Poly Medicure Ltd

NSE:POLYMED

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to Poly Medicure Limited Q1 FY '26 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Darshil Jain from ICICI Securities. Thank you, and over to you, sir.

[Unknown Analyst]

Thank you. Good afternoon, everyone. On behalf of ICICI Securities, I welcome you all to Q1 FY '26 Earnings Conference Call of Poly Medicure Limited. Today on this call, we have with us the senior management team of the company. We are represented by Mr. Himanshu Baid, Managing Director; Mr. Naresh Vijayvergiya, CFO; and Mr. Rahul Gautam, President, Strategy and Corporate Development.

I would like to thank the management team of Poly Medicure for giving us this opportunity to host their call. And with this, we will hand over the call to the management. Over to you, sir.

[Himanshu Baid, executive]

Thank you, Darshil. Thank you very much. A very good afternoon, everyone. Again, I welcome you all to our Q1 FY 2026 earnings call. I sincerely thank all of you for being here today.

Before I provide you with the performance review, I'm very proud to announce that Poly Medicure was awarded Medical Device Provider of the Year 2025 by Financial Express. It was a humbling moment to be recognized for the journey in the health care sector. These recognitions reflect our collective efforts of our entire team, and I accept them on behalf of our employees, partners and stakeholders who have been integral part of our growth and success over the years.

I'll now take you through the business and financial update for quarter 1. And after that, we are open for Q&A. So on the business update side, we received approval from our esteemed shareholders for appointment of Mr. Vishal Baid as the Executive Director. Mr. Vishal Baid has been part of the core team and has played a very pivotal role in strategy growth and international expansion of the company. He's been associated with the company for the last 14 years. And before to his appointment as Executive Director, he was designated as Senior President, Sales and Marketing.

Also, I would like to update that Board in its meeting today, subject to shareholders' approval, has approved appointment of Mr. PK Gupta, who was President, Operations and Executive Director of the company. He joined Poly Medicure as a senior manager in 2008 and rose to become President, Operations, leading key operational advancements. His strategic leadership significantly contributed to the company's growth. We welcome him to the Board and looking forward to his strategic insights as we scale up our manufacturing presence in India and globally.

I'm also pleased to announce that we have signed two contract manufacturing contracts. And this was, if you remember, I had shared earlier that we are exploring some opportunities in contract manufacturing space, specifically where we see reasonable margins. And we have signed two contracts in the first quarter. Companies are based out of -- one company is based out of U.S. One is Hong Kong headquartered company, which is based -- which has major operations in the U.S.

And both these companies have products in vascular access and in pain management segment. So these are new products we are developing for these companies. These are brand new. So this is basically more like a CDMO operation, where we do the contract design and manufacturing operations. And these are some of the kind of businesses currently we are building internally also to build a resilient manufacturing setup.

In terms of our international expansion, we have also established a wholly owned subsidiary in Brazil to expand our presence. Over the next few quarters, we will expand our presence in this key South American market. We are already doing some new product registrations there. And we are very excited about this dynamic Brazilian market. And we would like to have more deeper inroads. So we will set up a fully owned subsidiary with people out there where we'll be interacting directly with the customer. So it will be moving from B2B to B2C operation. And this is one of the major markets for us, and we have decided to go directly in that market.

Also, we are awaiting for a land allotment letter from YEIDA for around 7-acre plot at Medical Device Park, which is near the Jewar Airport in Greater Noida. We have already received a letter of comfort for the -- from the UP government. And this medical device park is very strategically located and will also have a lot of common facilities like labs and other infrastructure, which will help manufacturing of medical devices in the country.

On the financial performance side, quarter ended June '25, we have a consolidated revenue of INR 403 crores, marking an overall growth of around 5%. Gross profit was close to INR 276 crores, reflecting a margin of 68.4% at a gross level, an increase of almost 170 bps as compared to quarter 1 last year. Operating EBITDA for Q1 was INR 106 crores, delivering EBITDA margin of 26.3%, slightly down from 27% last year. On the bottom line, PAT totaled around INR 93 crores as compared to INR 74 crores last year, translating to a net margin of 21%, up to 50 bps.

I would like to call out that our R&D spend has increased by 20% in this quarter. I would also expect that R&D spend as a percentage of revenue will rise going forward as we get into high-end technology segments such as cardiology and critical care.

