Oil India's Q4 FY25 standalone Ebitda at Rs 19.8 billion (-15% YoY, -7% QoQ) and PAT at Rs 15.9 billion (-21.6% YoY, +30.3% QoQ) came in below estimates due to lower-than-expected volume and higher opex. Medplus 's Ebitda grew 29% YoY despite muted sales (pharmacy +1% YoY, diagnostics +21% YoY) and higher staff costs (+21%), led by 398 bps YoY expansion in gross margin (driven by increased private label share to 23.3%) and flat selling general and administrative.
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HDFC Securities Institutional Equities
Oil India -Higher opex impacts profitability
Our Buy recommendation on Oil India with a revised target price of Rs 490 is premised on oil production growth at 10% CAGR and gas production growth at 21% CAGR over FY25-27E. Q4 FY25 standalone Ebitda at Rs 19.8 billion (-15% YoY, -7% QoQ) and PAT at Rs 15.9 billion (-21.6% YoY, +30.3% QoQ) came in below our estimates due to lower-than-expected volume and higher opex. Oil and gas production stood at 1.65mmtoe (-0.2%YoY, -2.8% QoQ).
Medplus Health Services - Chasing private label share, margins over growth
Medplus Health Services Ltd.'s Ebitda grew 29% YoY despite muted sales (pharmacy +1% YoY, diagnostics +21% YoY) and higher staff costs (+21%), led by 398 bps YoY expansion in gross margin (driven by increased private label share to 23.3%) and flat selling general and administrative. Operating profit margin came in at 5.3% (+178 bps YoY), with pharmacy margin at 5.2% (+115 bps YoY).
Medplus has outlined following plans:
add ~600 stores in FY26;
achieve high-single to low-double-digit growth in matured stores;
increase private label share by 1% over the next few quarters (Q1 FY26 to remain flattish), aiding gross margin expansion;
improve gross margin to 25.5-25.8% in FY26 (vs 24.4% in FY25)–driven by 24.5-24.7% gross margin from pharmacy and ~1% from diagnostic business;
improve Ebitda margin with limited impact from new stores (as over 78% of stores are matured).
While we assume sales growth to take a hit due to Rx-to-private label cannibalization (leading to a 3- 4% revenue cut for FY26/27E), margin improvement is expected to sustain, led by a better mix and steady growth in matured stores (2+ years; ~10-11% margin), higher share of private label (Medplus-brand), and supply chain efficiencies.
Baking in management's guidance, we have marginally revised FY26/27E Ebitda estimates and raised the valuation multiple to 19x on the back of visible margin gains, strong operating cash flow/free cash flow generation (Rs 5.4 billion/Rs 2.4 billion in FY25), and improving return ratios. We revise our target price to Rs 1,110 (19x FY27E EV/ E, implying 31x pre-INDAS EV/E). Buy stays.
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