen level. And after we've reached there, we'll see how we can get it going faster than IPL. Okay, and that would be, Shankha, from Mumbai only, or this Pune or Goa initiative will get us there? No. So we have defined Bombay, Pune and Goa as the three core. I think that those are the three geographies that we are spending all our efforts on right now. You know, those markets are responding quite positively as well. Okay. Understood. Thank you. Thank you. Thank you. We have our next question from the line of Kunal Randeria from Axis Capital. Please go ahead. Hi, good evening. My first question is around..., it's- Actually, Mr. Randeria, can you use your handset more, please? Your voice is breaking. Sure. I hope it's better. Yeah. I'm sorry, we've lost his connection. We'll take the next question from the line of Sumit Gupta from Centrum. Please go ahead. Hi, thank you for the opportunity. ... Yeah. So I have some questions on Swasthfit. So I just want to understand what is driving Swasthfit, overall, so if you see, like, overall contribution has been increasing, pure sequential basis also. And, can you explain how much is coming from rural and urban? Okay. So let me first try and, hi, this is Shankha here. Let me try and first take the first part of the question, as to, you know, what are, what is driving Swasthfit. So, there are three, you know, streams that we see. First and foremost, there is this whole awareness amongst, you know, the public regarding doing preventive testing. So, you know, the whole area of in the metro cities as well as, you know, our, our formulation, our kind of approach that we have put on online, et cetera. So, you know, there is a slice of that preventive wellness market that we see is helping Swasthfit grow. Secondly, there is also something which we see as, you know, a channel with channel expansion. We also noticed that there is some upselling which happens, you know, in the channel. And lastly, we are also seeing in certain markets, that clinicians are moving towards starting to prescribe packages. So those are really drivers. And as we expand our reach further, metro as well as, you know, tier two, tier three kind of towns, we see that this Swasthfi t growth is likely to continue. So, you know, that really may be the first part of the question. In terms of split between urban and rural, now, that's a very, I think we haven't got those numbers ready. We will... Yeah, so for us it is primarily, you know, from tier one, tier two, tier three towns. We'll have to see what is the exact split, and maybe, you know, we can maybe share that number subsequently sometime. Okay, sir. So, sir, over, like, to take a broader view, over the next 3-4 years, what is the peak contribution that you, like, you expect, this Swasthfit to contribute to overall revenue? That's a quite a, you know, pie-in-the-sky kind of question. At least one thing we can definitely foresee is that, you know, if you see next 3 to 4 years, it should be higher than where we are today. But how much higher and where is the limit? I think that's something which we are still trying to work out. We did a math, and we found out that the last 5 years, directionally, every year we are increasing by 1.6%- One, 1 and a half percent to 1.6. One and a half percent. Now, obviously, that was on a much smaller base, so let's hope that continues for some time for next 2 to 3 years. Okay, sir. Okay. And just one more question on the margins. So, so how do you see the margins in general faring well due to, be it Swasthfit or overall business? See, Sumit, that, as Dr. Om mentioned, you don't see margins quarter-over-quarter, but annualized margins are... Hello? Hello. Yes, sir. So overall, like, over the next 2-4 years. So we said, you know, in a longer term, we said, you know, last call, 26-27%, around 27% kind of margins. Because we also, you know, doing a lot of investment, we are going deeper, we are spending more, and lot of new investments are required, which will, you know, give obviously top line, but, in a longer, longer period. But you, in a longer term, I think, you know, it is, you don't think these kind of margins, much, sustainable is around 27% kind of margin. Okay, sir. So just one last question. What was the revenue contribution from North and West, the overall geography mix for this quarter? This quarter, I think it's... Again, quarter-wise, it will not be representative, but I am saying, we have, like, Delhi NCR, which is, 31%-32% kind of, you know, contribution we have from Delhi NCR, and rest of India is balance. Okay, sir. Thank you. Thank you. Thank you. We'll take our next question from the line of Adrish Chaturvedi from Nomura Financial Advisory and Securities, India. Please go ahead. Hello. Yeah, I would just like to follow up on the awareness campaign bit that you had mentioned earlier. So in these awareness campaigns, are there also any discounts that you're offering to drive up a lot of these bundled testing volumes? So, I think these are two different things in itself. I think, you know, bundled testing by definition is discounted. So, so that, you know, there are awareness campaigns which are built on, you know, promoting the bundled test. Like I said, you know, if you look at a package, the package is inherently itself discounted. So, so that's one part of it. But I think some of the maybe visible campaigns that you observe, those are more to do with, you know, building awareness for the brand and the service, which is slightly independent from specific, you