Vijaya Diagnostic Centre Ltd Management Discussions

Economic Overview Global Economy1

The global economy demonstrated resilience in CY 2025 despite persistent trade tensions and geopolitical uncertainties. Global GDP grew 3.4%, driven by steady consumption, continued investments in technology and digital infrastructure and policy support across major economies. Global inflation moderated to 4.1% in CY 2025 from 5.8% in CY 2024, reflecting easing supply chain disruptions, lower commodity prices and the cumulative impact of tighter monetary policies.

Advanced economies expanded by 1.9%, led by the United States. Emerging market and developing economies (EMDEs) grew by 4.4%, supported by relatively stronger domestic demand and government expenditure. However, geopolitical developments and changing trade dynamics continued to weigh on supply chains, commodity markets and industrial activity.

Outlook

Global economic growth is projected to moderate to 3.1% in CY 2026 before improving marginally to 3.2% in CY 2027. Advanced economies are expected to grow at 1.8% in CY 2026 and 1.7% during CY 2027.EMDEs are projected to expand by 3.9% and 4.2% respectively in themes consecutive years.

Global inflation is expected to remain contained, with headline inflation projected at 4.4% in CY 2026 before easing to 3.7% in CY 2027. Technological advancements, stronger trade partnerships and more resilient supply chains are expected to support economic activity. However, geopolitical risks, evolving trade policies and financial market volatility may continue to influence global growth.

Indian Economy3

India remained among the fastest-growing major economies globally. Real GDP grew by an estimated 7.6% in FY 2026, compared with 7.1% in FY 2025. Growth was supported by strong domestic consumption, sustained public capital expenditure, strong services sector activity and improved industrial output. Government initiatives, including Production Linked Incentive (PLI) schemes, infrastructure investments and policy reforms continued to strengthen economic momentum and long-term competitiveness.

Inflation remained contained during the year, supporting household spending across urban and rural markets. India further strengthened its integration with global value chains through trade partnerships and supply chain diversification. These developments reinforced its position as an attractive investment destination.

Favourable demographics, rising disposable incomes, increasing urbanisation and greater healthcare awareness continue to support demand for healthcare and diagnostic services.

Outlook

India is expected to remain among the fastest-growing major economies, with real GDP growth projected at 6.6% in FY 20 274. Continued infrastructure investments, improving private consumption and ongoing policy reforms are expected to support economic activity.

Structural reforms aimed at improving ease of doing business, expanding manufacturing capacity and strengthening trade linkages are expected to enhance long-term growth prospects. Inflation is projected to remain at a manageable level of 4.6% in FY 2027, supporting macroeconomic stability.

Rising healthcare awareness, increasing prevalence of lifestyle-related diseases, expanding health insurance coverage and greater adoption of preventive healthcare are expected to support long-term demand for organised diagnostic services. These structural drivers, combined with Indias strong economic fundamentals, are expected to create a favourable growth environment for the healthcare sector.

Industry Overview Indian Healthcare Sector5

The Union Budget 2026-27 marks a significant step in strengthening Indias healthcare ecosystem. Healthcare allocation increased to INR 1,06,530 crores6, nearly 10% higher than the Revised Estimates for FY 2025-26.

Indias healthcare sector maintained strong momentum during FY 2025-26. The sector recorded transactions exceeding INR 10,000 crore across hospitals, diagnostics and specialty care segments. These transactions included buyouts, investments and cross-border deals. Private equity investors and strategic buyers drove deal activity, focusing on scalable platforms, clinical excellence and technology- enabled delivery models.

Several large investments have also been announced to modernise and expand healthcare infrastructure. Operational performance improved across the sector. Hospital chains reported a 10-16% year-on-year, increase in revenue per bed, driven by pricing improvements and a higher share of complex procedures, including oncology and cardiology treatments.

Diagnostics companies recorded revenue growth of 10-22%, with EBITDA margins ranging between 25 and 35%. Growth was driven by expansion into smaller cities, increasing consumer engagement and the introduction of advanced tests across genomics and artificial intelligence-based diagnostics. Multi-specialty hospitals reported revenue growth of 9-28%, supported by higher occupancy levels (54- 77%) and increased international patient inflows.

