HSIE Institutional Report: Medplus Health Services

Medplus Health Services Focus on Growth, Private Label, and Steady Margin

EBITDA^ grew 25% YoY, led by 16% sales growth (pharmacy +16% YoY, diagnostics +19% YoY) and an expanded gross margin (+113 bps YoY; private label share to 22.2%), which offset higher costs. OPM* came in at 5.4% (+24 bps YoY), with pharmacy margin at 5.2% (+13 bps YoY) and diagnostic margin at 15.5%. Medplus retains its guidance to add 600 stores in FY26E (400 added in 9M) and FY27E. It expects (1) overall private label sales continue to improve (gradual for pharma and faster for non-pharma) over the next few quarters (on GMV every 1% increase, implying 0.5% on net sales), given stickiness in the business (~90% repeat purchase due to favourable discounts), aiding steady GM expansion; (2) pick-up in growth from mature stores largely led by low base, better product availability (operationalization of new warehouses) and change in incentive structure (focus on both branded and private label); and (3) margins to remain steady with increase in private label share, which may be offset by new store additions. We see a pick-up in sales growth, led by a balanced approach to mature store growth, new store additions, and private label expansion. Moreover, margins are expected to see gradual improvement, led by a better mix, steady growth in matured stores (2+ years; ~10–11% margin), increased private label share, and supply chain efficiencies. Factoring in Q3, we have raised EBITDA for FY26/27E by 3% and revised TP to INR 1,060 (17x Q3FY28E EV/EBITDA, implying 26x pre-INDAS EV/EBITDA). BUY stays.

Medplus Health Services Q3 Highlights

Sales grew 16% YoY to INR 18.06bn, with 16% growth in retail pharmacy (~INR 17.71 bn) and 19% growth in diagnostics (INR 327mn). GM improved to 26.2% (+113 bps YoY), which was offset by higher costs (staff/ SG&A +19/18%) led to EBITDA^ of INR 1.65 bn (+25% YoY). Operating profit was INR 968mn (+21% YoY) and OPM at 5.4% (+24 bps). Pharmacy margin was 5.2% (+13 bps), diagnostic margin 15.5%, and PAT INR 648mn (+41%).

Medplus Health Services Q3 Operating Metrics

A net 182 stores were added (gross addition of 228), taking the total to 5,112, as of Dec’25. Mature store growth was at 10.5% YoY (vs. 4.4% in Q3FY25), with operating margin at 12.4% (vs. 11%) and RoCE at 77.7% (vs. 61.7%). Private label sales as a percentage of total sales rose to 22.2% (vs. 19.6% in Q3FY25). Overall RoCE was ~24.2% (up from 18.7%). In Q3FY26, OCF stood at INR 905mn while FCF was negative at INR 93mn.

Key takeaways from con call

Gross margin break-up: Private label pharma at 65-70%, private label non-pharma 25-30%, branded pharma at 13-14%, and branded non-pharma at 13-14%. Private label GMV share was at ~18.9% (net at 11.6%). As of Dec-25, diagnostics had 180k active plans, covering 368k lives; with a renewal rate of 23%. It has operationalized 60-70% of planned warehouses and manpower recruitment completed; balance warehouses to be commissioned soon; the company does not see a major increase in costs.

Quarterly Financial Summary

Source: HSIE Research (HSIE Results Daily – 03 Feb 26 – HSIE-202602030656002630379.pdf)

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