know, package promotion. Okay. So would you have the number handy with you, if you could give it, like, at MRP, if there are any kind of increases in these bundled testing? Because right now they're discounted, so there's no true sense of volume that we could gauge. So is there something like a GMV number on that? So I didn't get your question. So what are you expecting? What discounting? No, generally, I mean, these packages are discounted at a 20%-30% kind of, you know, discount on RPM, depending on the packages. So it's a bit of range, which is ranging 20%-30% kind of discount. Okay, okay. Thank you. And also, I think a lot of these bundled testings are also driving up your test per patient, right? So right now it's at 2.9. Like, as the share of this increases, do you have, like, a sense of where, how up it could go? Like, could it go across three or, like, a 3.1? Like, or is there a vision there that you would like to have more tests per patient or an average number that you track? So we don't have any operational target on saying that I want to drive tests per patient. I think our operational targets are more around, you know, increasing our reach and also making these bundled tests available and promoting them. So naturally, we see by doing all of this, you know, tests per patient grows, as well as revenue per patient grows. Now, we don't really work on a target saying that I want to grow so much basis this. Because it's also, you know, a lot of other factors which drive, including geography mix, specialized test portfolio, and also, you know, the channels through which we sell. So we really don't work on a specific target on that. As the contribution increases of Swasth, the test per patients are likely to go up. Okay, got it. And just finally for me, so this specialized portfolio now, now that it's, it's like 23%, what kind of gross margins are you seeing on that? And, I presume that they'll be a bit, a bit, like, lower on the lower end of the whole portfolio. So gross margin is different on this specialized versus routine. But net net on an EBITDA level, I don't think there is much difference, because servicing cost is. You know, these are high-end, mostly we are getting outsourced from hospitals or some third parties, where we just spend on logistics. But on B2C, I mean, there is a infra cost, servicing cost, which is much higher. So gross margin different, but on an EBITDA level, there is no much difference. Like, could you qualitatively or, like, tell me how different could they be? Like, if an average specialized versus a routine, like, what kind of gross margins differentials are you observing? So those are very difficult to measure, but we are measuring on bottom line, which is net on a PAT level, which is. Okay. And do you have, like, a mix of the institutional business through Swasthfit that you're doing versus, versus your retail? Swasthfit is predominantly a retail product. It isn't so much into institutional part. Okay. Okay, fine. Thanks a lot. Thank you. Yeah. Thank you. We'll take our next question from the line of Kunal Randeria from Axis Capital. Please go ahead. Hi, good evening. Sorry I got disconnected earlier. So apologies if my question has been asked. So you have been expanding aggressively in this Tier 3, Tier 4 cities. So is this what contribution from there also? Sorry, can you repeat the question? Aggressiveness from- From Tier 3 and Tier 4. So a company level average is, for Swasthfit is around 25%. So, even from Tier 3 or 4, is it similar or would it be substantially lower? So, you know, right now, I think there was this question was asked earlier, urban, rural, split, et cetera. I don't think we have the numbers handy. So I think, once we have those numbers, we'll look at it and see whether it's different or not. However, that may not be the right metric, because, you know, the competitive set and the growth strategies in these markets could be slightly different. Tier 3, Tier 4 versus a metro or a Tier 2 town. Got it. Okay. And second question is actually for Ved. Ved, you mentioned that 27% is the kind of EBITDA margin you're comfortable guiding with. You're already at 27%, and I'm assuming that the Suburban should, you know, improve margin, which means the core margin, the core ex-Suburban margin should trend out in the coming years. Is that because you'll be making higher investments? If you can just run us through your thoughts. Yeah, Kunal, it will compensate through higher investment in newer markets and, you know, spending on our awareness, you know, some bit of digital and automation, all these things. Got it. Oh, thank you. Thank you. We'll take our next question from the line of Shaleen Kumar from UBS. Please go ahead. Yeah. Hi, sir. First of all, I'm not sure if you have already answered this question, you know, in some other way, because I got dropped off for, like, 25 minutes in between, but I, I still ask here. Sorry, sir, can you use your handset mode? Your voice is not coming clear. Is it better? A little better, yeah. Please go ahead. Yes. So, two parts to the question. First, you can see that our margins are improving and they've been consistently improving, and I believe that, you know, you've been investing in the growth as well. So can you talk a little bit how little bit about how we are investing for future growth, you know, in terms of, maybe more of the, you're thinking of more accelerating our service, patient service centers or, you know, entering into, new segments? First part is that. And