The sector is expected to sustain its growth trajectory in CY 2026. Growth will be supported by rising healthcare utilisation, planned capacity additions of over 18,000 beds over the next three to five years and continued investor interest.

To address growing healthcare requirements, the government has proposed a phased outlay of INR 980 crore over three years. The initiative aims to strengthen education and training for allied healthcare professionals. Demand is being driven by an ageing population, a rising burden of non- communicable diseases and increasing global demand for skilled healthcare talent.

While new facilities may face short-term profitability pressures, industry consolidation, technology adoption and expansion into Tier 2 and Tier 3 cities are expected to support long-term growth.

1.6 Hospital Beds

Availability per 1,000 population7

1.23 Doctors

Per 1,000 population8 Indian Diagnostic Industry9

Diagnostic laboratories remain a critical component of Indias healthcare ecosystem. Although the segment accounts for less than 10% of the nations overall healthcare expenditure, its importance continues to increase. Demand is being driven by preventive healthcare, chronic disease management and data-driven clinical decision-making.

Industry Overview and Market Evolution

Indias diagnostic services market continues to exhibit robust growth. The industry is expected to expand at a Compounded Annual Growth Rate (CAGR) of approximately 12% over the next five years, reaching an estimated market size of USD 15-16 billion.

Growth is supported by Indias large population, annual growth rate of around 1% and improving healthcare infrastructure. Hospital bed availability has increased to nearly 1.6 per 1,000 population10, while doctors density has risen to about 1.23 per 1,00011. Capacity expansion has been supported by higher medical seat availability and new healthcare facilities.

The sector is also undergoing a structural transformation.

A landscape once dominated by standalone laboratories and hospital-based facilities is evolving into a more organised and scalable market. Technology adoption and the expansion of national and regional diagnostic chains are accelerating this shift.

Organised diagnostic chains account for an estimated 20- 25% of the market. The balance remains fragmented across unorganised and regional players. While fragmentation limits standardisation and operating scale, it also creates consolidation opportunities. Larger players are well positioned to expand market share through acquisitions and network expansion.

Wellness and preventive services revenue has grown at over ~25% CAGR over last 5 years, and now accounts for roughly

12-25% of total revenue for listed diagnostic companies · a genuine "sick care to well care" pivot, aided by bundling, personalization, and rising consumer willingness to pay for proactive health monitoring.

Growth is no longer a metro story. Organised Chains are aggressively expanding into tier 2 / 3 towns.

Convergence of radiology digitization, Al-assisted imaging workflows, and high-throughput pathology automation is enabling scalable expansion without linear growth in manpower, which matters directly for margins in a volume-driven, price-competitive business. Al is also seen as accelerating faster, more accurate diagnostics and supporting the preventive-care push.

Leading players continue to strengthen their footprint through a combination of acquisitions, partnerships and greenfield network expansion, steadily augmenting their share of the organised market.

Industry Tailwinds and Opportunities in the Diagnostics Market

Rising prevalence of preventive and precision testing

• Consumers are increasingly integrating technology, diagnostics, and lifestyle interventions to proactively manage their health.

• Lifestyle diagnostics and gut health are among the fastest-growing testing segments under preventive testing

• Employer-sponsored preventive health check-ups are emerging as a significant and recurring B2B revenue opportunity

• Onco-genomics, rare-disease genomics along with reproductive genomic segments are seeing rise due to improved turn around times and reporting quality

• Early detection, precision diagnostics, and preventive healthcare are rapidly becoming mainstream rather than optional

Increasing adoption of AI to transform diagnostic services

• AI is helping improve diagnostic precision by identifying patterns or anomalies that can be challenging for human eye to spot

• AI-enabled tools such as automated measurements, lesion segmentation, and report drafting are helping streamline reporting workflows, enabling radiologists to manage rising scan volumes more efficiently while maintaining turnaround times

