Vijaya Diagnostic Centre's radiology-led B2C model supports margin expansion and regional growth

Investment View

Axis Securities initiated coverage of Vijaya Diagnostic Centre Ltd on October 12, 2026, with a BUY recommendation. The broker’s thesis is based on Vijaya’s retail-focused integrated diagnostics model in South India, which combines specialised pathology and high-end radiology under one roof. Axis Securities believes this configuration supports customer stickiness, superior monetisation per patient episode and industry-leading profitability.

Integrated Diagnostics Model and Operating Strengths

Around 92 per cent of Vijaya’s revenue comes from direct consumer walk-ins. This provides pricing power and brand loyalty, while reducing dependence on referral commissions compared with B2B-oriented diagnostic chains. Preventive health check-up packages accounted for 14.8 per cent of revenue.

Pathology contributes around 63 per cent of revenue, while high-end radiology contributes around 37 per cent. The radiology offering includes 3T MRI, Digital PET-CT and 160-slice CT. In Q1 FY27, Vijaya recorded 3.7 tests per footfall and revenue per footfall of Rs 1,860, compared with Rs 750 to Rs 850 for pure pathology chains, according to Axis Securities.

Axis Securities views the radiology mix and B2C model as a key margin moat. The broker expects the growing contribution from radiology and preventive wellness packages to improve realisations.

Revenue per patient is forecast to increase at nearly 6 per cent over FY26 to FY28E, from Rs 912 in FY26 to Rs 1,024 in FY28E. Tests per footfall are forecast to rise from 3.62 in FY26 to 4.04 in FY28E.

Financial Performance and Forecasts

Actual FY26 consolidated net sales were Rs 814 crore, EBITDA was Rs 337 crore and net profit was Rs 173 crore. Axis Securities estimates net sales of Rs 936 crore in FY27E and Rs 1,100 crore in FY28E. EBITDA is projected at Rs 400 crore and Rs 487 crore, while net profit is projected at Rs 240 crore and Rs 318 crore, respectively.

Vijaya’s EBITDA margin was about 41 per cent in FY26. Axis Securities forecasts margins of 43 per cent in FY27E and 44 per cent in FY28E.

The broker expects footfalls to increase from 4.7 million in FY26 to 5.5 million in FY28E, tests performed to rise from 16.9 million to 22.2 million, and diagnostic centres to expand from 162 to 190.

Expansion and Capital Allocation

Management has guided for FY27 capital expenditure of Rs 190 crore to Rs 195 crore to add nine hubs and 10 spokes. Axis Securities notes that zero long-term debt, surplus cash exceeding Rs 330 crore as of Q1 FY27 and strong operating cash flow conversion should enable Vijaya to self-fund this expansion. Pre-cash ROCE exceeds 30 per cent.

The Hyderabad cluster contributes 67 per cent to 68 per cent of revenue and has delivered 17 per cent to 20 per cent organic growth. Mature spokes have generated 16 per cent year-on-year growth.

Expansion priorities include a Rs 30 crore mega-hub in JP Nagar, Bengaluru, five regional hubs in West Bengal and scaling PH Diagnostics in Pune.

Valuation

Axis Securities values Vijaya at 56x FY28E P/E and sets a target price of Rs 1,730. This implies 20 per cent upside from the October 9, 2026 CMP of Rs 1,437.

Key Risks

• Intense competition and price pressure.
• Reputational damage arising from inaccurate or delayed test results.
• Dependence on reference laboratories, equipment suppliers and reagent suppliers.
• Regulatory changes or controls on test prices.
• Regional concentration.
• Cybersecurity and patient-data privacy threats.