second part, when will we see the impact of that coming in? I mean, it will track it out, but when you think right now, it could be any positive momentum on the growth, maybe three months, six months down the line, you see because of the investments you're putting. So that's largely the question. Right. Okay, Shaleen, let me try and answer that. So, you know, in terms of where we are investing, it is in quite a few dimensions. I think Om mentioned about these 20 labs that we are in the process of setting up. So first and foremost, it's in infrastructure. So, you know, new, new lab infrastructure and, you know, accompanying that, obviously, you have other overhead costs that get built into the system. Over and above that, you know, we are also improving our spending, whether it's on the digital channel as well as in offline, to build awareness and also see, you know, how can we drive more patient acquisition activities. And as we expand more into non-core geographies in West and South, obviously, the, the spending needs are substantially higher than in brand-strong markets. So primarily, you know, those would be where, you know, these trends are going to keep going. And lastly, it could also, you know, some of it will also go into our, you know, frontline manpower expansion in sales and marketing kind of area. Now, you know, your second question was, where can we, where can we see the impact? Now, actually, this is an ongoing activity. It isn't as if that, you know, we started this action a few quarters back. This is an action we continue to do over a period of time. So what we see benefits today are result of actions which have been taken maybe a few quarters or, you know, a year back. So it's a rolling action. So, in case you are expecting a certain, you know, spike jump because of these investments we are making, it may not be so. But, yes, you know, steady growth, and also, you know, ability for us to do better in the newer geographies that we are entering, is what we see as the likely outcome. Yeah. So the, is it right to assume that, again, the intensity of our efforts have gone up because of our healthy profitability or, you know, a strong position in terms of the cash and all profitability? So the intensity, you know, we look at the past 2, 3 quarters versus where we are right now, it, it should be better, right? Because of where we are. And hence, I'm not expecting, you know, a step jump, but a gradual improvement should be followed if the intensity is high, or exactly our intensity is increasing. So in intensity, I would say because of two reasons one can look at. In our core geographies, you know, this whole expansion into Tier three, Tier four is happening, which needs quite a bit of, you know, investment from our side. And also in the non, you know, or let's say, some of our brand weak brand markets in West and South, there is investment required. And the new channel that we have started spending on, which is in digital. So these are where the whole promotional spend is going. And yes, you know, the outcome expected is a gradual, you know, improvement in our growth rates. Right. So any new segment you are trying to tap in, like, in your observation, could be the, you know, been mentioning about, you know, fertility, et cetera. So any kind of these kind of segment which where you see a lot, so you're kind of getting excited about? Sorry, what was the example you mentioned? So... Yeah. Sorry, go ahead. So I think in terms of, you know, segmenting the market, Om mentioned, you know, that there are various categories that, that we are trying to create and, and work on. Obviously, you know, the exciting area is around non-communicable diseases. You know, that's the whole area where Swasthfit and some of our other, you know, approaches are really focusing on various, things around that. And also, you know, some of these specialized areas in, in and around, you know, genetics, and, you know, testing, in, in that area. Got it, sir. Got it. Perfect from my side, sir. All right. Thank you so much. Thank you. Thank you. We have our next question from the line of Deven from Marcellus Investment Managers. Please go ahead. Yeah. Hi. So far, this quarter, our effective tax rate is around 28%, which seems to be on the higher side. So just wanted to understand why is that? So, so there is the, you know, deferred tax and, you know, Suburban depreciation, which is, you know, obviously, has impacted. There is some adjustment on account of deferred tax, but on an average, this tax rate is not changing. If you will see, analyze this is, I don't think there is a change in tax rate. So, don't see this quarter as a representative quarter for tax rate. Okay. Okay, got it. And secondly, currently, what's the net cash position?... as on thirty of June? INR 1,044 crore. Okay, okay. Thank you. Thank you. Thank you. We have our next question from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead. Yeah, hi. So thank you for the opportunity. So, so in the past, we have highlighted some bit of a competition coming directly from hospitals, you know, where they are trying to forward integrate. So, I mean, any thoughts on how we can tackle this or, you know, any measures we have already taken in that, in those areas, if you could highlight? So, our experience is the hospital competition is very limited to where their strength branch presence is there, and that's mainly in some catchment area of 4-5 km. Building a large network for hospital business is very, very