Shalby Limited Q2 FY26: Strategic Growth and Diversification

Shalby Limited, a prominent name in the Indian healthcare sector, has unveiled its financial and operational performance for the second quarter of fiscal year 2026 (Q2 FY26), showcasing a period of strategic growth and diversification. The company reported a robust consolidated revenue of INR 289.9 crore, marking a commendable 5.5% year-on-year (YoY) increase from INR 274.7 crore in Q2 FY25. This growth was accompanied by a significant improvement in profitability, with consolidated EBITDA rising by 15.8% YoY to INR 46.1 crore, up from INR 39.8 crore in the previous year. The EBITDA margin also expanded to 15.9% from 14.5% YoY, reflecting enhanced operational efficiency. The bottom line saw an even more impressive surge, with consolidated Profit Before Tax (PBT) growing 39.2% YoY to INR 19.1 crore and consolidated Profit After Tax (PAT) skyrocketing over 200% YoY to INR 7.3 crore. This strong quarterly performance underscores Shalby's resilience and strategic initiatives in a dynamic healthcare landscape.

The company's revenue streams are well-diversified, with Shalby Hospitals, Pharma & Franchise contributing the lion's share at INR 234.5 crore (80.9% of total revenue). The Shalby MedTech (Implant Business) segment demonstrated significant traction, generating INR 33.7 crore (11.6% of total revenue), driven by a 16.4% YoY increase in implant components sold. Shalby International (PK Healthcare, Delhi-NCR) contributed INR 19.9 crore (6.9%), while other segments accounted for INR 1.8 crore (0.6%). This segment-wise breakdown highlights the company's balanced approach to growth, leveraging its core hospital business while expanding into high-potential areas like medical implants. However, the half-year consolidated performance presented a mixed picture, with PBT declining 5.4% and PAT falling 12.5% YoY, indicating some pressures on overall profitability despite strong quarterly gains.

Management's strategic focus remains on enhancing operational efficiencies and expanding its footprint. The Shalby International Hospital in Gurgaon, which experienced a year-on-year revenue decline, EBITDA loss, and a low occupancy rate of 21% in Q2 FY26, is undergoing a significant turnaround. Initiatives include rebranding, leadership restructuring, and onboarding new clinical talent, with expectations of achieving optimum performance within two quarters and positive EBITDA by next year. This proactive approach demonstrates management's commitment to addressing underperforming assets and ensuring their long-term viability.

In the MedTech segment, despite the standalone EBITDA being negative in Q2 FY26 due to dollar fluctuations and product mix, the company is implementing robust strategies. These include aiming to reduce Cost of Goods Sold (COGS) by 15-20% through supply chain excellence and multiple vendors, alongside focusing on inventory improvements and capacity enhancements in Q3 and Q4 FY26. The introduction of robots in the product portfolio, US FDA-approved implants, and the establishment of R&D offices in India and the USA underscore Shalby's commitment to innovation and technological advancement. The company's expansion plans for the implant business into new geographies like the Middle East, East Africa, and CIS countries further highlight its ambition to become a global player.

Shalby's prudent capital allocation strategy aims to double its Return on Capital Employed (ROCE) in the coming year through operational leverage and an asset-light franchise model. The company's balance sheet remains strong, with a low gearing ratio of 0.36x and net debt of INR 362.2 crore, providing a solid foundation for future growth. The diversification of its hospital business beyond orthopedics into cardiac, oncology, neuroscience, critical care, general medicine, and transplants is a testament to its strategic foresight, reducing reliance on a single specialty and tapping into broader healthcare needs. Shalby Academy continues to nurture talent, with over 385 students registered in various disciplines, supporting the healthcare ecosystem. Overall, Shalby Limited's Q2 FY26 performance reflects a company actively managing challenges, driving innovation, and strategically positioning itself for sustained growth and enhanced shareholder value.