In Q1 FY '26, our domestic revenue grew by 20% to reach INR 126 crores. Domestic revenue growth in the private sector was 25%, while the government business witnessed a degrowth of 10%. So net was around 20%, and that is in line with our projections in line with our strategy. This clearly reflects our focus on building a strong and sustainable domestic business and to exit the business which we don't meet our margin threshold, specifically in the government segment. Contribution from the domestic revenue to our overall consolidated revenue has increased to 31% in Q1 as compared to 27% in the comparative period last year.

We continue to outpace the market and competition growth in the domestic market quite significantly. Hence, our conviction to invest higher amounts in domestic market is getting only stronger. This is reflected in the fact that we added 22 new sales associates in Q1. We have set up a target to add around 100 people this year. Out of that, 22 people have already joined in Q1. Hence, we are on track to hire 100 sales associates for FY '26. And this will give us a lot of firepower to go to Tier 2 and Tier 3 cities, especially the hospitals we have not addressed earlier. So we are expanding our reach into more deeper markets and territories.

In Q1 FY '26, our international revenue stood at INR 275 crores, which reflects a dip of 1% from INR 278 crores in Q1 FY 2025. We continue to witness a growth -- some growth challenges in European market, but witnessed a degrowth of around 6.7% in Q1. The current geopolitical situation as well as uncertainty in global trade due to ongoing tariff war is leading to some deterioration of customer sentiment. The recent tariff announcements by President Trump on India does not auger well for export markets, of course, but we are hopeful that a reasonable solution will be found in the ongoing trade negotiations between India and U.S. Of course, 50% tariff is kind of unsustainable for exports from India, for any segment we talk about.

All these factors are leading to customers being circumspect in predicting the business growth, supply chain stability and hence on focusing on inventory liquidation to meet end-use demand instead of building additional inventory. So in our last call, we had highlighted overstocking in certain customers, specifically in Southern European region. We are now starting to see the situation easing out in those markets. Hence, we are hopeful that things will be better in Europe in second half of the financial year. International revenue from rest of the world region has done relatively better, growing at 5% to reach INR 142 crores in Q1 FY '26.

Now let me give you an update on each of the business segments. Renal business, where we have been putting a lot of energy and efforts, has grown by around 46% in Q1 of FY '26 to almost INR 44 crores. Till July 31, we have sold additional 130 machines across the country, and we are on track to sell close to 500 to 600 machines in the current financial year, the dialysis machines. We continue to remain excited about these prospects in the industry. I think Government of India under its Pradhan Mantri National Dialysis Programme they have implemented dialysis centers in 751 districts with almost 1,700 dialysis centers, which are operational today. Also it has been now covered under Ayushman Bharat. So further expansion of networks of community health centers will be also taken by the National Health Mission.

So overall, we are very bullish that the demand will continue to increase. We are also ramping up our capacity. And by the end of FY '26, we'll almost double our manufacturing capacity in the dialysis business. So I think that's also a very important task we had undertaken last year to expand the capacities all across in this segment. We continue to remain bullish, and we aim to reach at least 15% to 17% of market share in the next 2 to 3 years from the current around 8% to 9%.

Let me now move to our cardiology vertical, which we have started end of last year. It was just kind of a trial period. And this year was the real start. And I'm pleased to announce that we have already implanted around 1,350 drug-eluting stents with a very positive feedback received from patients and clinicians. And these were -- these stents were specifically designed at Poly Med and all the design elements were done by our R&D team. And this is indicating growing acceptance of our products in cath labs among interventional cardiologists.

We remain excited about our pipeline of products. We have already launched our angiographic catheters, angiographic balloons. We are also launching drug-eluting balloons and PTC catheters and a whole number of guidewires, hydrophilic guidewires and PTFE-coated guidewires. So a lot of devices are coming Interventional cardiology space, which are getting manufactured at Poly Med right from scratch. So we are one of the first companies to make these products in India. Most of the companies who are importing and selling them. We're one of the first companies to make such products in India.

I'm also very pleased to announce that we have initiated an open-label multicenter single-arm clinical investigation to evaluate performance and safety of our RisoR Everolimus drug-Eluting Stent. The study aims to access safety and performance of these stents in treating coronary artery stenosis patients, and this will be a clinical registry of 2,000 participants. And this is the first time a clinical registry of this scale is happening in India for stents across 50 sites in India and 1 in Europe.