challenging. So we are not unduly worried about that. As I keep mentioning, that it's better that good name, good quality name, come into the market, so the overall table will go up. But, there have been 4 or 5 such players who've come in, but they have done well only in those markets where their hospital brand is strong. And most of them are also listed player. I don't think there's any unlisted player who's trying to do this. So it's okay. There's a lot of space in the market for competition to be absorbed. Sure, understood. So my next question is with regards to the underlying growth in Q1. So if I exclude, you know, the 8% growth, what you mentioned about Suburban and Swasthfit, the balance business also seems to have grown at 7-8%. So any thoughts over there? I mean, is there some bit of a bumpiness and a few tests due to which, you know, the growth was in single digit? So, you know, excluding, you know, looking at growth excluding Swasthfit, may not be appropriate because like I said, in terms of, you know, the way Swasthfit business is coming, there are, there are places where upselling is happening. Also now, some doctor prescriptions are moving towards Swasthfit. So something which was a non-Swasthfit earlier may also be turning into Swasthfit. So I think you need to look at the totality, of the business. You can look at maybe Suburban separate and, LPL, if you, if you want to look at organic, maybe that will be a more appropriate way to look at it. Got it. And one final one, if I may. So in terms of the margins for Suburban, so I mean, I understand, you know, we have put considerable efforts to improve the margins here. But on a sequential basis, also, you know, we did, I think, close to 17% last quarter, and now it's close to 14%. I mean, so just wanted to understand, you know, is there any lumpiness into this business? And on a, on an annualized basis, you know, what is the kind of a sustainable margin we should look forward for next 2-3 years perspective? I really won't go by a few percentage here, here and there, because the base is too small. 40, 50 lakhs can swing that margin. So I... Our focus clearly in Suburban is to see higher volume, higher top line growth. So I won't be worried about, too much about these margin fluctuations. For next two years, we just want to make sure that we get our growth trajectory right, and then everything else will fall in place if we have a good top line growth. Plus, if you see quarter-on-quarter, it's improving. It's, you know, last, last year, same quarter, it was much lower. So from that sense, because there is a quarterly impact. Yeah. Improvement. Improvement also. So annual, annualized basis, I don't think we are very confident that we should be improving. Got it, sir. Wish you all the best. Thank you. Thank you. Thank you. Thank you. Our next question is from the line of Pranav Chawla from Antique Stock Broking. Please go ahead. Hi. Sir, I have just one question majorly on your Delhi NCR market. Have you seen the growth rate of NCR slowing down over the past years when compared to the past year's performance? So, so I think the good news is that we aren't really seeing a slowdown in the growth rate. Rather, we see it being sustained and, you know, and that has been sustained at a level which is slightly higher than what we had, maybe, you know, pre-COVID. So, if we're seeing NCR, that is our biggest geography, if that is... That continues to maintain its growth momentum, so which would be the market that we are seeing a slowdown as of now? Because NCR is among the biggest markets that we have. Yeah. So I would, this is Om here. My sense is that Delhi NCR market has gone through, two, three phases, where there was a phase of a hiking competition. I presume some bit of a shift may have happened to them, in the last sort of a couple years, couple of years. Many of our old customers whom we lost may have come back to us. So, in between, we had a slightly slower growth in Delhi NCR, but as Shankha mentioned, that we are inching towards slightly higher number. Can it go up further? I still doubt, because we in our business planning, we still don't want to project higher Delhi NCR growth because the base is too high in the market. Size is still INR 3-5 crore of this cluster. While all other clusters like UP, Bihar, Uttarakhand, they are fighting for us, where the market size is nearly about 20-25 crore population. So that's the way I would put it. Basically, we are very strong in Delhi NCR. Some of our customers who may have gone back, gone to the competition, they have come back in the last 8-12 months. This is what we are seeing, and I think Swasthfit contribution also has pushed up the revenue growth. But I will still stay conservative on Delhi NCR and push the other markets. Correct. Sir, have you seen any change in patient behavior regarding, because our patient volumes have been pretty muted for the past couple of quarters, have we seen any improvement on this front? There is an interplay that we are seeing between, as a contribution for Swasthfit goes up, the number of patient visits are slightly muted. That maybe impacted this, this growth. Because what we are reporting as a patient volume growth, is technically they are not unique patients, they are patient visits. But in Swasthfit per visit, we end up doing a lot of tests in one go, the number of visits may actually get reduced. So I think we are seeing some kind of interplay as the contribution of Swasthfit is going up. I have a sense that patient visits may be inversely related to that. I think that may be some impact that we are seeing. But I think overall, one should see the sample growth, which is nearly about 9.6%, right? 