Chandan Healthcare’s Q1 FY27: Diagnostics-First, Franchise-Fast

Chandan Healthcare Limited began FY27 with a quarter that combined profit expansion with an unusually aggressive network buildout. In Q1 FY27, consolidated total income was INR82.26 crore, up 19.62% year on year. EBITDA rose faster at INR20.98 crore, up 42.27%, while PAT increased to INR7.50 crore, up 29.51%.

The quarter also marked a strategic pivot. Management announced the divestment of the company’s entire 53.56% stake in Chandan Pharmacy Limited for about INR16.77 crore. Management described pharmacy as a low-margin trading business and stated that the transaction is intended to sharpen focus on higher-margin diagnostics, simplify the business structure, and redeploy capital into diagnostic expansion.

Q1 FY27 performance: margin-led growth with improving operating leverage

While consolidated revenue growth was near 20%, EBITDA growth exceeded 40%, indicating operating leverage as the network scales. The CFO also disclosed standalone diagnostics performance for the quarter: revenue of INR49.75 crore, up 35.85% year on year, and EBITDA of INR18.19 crore, up 47.36%. Standalone diagnostics EBITDA margin was reported at 36.57%.

The management commentary tied this improvement to a mix shift and expansion momentum. Management highlighted growth across segments, noting B2B growth of about 94% year on year, B2G growth of about 22%, and B2C growth of about 20% for the quarter.

Mix and model: B2C, B2B and B2G under one platform

Chandan’s investor presentation positions the company as a multi-channel diagnostics platform serving retail patients, institutional partners and government PPP contracts. In FY26, the company disclosed revenue split across B2C, B2B and B2G. This is important because each channel has different economics and working capital behaviour.

For FY26, the PPT discloses B2C at 41.5% of revenue, B2B at 26.88%, and B2G at 31.82%. Management also indicated it does not want B2G to become too dominant because of receivable cycles. In the concall, management stated B2G receivables are typically four months on average, sometimes extending further, while B2B receivables are around one to two months.

The company also disclosed its core business vertical mix in FY26, with pathology at 40.95%, radiology at 16.25%, and pharmacy at 42.80% (before divestment).

Strategy in motion: exit pharmacy, scale franchises, add high-end capabilities

The sharpest strategic decision in the quarter was the pharmacy divestment. Management stated that pharmacy has limited synergy with diagnostics and that the company wants to redeploy resources towards higher-return diagnostic assets. Management also clarified that pharmacy revenue will stop accruing to the listed company from 1 September.

The second big lever is franchise scaling. Management described the franchise format as a collection-centre model rather than capex-heavy diagnostic centres. Franchise partners reportedly invest around INR1 lakh for setup and provide an advance payment (INR25,000 to INR1 lakh) against testing. The company’s capex in this model is described as minimal, with support primarily through branding and marketing material. Management stated the revenue share varies but that the company generally aims to retain at least 50% of MRP.

Network additions also featured prominently. Management stated that during Q1 FY27 it added 134 franchise centres, alongside one comprehensive diagnostic centre, two diagnostic centres and three standalone labs. It also said the franchise count had reached about 375 within the first four months of the initiative. Management’s stated target is now 1,000 franchise centres within FY27 and 3,000 in the next two years.

Alongside the asset-light rollout, the company is adding capacity through owned infrastructure. Management said it is working on eight comprehensive diagnostic centres that are expected to become operational in the next three to four months from the call date, plus additional diagnostic centres.

On the high-end side, the company is building a genome sequencing laboratory in Lucknow. The PPT describes a genomics offering covering tests such as whole exome sequencing and whole genome sequencing, while management stated on the call that the genomics lab is slated to open in the next six months. Management also guided that two PET scan facilities at Kanpur and Gorakhpur are expected to start in the next two to three months.

What to track from here

Chandan’s near-term narrative is built around three measurable drivers: rapid franchise onboarding, commissioning of new owned centres, and the shift to a diagnostics-only structure after the pharmacy divestment. If the franchise model scales with quality and turnaround time intact, it can create a high-throughput funnel into the company’s labs with limited incremental capex.

At the same time, investors will need to track execution risks that management itself indirectly acknowledged. Government PPP expansion depends on space handover and administrative readiness. Receivable cycles in B2G remain longer than retail and corporate business. And at the pace of onboarding described, maintaining quality systems and consistent service standards across geographies becomes a key operating variable.

The quarter ended with management providing a clear directional message: aggressive expansion, tighter focus on diagnostics, and an expectation of more than 50% year-on-year top-line growth for the next three years. The next few quarters will determine how quickly the new centres and the rapidly expanding franchise base convert into sustained reported revenue and cash generation.