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Systematix Research Report
Krsnaa Diagnostics Ltd.’s Q1 FY25 revenue (Rs 1,702 million) and Ebitda (Rs. 427 million) were below expectations. Revenue was up 22% YoY and 2.4% QoQ. The company has also softened its growth guidance to 25% for the year versus 30% earlier.
The court decision regarding the Rajasthan project is still awaited and a favorable ruling can meaningfully alter the growth opportunity going forward. The capex during the year is expected to be around Rs 1,400 million (~20% of sales versus 25% of sales in FY23).
Revenue run rate should strengthen in coming quarters as centers in Maharashtra and Madhya Pradesh operationalize, projects in Assam and Orissa continue to show positive traction and their B2C venture contributes meaningfully to its top-line and margins.
The older centers of Krsnaa operate at a ~38% margin compared to the newer centers (~12-14%). The new centers have a mix of radiology and pathology revenues as compared to the old centers which primarily focus on the radiology services.
As these new centers start to mature in the coming quarters, Krsnaa will see its margin profile improve. While new centers will keep coming up every quarter, its proportion in the overall mix should reduce as the topline scales up. We maintain our target PE multiple of 22 times FY26E earnings per share and recommend a Buy on Krsnaa at current market price with a target price of Rs 841.
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Also Read: Vijaya Diagnostics Q1 Results Review - Core Growth Unlikely To Accelerate Further: Yes Securities
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