Thyrocare Q1 Results Review - Margin Thesis Is Starting To Unfold: ICICI Securities

ICICI Securities Report

Thyrocare Technologies Ltd. has reported a strong 16.4% YoY growth in pathology segment in Q1 FY25 in otherwise a seasonally weak quarter.

The company had started restructuring of its franchisee business in May 2023 which is yielding results as sales contribution from larger franchisee is growing at a faster pace (added 600 franchises in past one year) while partnership business (excluding API and B2G) grew 41% YoY in Q1.

The newly launched bundled test package ‘Jaanch’ grew at 25% YoY. Ebitda margin expanded 140 basis points to 27.2% mainly driven by operating leverage and lower Employee Stock Ownership Plan cost. Management expects Ebitda margin in 27-30% range in FY25.

We raise FY25/26E Ebitda by ~5% each and earnings by 11-12% to factor better margins. Maintain 'Buy' with discounted cash flow based revised target price of Rs 825.

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