• AI applications are supporting pathologists in identifying suspicious cells and tissue patterns, thereby aiding in the early and more accurate detection of cancers and other diseases. These tools also help minimize subjectivity in tumor grading and histopathology slide interpretation, contributing to greater diagnostic consistency

• As AI adoption deepens across diagnostic services, it is expected to play an increasingly central role in improving quality, reducing turnaround times, and supporting scalable, standardized care delivery across the healthcare ecosystem

Growing Scope in Tier 2 and Tier 3 Diagnostic Markets

• Patients in these markets are increasingly seeking the reliability, accuracy, and standardized quality associated with organized diagnostic chains over unorganized local providers, aided by growing trust in branded healthcare services

• Rising disposable incomes, expanding health insurance coverage, and government healthcare initiatives are making organized diagnostic services more accessible to a wider population base in these markets

• Organized diagnostic players are increasingly adopting hub-and-spoke models, franchise arrangements, and strategic collaborations to penetrate these markets efficiently, enabling wider reach without proportionately high capital investment

• With Tier 2 and Tier 3 markets accounting for a large share of Indias population but a disproportionately small share of organized diagnostic revenues, this segment is expected to be a key growth driver for the industry over the coming years

Supportive Government Policy Environment

• Ayushman Bharat and PM-JAY: Government health insurance schemes such as Ayushman Bharat - PM Jan Arogya Yojana continue to expand healthcare access for economically weaker sections, driving higher volumes of diagnostic testing across the country, including in underserved geographies

• Push for Quality and Standardization: Regulatory emphasis on accreditation (such as NABL and NABH standards) is encouraging greater standardization and quality benchmarking across the diagnostics industry, benefiting organized players with established quality systems

• Focus on Rural and Semi-Urban Healthcare: Continued government investment in strengthening primary and secondary healthcare infrastructure in smaller towns is expected to create incremental demand for organized diagnostic services in these regions

Company Overview

We are one of Indias leading integrated diagnostic service providers and the largest B2C-focused integrated diagnostic chain, offering a comprehensive range of pathology and radiology services.

We have best-in-class equipment, alongwith 400+ specialized and superspecialized radiologists and pathologists to ensure high-quality reporting with quick turnaround times across tests, enabling clinicians in providing efficient and accurate treatment. Vijaya Diagnostics services are presently available in 162 centres across 6 states Andhra Pradesh, Telangana, Karnataka, Maharashtra, West Bengal, and the NCR.

Our mission is to make diagnostic services accessible and affordable while maintaining the highest standards of quality. We continually invest in state-of-the-art technology and infrastructure to ensure that our patients receive the best possible care. Our commitment to excellence is reflected in our accreditations and certifications, including NABL and NABH.

Financial Performance in FY26

FY26 has been a landmark year for Vijaya, with revenues crossing ^8,142 million. Growth was driven by sustained demand for diagnostic services, higher preventive healthcare adoption, strong operational execution, continued network expansion and accelerating traction of the Vijaya brand in new markets, supported by our differentiated service proposition.

EBITDA increased to ^3,369 million, with an EBITDA margin of 41.4%. This performance reflects the strength of our integrated business model and operating efficiencies.

Profit After Tax (PAT) increased to ^1,730 million. The growth reflects disciplined execution and our focus on profitable expansion. During the year, we conducted 16.92 million tests and served 4.68 million patient visits. These metrics underscore the scale of our operations and customer trust.

Our wellness portfolio continued to gain momentum during the year. Wellness services contributed 14.8% of revenue in FY26.

We maintained our leadership position in the B2C diagnostics segment, with approximately 92% of revenue generated from direct consumers. Our integrated diagnostics model, strong brand franchise and expanding network supported this performance. We continued to enhance accessibility, convenience and service quality across our operating markets.