9.6%, which is a combination of number of test per patient into patient footfall. Sir, that was actually very helpful. Can you give us some color on FY 2025, 2026 growth that you are internally projecting? FY 2025, FY 2026, or FY 2024, FY 2025? So, for FY 2025 as well as FY 2026. Any internal estimates that you have? I think FY 2025, I told you last time, we'll try and beat the FY 2024 number. So this quarter is 11.3, what? 11.3 is better than 10.4. So I have a feeling we'll continue to do better and then definitely beat 10.4 of last year. As I mentioned that September is a crucial month for the entire industry, not only for us. So let's hope, I don't know how it turns out to be, but I think I can confidently say that we'll beat the last year number. FY 2026 is bit. Away. Shankha, you want to say? A bit away. I think just to add to Om, kind of adding to that, so beat last year growth number without- Without price - having to take a price increase. I think that's- I think that- We are not- That is what we are trying to drive this year. Yeah, without price increase years. Once we see, you know, two or three quarters of this year, maybe we'll be in a position to then start looking at what the next year outlook. I think October might be this good month to talk about FY 2026. Perfect. Sir, and one last from my end. What is the strategy on cash utilization, given that we have cash building up in our balance sheet? That I think is- Dividends, M&A, something that you're looking at. Both. See, time and again, we have said our priority number one is to look for strategic assets, inorganic, which are in south and west region. West, we have done Suburban. If you look at contribution-wise, region-wise, obviously, south is still very weak. We would want to fill that gap, there's no doubt about that. But, we also need to have a quality asset at the right price, much high on governance, et cetera, so that's given. In the absence of that happening, because you don't know, that doesn't happen every month or every quarter. It may happen, may not happen. But in the meantime, we have increased our dividend payout, so which is also... we are trying to balance between the two, and also investment in our new labs and technology. So I think combination of all these three is where we want to utilize, our cash. Cash in the balance sheet is also good because our ability to do certain transitions, can actually go up as well. So number one priority is to see deploy this, money for growth, primarily in acquisition, because it's a global experience that in new markets it's very challenging to establish organically, so one has to look at that. Thank you so much, sir. This was very helpful. Thank you. Thank you. We'll take our next question from the line of Ashutosh Parashar from Mirabilis Investment Trust. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. So just a couple of questions. So on the 20 labs that we have planned to open this year, can you give us some color on the geographic spread of these labs? Are these likely to come up in the markets of Bihar and UP? And how many of these are planned for Suburban? So, you know, the primary focus is going to be, you know, like we have been doing in Tier 3, Tier 4 geographies of North and East. That's where the primary focus is going to be. Suburban, you know, there isn't really a plan to add too many labs. There are one or two, one or two maybe gaps, which we will fill. We are still evaluating that. But this is more in our core geographies of North and East. Got it. On the Suburban front, so it's been some time since we have integrated the acquisition. Are there still some gaps on, like, testing mix and all that we have to address or we have largely addressed that? So, there are, you know, various layers of integration that are currently working. So from a test perspective, now the whole test menu, which Lal PathLabs operates, is today available through Suburban as well. ... but having said that, there are certain background, you know, integration, IT integration work, which is still happening to make it even more seamless. That work is going to take some more time. But as of now, you know, clients in the geography in which Suburban is operating have access to all test menu from Lal PathLabs. Got it. And just lastly, on the Swasthfit front, so what would be our average realization for our Swasthfit test menu? Sorry, can you repeat the question? Realization for Swasthfit. Yeah. Yeah. Yeah, I think this is one information we have not made it public yet, so we would like to not share in a public forum. Okay. But definitely it is higher than the- You see, my reading is, you can do a reverse math in any case, right? 25% contribution, you know, the portfolio, revenue contribution earlier and now, I think you can figure that out, but exact figure we have not really, shared so far. Sure, sir. No problem. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you, sir. Thank you, everyone, for being with us on this call today. We express our gratitude for your continuous trust and support. I hope we are able to answer all your queries satisfactorily. Please feel free to reach out to us in case you have any further questions. Thank you once again. Thank you, members of the management team. On behalf of Dr. Lal PathLabs, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.