Reduce Vijaya Diagnostic Centre: target of Rs 950: ICICI Securities

ICICI Securities's research report on Vijaya Diagnostic Centre

Vijaya Diagnostic’s (Vijaya) Q2FY26 performance was weaker than our expectations due to a slowdown in core markets of Hyderabad (+3% YoY). Pathology revenue grew at a modest pace of 5.1% YoY on a high base of last year and a slowdown in footfalls due to early festive season. Company plans to add two hubs in West Bengal in Q3FY26 and 4-5 hubs in Bangalore by FY27. Management anticipates a recovery in Q3FY26 and targets 15% revenue CAGR for next couple of years. New hubs are expected to have a marginal 50bps impact on EBITDA margin which may aid in surpassing earlier guidance of 38-38.5% for FY26 (H1FY26 margin at ~40%) and management anticipates ~40% margin in FY27. We trim FY26/27E EBITDA by ~7%/9% to factor in the slowdown in revenue. Maintain REDUCE with a lower TP of INR 950.

Outlook

We maintain our REDUCE rating with DCF-based revised target price of INR 950 (INR 1,000 earlier), implying 50.4x FY27E EPS and 25.9x FY27E EV/EBITDA.