Record Q2 masks gross margin compression; execution on pipelines key to long-term thesis

Q2 revenue 373 Cr, PAT 26.5 Cr, EBITDA 65 Cr all match claimed record levels

Delivered EBITDA margin 17.6% confirmed; +160 bps YoY expansion accurate

Vascular 58% of H1 revenue +16% YoY; structural heart ~40% growth Q2 consistent with claim

Gross margin compression 170 bps reflects product mix shift to lower-margin traded products (IVUS) and higher input/labor costs in Europe

Implies Q1 PAT ~14.5 Cr vs. Q2's 26.5 Cr; lumpy growth reflects Q1 softness, one-off tax benefit in prior year H1

Q2 gross margin 74.3% down 170 bps from prior; management attributes to product mix (traded products like IVUS) and European expansion cost inflation; ongoing risk

Structural heart ~40% growth in Q2 vs. vascular 16% YoY; TAVI and occluders up 40%; evidence of faster segment penetration

EBITDA margin +160 bps to 17.6% despite gross margin compression; employee cost fell 170 bps (28.8% to 27.1% of revenue) due to geographic mix (European headcount now in place)

FY27-28 CapEx ₹70 Cr (split: vertical integration, automation, plant maintenance); Telangana plant early-stage but will absorb capex without proportional revenue requirement

₹70 Cr guidance FY27-28; first half ~₹44 Cr spent. Split: vertical integration processes, automation, maintenance capex for legacy Sachin plant; not linear across years.

150-200 bps improvement guidance FY27-29 (baseline FY27 ~17.6%, target ~20% by FY29); vertical integration will help but won't quantify until setup complete; operating leverage and European team hiring done, future growth won't require proportional headcount.

Cannot give clear guidance; capex is toward vertical integration (TAVI), not line capacity. Expanding TAVI within Hyderabad plant generates more revenue than stent/catheter expansion.

In 70+ countries; approvals in Australia, Canada recent; U.S., China, Japan, Brazil pending for mature products; new products (Hydra TAVI, Sirority, AVDC) rolling out in approved geographies first.

Growth from both, but structural heart expected to grow faster than vascular (newer category, larger market, higher growth rates); vascular already established; structural heart margin and mix benefit expected.

Yes, supply government hospitals in India; pricing driven by competitive landscape and product merit; account-level pricing driven by competition and clinical value, not commodity.

15 days further improvement expected over 3 years (to 100-110 days); DSO already at optimum; focus on inventory reduction and better forecasting.

Very favorable tailwind; increases volume as devices can't be reused. Within product portfolio, Pipit SC and NC are reusable categories (PTCA catheters) impacted; 9%-10% industry growth potential, but won't be 15-20% jump due to existing reuse practices and PTCA's mature market share.

Europe is high-focus region; same sales and distribution force used for both vascular and structural products (already built in Europe). Specialized clinical teams for TAVI/complex products are small subset, not separate force; existing sales leverage can cross-sell.

IVUS recently acquired from Boston Scientific; trading segment ~25% of revenue, lower gross margins (SG&A common). Focus remains on own product development and vertical integration; trading is opportunistic, not a strategic focus. IVUS acquired for market share but not a margin driver.

9-10% of revenue is R&D spend, all expensed (no capitalization policy). 156-person R&D team, 118 granted patents, 75 clinical studies. Not capitalizing means EBITDA reflects full R&D expense.

Sirority commercialized in India (ongoing ramp); TAVI 2.0 expected Q3-Q4 FY27; AVDC delivery platform undergoing clinical and regulatory phases. Next-gen Hydra valve scheduled for very soon launch.

H1 typically ~48% of annual revenue; H2 ~52% (slight uptick). Usually in H1 we see ~48%, H2 ~52%; this varies quarter-to-quarter by bulk purchases.

Anchored on Q2 delivery of 24.7% growth; mid-teens is conservative vs. Q2 run-rate; structural heart +40% expected to continue

FY27 target ~18.5-18.7% (from Q2 base of 17.6%); FY28-29 continued improvement to ~20%. Driven by operating leverage (European team now in place, no proportional headcount growth), efficiency, and gross margin stabilization (no further major product mix shift expected)

Vertical integration (TAVI processes), automation, maintenance capex at legacy Sachin plant. Telangana plant capex-efficient due to pre-existing asset base

Gross margin contracted 170 bps to 74.3% in Q2 (vs. 76% prior). ~150 bps from product mix (IVUS trading, new lower-margin products), ~20 bps from input cost inflation in Europe and labor cost increases.

H1 FY27 PAT grew only 7.5% to ₹41 Cr vs. Q2's 26.6% to ₹26.5 Cr, implying Q1 PAT ~₹14.5 Cr (down YoY). Management attributes to prior-year one-off tax benefit (₹8.7 Cr), but even excluding, H1 would show ~39% growth—still lumpy.

Multiple new launches in pipeline: Sirority (ramping), TAVI 2.0 (Q3-Q4 FY27), AVDC delivery system (regulatory phase), next-gen Hydra valve (very soon). Simultaneous launches create execution and market adoption risk if not managed effectively.

40% of revenue is international (ROW + India); mid-teens constant currency growth guidance implies reported growth vulnerable to INR strength. Q2 saw 16% constant currency growth, with forex tailwind; not sustainable.

IVUS acquisition from Boston Scientific (~25% of revenue); trading business carries lower gross margins than own products. Integration risk and margin accretion uncertain.