MEDPLUS Q3 FY26 earnings call.
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Revenue
₹1,806 Cr
verified against source
Revenue YoY
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EBITDA
Pending
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What the record says.
MedPlus delivered a strong Q3 FY26 with notable operational execution. The company expanded its store network to 5,112 stores (net addition of 182 in Q3, 400 YTD) while achieving 10.5% SSSG for mature stores—driven by revised incentive structures incorporating total sales targets and improved inventory availability from new warehouses. Private label pharma now constitutes 18.9% of pharma sales versus 7.9% pre-launch, while private label FMCG continues gaining traction with new categories like food and wellness. Diagnostics posted strong growth with EBITDA margin at 15.5%, and active subscription plans grew to 1.8 lakh covering 3.68 lakh lives. Gross margins held stable despite mix shifts, supported by 65-70% gross margins on private label pharma versus 13-14% on branded. The company guided for 600 store additions in FY26 but declined to provide FY27 targets or specific margin guidance, though management expressed confidence in reaching 6% pharmacy operating margins over time. Key risks include labor code implementation costs (Rs 7 crore one-time charge) and pending regulatory clarity on wage notifications.
Colored figures show movement against the previous available record.
Guidance to track
- Company expects to add 600 new stores during FY26, building on the 400 net additions achieved through Q3.
- Management indicated FY27 store additions should be at least similar to FY26 levels (~600 stores), pending formal AOP completion.
- Gross margins expected to remain at current levels in Q4, supported by private label mix and offset by franchisee sales at lower margins.
- Management expressed confidence in reaching 6% pharmacy operating margins over time, driven by private label mix expansion (especially non-pharma FMCG at 25-30% gross margins) and operating leverage.
Risks flagged
- New wage code implementation resulted in Rs 7 crore one-time charge. Management noted that pending notifications and rules are not yet final, with clarity expected by end of March/April. This could result in additional provisions.
- Net realization on private label pharma has declined from ~83% to ~45-43% of MRP. Management acknowledged this needs to play out for a couple more quarters before making like-to-like comparisons, suggesting potential margin pressure from discount normalization.
- Net working capital improved to 53 days from 63 days YoY, partly due to 15-18 lakh inventory per store not on books for franchisees and disciplined inventory management. Benefits may plateau as franchisee model scales.
- Franchisee initiative is still evolving with multiple models and partners being tested. Management declined to provide quantitative disclosures on franchisee store counts, making it difficult to assess execution quality and financial impact.
Key quotes
- We have tweaked the incentive structure so as to consider the total sales growth at our store level which is paying off dividends. We are clearly seeing the improvement in the branded pharma uptake as well as the uptick in the private label non-farma.
- On the non-farma side, if the experience is good, the product is good, the availability is good and the quality is good, there is no cap per se in terms of how far this could go.
- Only 20% of our sales now come from general goods and most of our competitors are in the range of around 30 to 40 even 50%. Even a slight jump in the general good side and most of it coming from private label will definitely increase the top line and also will improve the profitability.
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