Krsnaa Diagnostics is shifting focus toward its retail diagnostics segment, aiming for it to contribute 25-30% of total revenue in the medium term. While the company maintains its steady Public-Private Partnership (PPP) model, the retail push is intended to improve overall profit margins. Investors are tracking how quickly the company can normalize its 150-day receivable cycle following payment platform changes.
Krsnaa Diagnostics is working to balance its established public healthcare business with a faster-growing retail diagnostic network. The company, known for its extensive network of diagnostic centers under Public-Private Partnership (PPP) contracts with state governments, is now investing heavily to grow its Business-to-Consumer (B2C) footprint. This retail segment saw revenue reach ₹60 crore in FY26, representing about 8% of the company's total income.
Scaling Retail and Public Projects
Management has stated that the retail division is currently in an investment phase, with expectations for the segment to reach EBITDA break-even by FY27. By using an asset-light model, the company has expanded to over 3,500 touchpoints. At the same time, the PPP business remains the core of the company’s revenue visibility. New projects, including a major expansion in Rajasthan and the setup of 17 MRI centers in Maharashtra, are expected to support volume growth. The Rajasthan project is scheduled to begin revenue generation in the first quarter of FY27, with momentum building throughout the year.
Financial Performance and Working Capital
In FY26, Krsnaa Diagnostics reported an 8% increase in revenue and a 31% rise in profit after tax, maintaining EBITDA margins near 28%. Despite this growth, the company has faced challenges with cash flow. The move to the government's SNA-SPARSH payment platform caused the collection period for receivables—the time it takes for the company to receive payment for services rendered—to stretch to approximately 150 days. Management is working to bring this cycle down to roughly 100 days. Investors will likely watch whether the company can successfully shorten this payment window, as extended cycles tie up cash that could otherwise be used for expansion.
Strategic Shift and Risks
The transition to a higher retail mix is designed to give the company more pricing power and better profit margins compared to the high-volume but price-regulated PPP contracts. However, this strategy comes with its own uncertainties. The success of the retail expansion depends on achieving scale in a highly competitive diagnostic market. Additionally, the company faces the risk of project delays or cost increases, particularly as new centers like those in Rajasthan require upfront spending on manpower and equipment. If the retail segment grows slower than expected or if the receivable cycle remains elevated for longer than anticipated, the company’s financial flexibility could be impacted. The progress of these new government contracts and the timeline for retail profitability will be essential monitorables in the coming quarters.