Key Financial Ratios - Standalone Financial statement

Particulars	FY 2025-26	FY 2024-25	Reason
Debtors Turnover (In times)	3.15	3.20
Inventory Turnover (In times)	21.49	19.16
Interest Coverage Ratio (In times)	Nil	Nil
Current Ratio (In times)	2.77	1.93	There is increase in the current ratio primarily due to decrease in capital creditors
Debt Equity Ratio (In times)	Nil	Nil
Operating Profit Margin (In %)	42.13	40.17
Net Profit Margin (In %)	23.30	21.44

Note: Numbers are restated for FY25 due to merger of Medinova Diagnostics Services Limited

Strategic Position to Capitalise on Opportunities

Strategic Strength	How We Are Capitalising on the Opportunity
Integrated Diagnostics Platform	Integrated diagnostics platform enhances customer convenience since patients increasingly are preferring one stop solution to complete all their diagnostic investigations. It improves service utilisation and drives operating leverage due to shared infrastructure, technology and resources. These structural advantages often translate into stronger long-term growth and profitability.
Strong B2C Franchise and Brand Equity	Approximately 92% of our revenue derived from the B2C segment. Our brand recall, customer trust and direct consumer relationships enable us to capture demand driven by rising health awareness, preventive healthcare adoption and greater focus on wellness.
Expanding Multi- State Network	We are strengthening our presence across Telangana, Andhra Pradesh, Maharashtra, West Bengal, Karnataka and the NCR. All these markets are mature with very good healthcare infrastructure and ecosystem. Network expansion and deeper market penetration enhance accessibility, widen customer reach and help drive operating leverage with increasing densification.
Technology and Digital Capabilities	We have consistently invested in advanced diagnostic equipment, AI-enabled radiology solutions, Laboratory Information Management Systems (LIMS), Radiology Information Systems (RIS), and digital reporting platforms to strengthen our clinical capabilities and operational efficiency. Over the years, we have expanded access to advanced diagnostics by deploying state-of-the-art equipment across both urban and tier-2/3 markets, enabling superior diagnostic outcomes. Our integrated teleradiology platform ensures standardised reporting protocols, consistent clinical quality, and operating leverage across the network. We have also commenced the adoption of AI-based solutions in areas such as CT KUB and dental imaging, enabling AI-generated 3D visualisations for clinicians and patients at no additional cost. These technology-led initiatives enhance diagnostic accuracy, improve turnaround times, and further strengthen the scalability and efficiency of our operations.
Growing Wellness and Preventive Healthcare Portfolio	Rising awareness of preventive healthcare and early disease detection is expanding demand for wellness services. As preventive healthcare gains wider acceptance, consumers are increasingly opting for comprehensive health check-ups that combine laboratory testing with imaging modalities such as ultrasound, mammography, CT calcium scoring, DEXA, and MRI. Integrated diagnostic chains are better placed to capture this growing demand through their broader service portfolio, resulting in higher average revenue per patient, improved operating leverage, and stronger long-term customer relationships
Operational Excellence Through Hub-and- Spoke Model	Our hub-and-spoke network drives efficient utilisation through improved throughput, process standardisation, faster turnaround times. This scalable model supports profitable growth while maintaining service quality across locations.
Experienced Clinical Talent Pool	With a team of more than 400 specialised and super-specialised radiologists and pathologists across segments, including many experienced professionals from top tier medical institutions, we possess one of the strongest clinical talent pools in the industry. This depth of expertise enables us to deliver precise diagnostics, maintain the highest standards of clinical excellence, and achieve differentiated patient outcomes
Strong Financial Position	Our strong balance sheet, healthy return profile, and disciplined capital allocation provide the financial flexibility to invest in network expansion and advanced technologies. This enables us to strengthen our capabilities, pursue sustainable growth, and expand our network while maintaining financial discipline.

Business Outlook

We remain optimistic about the long-term growth prospects of the diagnostics industry. Increasing healthcare awareness, greater adoption of preventive healthcare, rising lifestyle- related diseases and expanding health insurance coverage are expected to support demand for organised diagnostic services across both established and emerging markets.

