Chandan Healthcare: Pharmacy exit, 50%+ growth FY27

Stock snapshot and what changed

Chandan Healthcare Limited (NSE: CHANDAN) traded at ₹226.25, up ₹6.10 or 2.77%, amid updates around its strategy shift toward diagnostics. The company has communicated a plan to divest its shareholding in Chandan Pharmacy Limited and focus capital and management attention on diagnostics, which it describes as a higher-margin business. Alongside the divestment, management commentary circulating from the Q1 FY27 concall pointed to an accelerated rollout in centres and franchise additions. The combination of a cleaner structure and a larger diagnostics footprint is positioned as the key driver of the next phase of growth. The company also outlined margin targets and a timeline for bringing multiple projects online within FY27.

Divestment: sale of Chandan Pharmacy stake

Chandan Healthcare informed the exchange that it will divest its entire 53.56% shareholding in Chandan Pharmacy Limited (CPL) to Chandan Hospital Limited. The consideration disclosed was approximately ₹16.77 crore, with one exchange-linked post specifying ₹16.77 crore (₹16,77,10,554.24). The company communication also stated the consideration is based on CPL’s independently determined total valuation of about ₹31.31 crore. Upon completion of the transaction, CPL will cease to be a subsidiary of Chandan Healthcare.

Management described the pharmacy business as a low-margin trading operation and said the divestment is meant to sharpen focus on diagnostics. It also said the transaction will simplify the business structure and free up capital and bandwidth for higher-return diagnostics assets. Another key clarification shared in the management commentary was that pharmacy revenue will stop accruing to the listed company from 1 September.

Why management is exiting pharmacy

Management commentary accompanying the decision indicated that pharmacy has limited synergy with diagnostics. The stated plan is to redeploy resources toward diagnostic network expansion and capacity building. In the concall highlights circulating on X, the pharmacy exit is framed as the sharpest strategic decision during the quarter, primarily because it changes the business mix and removes a low-margin segment.

There is a data mismatch in public commentary around the stake size. Social media concall notes referenced a “full divestment of 83.56% stake,” while the exchange communication and company announcement referenced divestment of the company’s entire 53.56% shareholding. The company’s exchange-stated number is 53.56%, and the key operational point remains that CPL is expected to cease being a subsidiary after completion.

Growth outlook: 50%+ topline target for diagnostics

Concall highlights indicated management expects more than 50% year-on-year top-line growth for the next three years on the “pure diagnostics” business after the pharmacy divestment. This compares with an earlier guidance of 30% to 35% consolidated growth that included the pharmacy business. The same notes referenced standalone diagnostics as the growth engine, citing a base of about ₹156 crore in FY26 for standalone diagnostics.

Management also indicated it expects quarter-to-quarter profit after tax (PAT) growth. While the company did not provide a quarterly PAT number in the provided material, it framed the PAT progression as a function of scale-up and operating leverage in diagnostics.

Margin targets: moving toward 40% EBITDA

Margin improvement was a central theme in the concall highlights. Management said it aims to reach about 40% EBITDA margins in a few months. The circulated notes put standalone diagnostics EBITDA margin at 36.57% in Q1 and consolidated EBITDA margin at 25.51%. The difference underscores why the company is emphasising a diagnostics-only mix, which it believes can sustain higher operating profitability.

The margin guidance was linked to a higher share of B2C and franchise-led volumes, where cash conversion and pricing are typically stronger than government-linked business. Management also discussed keeping B2G exposure capped to manage receivables.

Expansion plan: centres, franchisees, and new capabilities

Management outlined an aggressive scale-up plan for FY27. Concall highlights indicated a target of 1,000 franchisees in FY27 itself, accelerated from an earlier three-year target due to what was described as strong response. The same notes set a goal of 3,000 franchisees within two years.

The growth blueprint was presented as three pillars: “One District One Lab,” exponential franchise scaling, and digital plus preventive healthcare. Uttar Pradesh and Uttarakhand were mentioned as the initial focus for “One District One Lab” over the next two years, followed by other states. Management also pointed to online and home sample collection as already seeing strong traction.

New infrastructure pipeline and timelines

The pipeline shared in the concall highlights included eight new comprehensive diagnostic centres and more than six diagnostic centres (lab plus radiology) expected to go live in the next three to four months. Management also referenced a genome sequencing lab in Lucknow expected in about six months. Two PET-CT machines were cited, planned for Kanpur and Gorakhpur, targeted for commissioning in two to three months.

For FY27, management stated that expansion, including remaining government projects, is expected to be completed before December 2026. It also said major capex has already been incurred, with residual capex of about ₹10 crore or more, to be funded through internal accruals and debt if needed.

Network size: Q1 additions and early-August update

Management shared network numbers as of the end of Q1. The reported network stood at 327 total centres, including 23 comprehensive diagnostic centres, 18 diagnostic centres, 24 standalone labs, and 15 radiology centres, alongside 325+ franchisees. During Q1 alone, the company added 134 franchisees, one comprehensive centre, two diagnostic centres, and three standalone labs.

The concall highlights also noted that the franchise network had already reached 375+ by early August, indicating continued additions after the quarter ended.

Key numbers at a glance

Timeline and operational targets

Market impact and what investors are tracking

The core market implication is the shift in business mix. Management has positioned pharmacy as low-margin trading and diagnostics as the higher-margin core, and the margin numbers shared for Q1 in the concall highlights reflect this gap between standalone diagnostics and consolidated profitability. The divestment proceeds of ₹16.77 crore are planned to be redeployed into diagnostic expansion and capacity, which links the transaction directly to execution in FY27.

Investors are also likely to watch how the company balances volumes across B2C, B2B, and B2G. Management’s target mix of roughly 33% each, with B2G capped below 40% to manage receivables, signals an intent to improve cash flows and reduce working-capital stress. In addition, the accelerated franchise plan and the timeline to complete projects before December 2026 set measurable milestones that can be tracked through periodic disclosures.

Conclusion

Chandan Healthcare’s disclosed sale of its 53.56% stake in Chandan Pharmacy for about ₹16.77 crore marks a clear pivot toward diagnostics, supported by growth guidance of 50%+ topline expansion and a push toward higher EBITDA margins. Management has also laid out a dense FY27 execution calendar covering new centres, PET-CT installations, and a genome sequencing lab. The next key checkpoint is the stated change in revenue accrual from 1 September, followed by progress updates on centre rollouts and franchise additions through FY27.