We have also partnered with Dr. Praveen Chandra, Chairman, Interventional Cardiology at Medanta Medicity Hospital, and he will be the principal investigator in India for these clinical trials. The study will be completed in almost 24 months. And from a strategic standpoint of view, this trial underscores Poly Med's commitment for post-market evaluation in India and premarket readiness for the European market and positioning the company in the global growth of the coronary stent markets.

We are gradually moving up the technology chain in medical device market and such initiatives position us strongly to capture market share in -- initially in the domestic market and over time in the international markets.

Our second growth segment was critical segment -- critical care segment. This vertical remains a very important part of our growth journey, especially in treatment of oncology. Government of India is already playing active role in ensuring setting up 200 stand-alone specialty oncology centers, eventually expanding to 700. So we are strongly positioning ourselves in this segment and especially with Make in India products and continue to invest significantly in new product development. Over the last 12 months, we have launched over 20 products in this segment, and we continue to expand our manufacturing footprint.

Our transfusion segment has been growing steadily. It has grown at around 18% in quarter 1. There's a slight slowdown in our infusion therapy business, which is our core business, and this is mainly because of slowdown in Europe. That's what we have witnessed. And I think historically, I think we have done well in this segment, but I think we are seeing some headwinds, which we saw in quarter 1. But I think from quarter 2 and quarter 3 onwards, I think things will change and are on track to deliver a better performance. This segment, we are strongly globally competitive. We have a lot of innovation, which is sitting within the company. Hence, we are very confident in continuing to gain market share in coming quarters.

Liquidity position. Currently, we ended the quarter with liquidity of INR 1,249 crores. Strong cash flow allows to continue back our ambitious growth strategy, both organic and inorganic. On the M&A front, our thesis focuses on technology acquisitions that are complementing our core verticals, critical care, cardiology and other adjacencies. We are actively evaluating opportunities, which we believe are quite exciting in terms of technologies, markets and customers. We'll keep the market informed once these transactions are finalized.

Let me now connect to our forward-looking outlook. We continue to remain bullish on the domestic market and reiterate our guidance for revenue growth of 30% for the domestic business for FY '26. For international business, we expect a revenue growth between 5% to 10% this year, which is lower than what we have given guidance earlier in quarter 1, 12% to 15%. This is reflective of the current ground realities. We'll keep you updated and have a better clarity, I think, once we see this quarter ending.

Further, Poly Med also set some ambitions to grow in the U.S. market. I think we already have FDA approvals, which I informed earlier. There are some products in pipeline. We're in the process of getting them also approved. We have already signed contracts with 2 large GPOs and distributors in the U.S. And I think we are on track to achieve the revenue, which we have projected $15 million to $20 million, and then that is overspread over the next 2 to 3 years. But I think currently, the current situation, we are not sure how it's going to pan out, but I think we're keeping our fingers crossed.

But in the current financial year, we don't have too much impact from the U.S. because our U.S. revenues are less than $3 million, $3.5 million. So we don't see a major impact on our business because of the U.S. tariffs. So I think we are very, very insulated because of our strong presence in Europe because 1/3 revenue still comes out of Europe. So I think we are strongly protected for our business with India, Europe and rest of the world presence. So let's see. I think we keep our fingers crossed for the next few weeks and see what is going to happen.

We are keeping our EBITDA guidance margin in the range of 25% to 27%. We have done first quarter EBITDA of 26.3%. So we are very within the range, as we called out earlier in the beginning of the year. CapEx side, we maintain our guidance for a spend of around INR 250 crores plus for FY '26 as we have two new plants, facilities under construction in Palwal and Haridwar. Also, our gamma plant in Palwal has started -- the operations -- Phase 1 operations have started.

We have received the license for our Class A and B devices. We are waiting for further licenses for C and D devices, and also expansion of that capacity, which will move from 300 KCI to 2,000 KCI. So -- and that's a major achievement, I would say, because we are one of the first companies to have their own gamma sterilization plant, which gives us a lot of strength in terms of sterilization the products, using a special technique to the gamma sterilization, which is very unique to medical devices.

Also, of course, the guidance is building some conservation right now around international business, given the current geopolitical and macro uncertainties. But we are very confident. We have almost 30 new products in pipeline, which will be launched over the next 2 years or so. And so we have a huge pipeline of products, which is getting ready. We have also new regulatory approvals, which are expected during the year from major markets like Europe and also some approvals are coming from Latin America. So once we have these new approvals, we'll be able to launch some new devices in these markets.