Following our expansion into key growth markets such as Pune, West Bengal and Bengaluru, our focus is on increasing market penetration, improving operating leverage and strengthening brand visibility. The encouraging performance of our newly established centres, including the early break-even of our Bengaluru operations, reinforces our confidence in these markets. Our core Hyderabad market continues to outperform expectations, and we believe there remains significant headroom to further strengthen our presence. Looking ahead, we also plan to expand into new markets across the Rest of Andhra Pradesh (RoAPT) during FY27 and FY28.

We are also coming up with our state-of-the-art total automated lab in Panjagutta, Hyderabad with track system which is expected to enhance turnaround times and operational productivity. Additionally, we plan to introduce advanced genomic testing as part of our specialised diagnostics offering.

Our integrated diagnostics model remains a key differentiator. By offering pathology and radiology services on a single platform, we enhance convenience and deliver a seamless patient experience. Our B2C-focused model contributed approximately 92% of revenue in FY26, providing revenue stability and deeper customer engagement. The increasing contribution from wellness and preventive healthcare services further supports our growth trajectory.

Technology and innovation remain central to our strategy.

We will continue investing in advanced diagnostic infrastructure, automation, artificial intelligence-enabled radiology solutions and digital platforms. These investments are expected to improve reporting accuracy, enhance turnaround times and strengthen patient convenience. They will also support operating efficiencies and scalable growth across our network.

Our strong balance sheet, healthy cash generation and asset-light expansion strategy provide the flexibility to pursue growth opportunities while maintaining financial discipline.

Going forward, we remain focused on expanding access to quality diagnostics, deepening our presence across existing markets and enhancing customer experience. Our brand, integrated service model and execution capabilities position us well to capture opportunities in Indias evolving healthcare landscape.

Risk and Mitigation

At Vijaya Diagnostic Centre Limited, effective risk management remains integral to our strategy and operations. Our risk management framework enables the identification, assessment and mitigation of risks that may affect our business, financial performance or reputation. The framework supports informed decision-making, operational resilience and sustainable growth.

Company Philosophy on Risk Management

Our approach to risk management is based on the timely identification, evaluation and mitigation of potential risks.

We have established a structured framework that integrates risk management into strategic planning and operational processes across the organisation.

Our Board of Directors and senior management provide oversight of risk management practices. Their involvement ensures that key risks are monitored, mitigation measures remain effective and appropriate controls are maintained across the business.

Risk	Description	Mitigation Strategy
Competition Risk	Intensifying competition from national chains, regional diagnostic players and hospital-based laboratories may impact market share and pricing.	Strengthen brand visibility, deepen customer engagement, expand network density and leverage our integrated diagnostics model to differentiate service offerings.
Expansion and Integration Risk	Delays in scaling new geographies or integrating acquired businesses may impact growth and profitability.	Adopt a phased expansion strategy, standardise operating protocols and closely monitor integration milestones, project execution and centre-level performance.
Technology and Quality Risk	Equipment downtime, reporting inaccuracies, delays in technology adoption or technology failures may affect service quality and patient trust.	Invest in advanced diagnostic technologies, maintain stringent quality assurance protocols and undertake periodic equipment calibration and maintenance.
Regulatory Risk	Changes in healthcare regulations, accreditation requirements or compliance standards may impact operations.	Maintain robust compliance processes, conduct periodic audits and monitor regulatory developments across operating markets.
Talent Risk	Shortage or attrition of skilled radiologists, pathologists and healthcare professionals may affect service delivery.	Strengthen talent acquisition, invest in training and professional development and implement retention-focused incentive programmes.
Cybersecurity Risk	Cyberattacks or data breaches may compromise patient information and disrupt operations.	Enhance cybersecurity infrastructure, conduct periodic vulnerability assessments, employee awareness programmes and strengthen data governance and protection protocols.
Operational Risk	Disruptions arising from utility outages, natural disasters, workforce shortages or other unforeseen events may affect service continuity.	Maintain business continuity plans, operational redundancies and contingency arrangements for critical functions.
Supply Chain Risk	Dependence on suppliers for diagnostic equipment, consumables and reagents may lead to procurement disruptions.	Maintain diversified supplier relationships, optimise inventory levels and establish sourcing redundancies for critical supplies.
Reputation Risk	Service quality issues or adverse patient experiences may impact brand reputation and customer confidence.	Maintain high clinical standards, monitor service quality metrics, address customer grievances promptly and strengthen patient engagement mechanisms.

