After a year of trying to understand the business better, the greatest jumps in understanding have come from analysing each state granularly.
Some updates on current understanding:
- Punjab potential is likely to be capped at 70 Cr. of revenue as the tender payment is cash based, not cashless. The centre may choose to make this cashless after a few years, even if the ruling party in the state is different. One should price in 70 Cr. and move on.
- Rajasthan’s execution for the free diagnostics mission has been incredible, and is possibly the greatest case study of what could go right. Two pictures below are worth a thousand words: Centre’s contribution for PPP diagnostics in 2014, and the same in 2022:
The budget requirement went from 10 Cr. in 2014 to 220 Cr. in 2022, over 20x in 8 years.
The obvious next questions are to pin down what factors lead to this, and the answer depends on two parameters:
- Number of locations.
- Number of tests offered.
Over time, the free diagnostics initiative went from a few district hospitals in 2014 to over 1000 locations in the 2023 tender.
- In my opinion, Odisha is an example of a state that could replicate Rajasthan in a few years.
Krsnaa won a statewide tender a month ago. My estimate then for the revenue from the tender was around 40-50 Cr. I now think this could be a minimum of 2x of my estimates for the following reason:
In the RFP, the government required the tender partner to provide 38 blood tests at district hospitals. Now, they have doubled down and made 146 tests available in each district hospital, and have included more families within the scheme.
B2G questions posed by investors are memorable (and valid), it’s nice to hear some good news from the same B2G angle, and have this data on budgets.
- Krsnaa may have just won a state-wide tender in Assam. Will look for confirmation soon from the authorities and in exchange filings in the next few days.
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