01 — Opening Hook
The Acquired Growth Magician
Picture a diagnostics company that walked into earnings and announced Q3 revenue of ₹50 crores, up 98% YoY, and everyone cheered. Then you realize ₹24 crores of that came from a Belgian acquisition (Coris) they just bought in August, and ₹8.8 crores was a one-time government contract for HAT (sleeping sickness) that expires in two years. So the core domestic business? Growing at maybe 10-15%, which is… fine. Not sexy. Not even interesting without the acquisition accounting magic.
The management is honest about this. They admit margins are under pressure from competition, the diagnostics industry has only 7-8% CAGR (excluding Dengue/Flu spikes), and they’ve planted a flag in next-gen technologies (dPCR, NGS) that aren’t monetizing yet. But they’re also betting the house on FDA approvals for Coris in the US market, which could take 3-4 years. Read on. This one’s a patience play wrapped in a growth facade.
The Plot: One-time revenue from a dying tropical disease contract + acquisition accounting + seasonal Dengue spikes = Earnings that look better than they actually are. Management knows. They told you. Will you listen?
02 — At a Glance
The Quarterly Numbers Play
- Q3 Revenue: ₹50.4 Cr (+98% YoY) | But ₹24 Cr from Coris acquisition, ₹8.8 Cr from HAT one-off. Strip those: +15% organic.
- Q3 Operating Margin: 43.6% | The diagnostics business still prints cash. But watch pricing pressure intensify.
- 9M Revenue: ₹99.1 Cr (vs ₹64.8 Cr last year) | Growth masks composition. Coris: ₹24 Cr. HAT contract: ₹8.8 Cr. Core: ~₹67 Cr (+10.2% YoY).
- 3B Domestic Growth (Ex-Coris): +11.8% YoY | With seasonal Dengue spike removed: +20%. Without the spike? Back to baseline 10-12%.
- EPS (Q3): ₹25.32 | TTM: ₹66.9. Stock P/E: 18.2x. Not expensive if NGS and Coris scale. Expensive if they don’t.
The Honest Truth: This quarter screams growth but whispers stagnation. Strip acquisitions and one-off contracts, and the core business is growing at industry rates. Problem: Management now has ₹190 crore cash and is hunting for more M&A to sustain the illusion.
03 — Management’s Key Commentary
What They Said. What They Really Meant.
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