Human Resources

Our people remain central to our ability to deliver high- quality diagnostic services and sustain long-term growth. As we continue to expand our network across multiple geographies, we remain focused on attracting, developing and retaining skilled talent across clinical, technical and support functions.

We promote a performance-driven and inclusive work culture that emphasises continuous learning, collaboration and professional development. Our clinical workforce, comprising radiologists, pathologists and technical professionals, remains central to maintaining diagnostic accuracy, service quality and patient trust. Through structured training programmes, leadership development initiatives and ongoing clinical education, we equip our employees with the skills required to adapt to evolving technologies, diagnostic advancements and changing patient needs.

As digital platforms and AI-enabled diagnostic solutions gain wider adoption, we continue to enhance workforce capabilities. These initiatives improve operational effectiveness, service quality and patient experience.

Our employee engagement initiatives, transparent communication practices and performance-linked reward mechanisms (ESOPs) across departments further support talent retention and organisational effectiveness.

As on March 31,2026, our total employee strength stood at 2507, reflecting our commitment to building a skilled, motivated and future-ready workforce capable of delivering exceptional diagnostic services.

Internal Control Systems and Their Adequacy

Vijaya Diagnostic Centre has implemented a robust and comprehensive internal control framework that aligns with the Companys strategic objectives and operational requirements. This system is designed to safeguard assets, ensure compliance with regulatory standards and maintain the integrity of financial reporting.

The Companys internal control mechanisms encompass a wide range of policies, procedures and monitoring processes that are regularly reviewed and updated to address evolving business needs and regulatory requirements. Key features of our internal control system include:

• Risk Assessment and Management: A structured approach to identifying, evaluating and mitigating risks across all business functions.

• Financial Controls: Rigorous checks and balances to ensure accuracy in financial reporting and adherence to accounting standards.

• Operational Efficiency: Continuous monitoring and improvement of operational processes to enhance productivity and reduce wastage.

• Compliance Management: Comprehensive systems to track and ensure compliance with all applicable laws and regulations.

• Information Technology Controls: Robust IT systems with appropriate access controls and data security measures.

• Internal Audit Function: An independent internal audit team that conducts regular audits across all departments and reports directly to the Audit Committee.

The Audit Committee, comprising independent directors, plays a crucial role in overseeing the effectiveness of these internal control systems. They regularly review audit reports, monitor the implementation of audit recommendations and provide guidance on strengthening control mechanisms. In FY26, we further enhanced our internal control framework through the implementation of advanced data analytics tools to improve real-time monitoring capabilities and by conducting specialised training programmes for employees to reinforce the importance of internal controls in their day- to-day activities.

The management believes that the current internal control systems are commensurate with the nature, size and complexity of our operations. However, we recognise that internal control is an ongoing process and we remain committed to continuously improving and adapting our systems to meet future challenges and opportunities.

Cautionary Statement

This Management Discussion and Analysis contains statements that describe the Companys objectives, projections, estimates, expectations or predictions. These forward-looking statements are based on the managements current assumptions and assessments and involve known and unknown risks and uncertainties.

Actual results may differ materially from those expressed or implied due to various factors beyond the Companys control. These factors include, but are not limited to, changes in government regulations, tax regimes, economic developments within India and other countries and other incidental factors. Market data and product information contained in this report are based on information gathered from various published and unpublished reports and their accuracy, reliability and completeness cannot be assured.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these statements, which speak only as of their dates. They are advised to conduct their own investigation and analysis of the information contained or referred to in this section before taking any action with regard to their specific objectives.

Furthermore, the discussion of our financial condition and results of operations should be read together with our audited consolidated financial statements and the notes thereto included in this Annual Report.