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Star Imaging and Path Lab Limited FY26: Margins expand as B2C grows and cash flows turn strong

Star Imaging and Path Lab Limited closed FY26 with a mixed topline but a stronger profit and cash profile. Revenue from operations rose to INR 88.5 crore, up 6% year on year. EBITDA increased to INR 33.2 crore, up 16% to 17%, with EBITDA margin expanding to 37.5% from about 34% in FY25. Profit after tax (PAT) stood at INR 19.3 crore, up 21%, translating into PAT margin of about 21.8%.

The year’s performance was shaped by two parallel trends: stronger operating leverage and a better mix, alongside slower execution due to regulatory approvals. On the earnings call, management said regulatory changes and longer approval timelines at PNDT and AERB delayed a couple of projects, impacting the pace of growth. Despite this, the company reported a sharp improvement in operating cash flow to about INR 23.4 crore versus negative in FY25.

Multi-channel mix: B2C and B2B grow, B2G stays stable

Star operates across three routes to market. B2G comes through government public-private partnership (PPP) contracts. B2C is driven by retail diagnostic centres, and B2B is built through private-hospital partnerships.

In FY26, B2C was the strongest contributor to growth, rising 18% to INR 33.0 crore. B2B increased 10% to INR 8.1 crore. B2G, the largest stream, remained broadly stable at INR 47.3 crore, down 1% year on year. As a result, the revenue contribution shifted slightly towards retail. B2G’s share moved to 54% in FY26 from 57% in FY25, while B2C increased to 37% from 34%.

The company also noted a classification correction where a business previously classified under B2C was reclassified under B2B in the current presentation.

Financial summary

Note: FY25 PAT differs marginally between standalone (15.9) and consolidated (16.0). FY26 values are the same in both.

Service portfolio: Radiology dominates FY26 revenue

The presentation highlights that the business remains heavily radiology-led. In FY26, radiology revenue was INR 73.6 crore, while pathology contributed INR 12.3 crore. Cardiology and neurology were smaller at INR 2.2 crore and INR 0.4 crore respectively, while urology and other tests contributed INR 0.1 crore.

On a percentage basis, the service-wise mix in FY26 was shown as cardiology 83.2%, neurology 2.9%, and pathology 13.9%. However, the absolute revenue table indicates radiology is the largest revenue stream. Investors should therefore rely on the absolute revenue table for service line sizing.

Operationally, the company reported conducting 7.1 lakh tests in FY26 and operating 24 diagnostic centres with a team of 236.

Geographic footprint: Delhi and Uttar Pradesh drive scale

The company operates in Delhi, Uttar Pradesh and Nashik (Maharashtra). In FY26, Delhi contributed INR 42.4 crore through 5 centres. Uttar Pradesh delivered INR 43.0 crore across 18 centres, supported by PPP-based radiology services. Nashik contributed INR 3.2 crore through a royalty-based B2G model.

Cash flow and balance sheet: IPO proceeds and collections improve liquidity

A key development in FY26 was the strengthening of liquidity. Standalone cash and cash equivalents increased to INR 51.5 crore from INR 5.1 crore in FY25. The cash flow statement indicates INR 49.7 crore proceeds from issue of shares, alongside net debt repayment of about INR 12.1 crore.

Trade receivables stood at INR 49.9 crore at FY26 year-end, broadly similar to FY25. Management acknowledged the B2G receivable cycle is longer due to government payment processes. On the call, the CFO cited a payment cycle of around six months and said the company is focused on improving billing conversion and accelerating collections.

Management also stated total debt was about INR 20.6 crore and that the company had a net cash position of about INR 31 crore as of March 2026. It added that a portion of IPO proceeds is earmarked for repayment of certain borrowings, which should reduce financing costs.

Growth plan: new centres, upgrades, and hospital tie-ups

The company’s strategy centers on expanding within existing geographies while building higher-end imaging capability. During FY26, the Vikaspuri centre was expanded and upgraded with MRI and CT installed. The Tilak Nagar centre was upgraded with a 640-slice CT scan.

A major B2C step is the planned Dwarka centre in Delhi. Management said the location is finalized and project work has started, and the centre is expected to be operational by H1 FY27. On the call, management indicated the Dwarka centre could initially generate INR 5 to 6 crore annual revenue and expects break-even in around 12 months, given the higher investment.

The company is also scaling B2B partnerships. The presentation stated the B2B hospital tie-up network expanded by 40 to 45 additional hospitals, taking the total to over 100 tie-ups.

Another growth lever is equipment installations at partner hospitals. The company reported a tie-up with RG Hospital where a CT machine was installed and commercialized, and stated that four more tie-ups are coming up with RG Stone. Management described these as smaller projects of about INR 2 crore capex each, expected to break even faster.

Capex and return expectations

Management guided FY27 capex of around INR 20 to 25 crore, largely for equipment purchase and construction. It also discussed unit economics: smaller centres generally break even within six to eight months depending on investment size. For the Dwarka centre, management expects a longer break-even of around 12 months, and indicated a project payback period of about two-and-a-half to three years for new centres.

Outlook and guidance: 25% to 30% growth target after regulatory delays

On the call, management guided for 25% to 30% year-on-year growth in FY27 and said it expects this pace to be consistent for the next two to three years. It also indicated a FY28 revenue target of around INR 110 to 120 crore.

On profitability, management stated the FY26 EBITDA margin level is sustainable and indicated PAT margins around 22% to 23% going forward.

The company also commented on AI in radiology, stating that AI is currently nascent and not replacing radiologists, though it can help improve workflow, with final sign-off still done by a radiologist.

Key investor takeaways

Star Imaging’s FY26 highlights were margin expansion and a sharp turnaround in operating cash flow, even as revenue growth stayed modest. The segment mix continues to be B2G-heavy, but B2C is gaining share and remains management’s stated focus because B2G expansion depends on tender availability.

The near-term execution will likely hinge on two factors explicitly acknowledged by management: smoother regulatory approvals for new centres and equipment installations, and continued improvement in collections from government clients. If these move in line with management commentary, the guided 25% to 30% growth and stable margins will be the key benchmarks to track through FY27.

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