Vijaya Diagnostics Q4 Results Review - Renewed Push For Growth; Upgrade To Add: Yes Securities

Yes Securities Report

Vijaya Diagnostics Ltd.'s management appeared upbeat on centre addition and indicated opening of ~10 hubs in two years at a capex of Rs 2-2.2 billion which appears an increase over previously outlined expansion. Pune would be the focus area as company attempts to create Hyderabad type of network with addition of five hubs over next two years.

Q4 footfall growth excluding PH at ~15% is an affirmation of healthy underlying trend in volumes especially in core Hyderabad market which is growing in early double digit.

Capex of Rs 1-1.1 billion in FY25 and FY26 each is well within the estimated Rs 1.8-1.9 billion in operating cash thrown in each of those two years leaving room for further expansion.

We reckon capex has been increased by Rs 400 million over next two years with revenue impact seen from FY26 onwards; accordingly, we have raised FY26 volume growth by ~3% ex-PH along with Rs 700 million PH revenues (currently Rs 450 million annualised) leading to a raise in EPS estimate by 14%.

Anticipating a faster growth ambition, we raise target PE multiple to 40 times (slight premium to Dr. Lal Pathlabs Ltd. /Metropolis) and upgrade to Add with revised target price Rs 800 (earlier Rs 610).

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