There's a strong domestic momentum. So we are very confident about the domestic market, and I think it continues to give us a lot of wings to fly today. And I think we can pretty well offset these headwinds, which we see, which has been like a one-off phenomenon. But I think just to recap FY 2026, I think the business is fundamentally very strong. The model is that we have developed and moving from, let's say, from vascular to critical care and to cardiology products. So we have done that transition over the last 2, 2.5 years, invested a lot of in new technology, new products.

And I think that is going to start bearing fruits. And most of these products are from higher-margin categories. So we'll continue to make healthy margins in next years because of the new products we are launching. And I think domestic market is very strong for us right now. So we'll continue with the growth trajectory, which we have already told earlier.

And I think we'll continue to invest in R&D. So that is scale-up is happening. A lot of green initiatives have been taken. By September, October, 40% of our power generation will be from green power. So we invested in solar capacity building. So we have done a lot of heavy lifting in the last few years. And definitely, in coming years, you will see a lot of new things happening with contract manufacturing opportunities, with the U.S. business. Of course, there's a caveat there because of tariffs. But I think as we see, I think tariffs are temporary, and I think we have a long journey ahead on that U.S. market.

We have some very important contracts, which are already in place. And of course, we are deepening our presence in Europe with more product launches. So all in all, I think we are in great shape. I just wanted to update you on this performance of the company. And now I'll be happy to answer questions from our listeners and people who are on the call. Thank you again, everyone.

[Operator]

[Operator Instructions] The first question comes from the line of Rashmi from Dolat Capital.

[Rashmi Sancheti, analyst]

So one question on the gross margin side. Despite a lower international business, our gross margin was pretty high during the quarter. So what has -- which segment or what has actually driven this kind of margin? And what kind of gross margin would be sustainable for the full year?

[Himanshu Baid, executive]

See, I think gross margin, Rashmi generally track between 65% and 67%. That has been the historical gross margin for our business. But as we go dig deeper into this critical care cardiology areas, I think there, the product price is also much higher compared to what we have been selling in the past. So the gross margin in these products is very high, like much higher than what we -- than the products we have been selling in the past. So I think that correction will keep on happening. So I think a run rate between 65% to 68% is a great run rate to be at the gross margin level.

[Rashmi Sancheti, analyst]

Okay. So you mean that the major gross margin has actually come from this particular category, which is -- which has been launched basically in India. So from the domestic segment, this time, the margins are better.

[Himanshu Baid, executive]

Yes, definitely. Because if you see export sales has gone down. But the margin contribution used to come higher from the export business. In spite of international business going low, still we have sustained our margins in terms of EBITDA, which is not a big difference from what we have been doing in the past. Bps variation is there in the first quarter, which is, I wouldn't say is hardly any variation.

[Rashmi Sancheti, analyst]

Understood. And on the export market, if you can explain a bit in the Europe, you had seen issues and growth challenges in the first quarter. And you're saying that things will get eased out in the subsequent quarters. This is because the U.S. had imposed a tariff on these different countries, and that is the reason it was an indirect impact on India.

[Himanshu Baid, executive]

I think Europe is, I think, was going through some financial, let's say, I would say, restructuring. I think most of these countries had kind of liquidity issues. And I think there was also overstocking. And this whole uncertainty around tariffs was actually where people would have actually reduced their inventory levels. Normally, in our industry, people maintain 4 to 5 months of inventory because they are constantly supplying the national systems. But what we realized that people went down to 2 to 3 months of inventory.

And in fact, in the last few months, last month or so, we have also made a few air freights because they ran out of inventory with higher consumption. So I think we are seeing the demand coming back from Europe. So I think that's where we are positive. So -- and that's the reason we are saying that we should end up closer to 5% to 10% of growth overall in the international business. Going forward for the next 3 quarters, quarter 2 to quarter 4.

[Rashmi Sancheti, analyst]

And excluding Europe, even rest of the world has seen just 4% to 5%. Have you seen the similar situation over there or the reason is.

[Himanshu Baid, executive]

Yes, I think we are seeing -- so this quarter, the growth is coming back. And I think in subsequent quarters also, I think we are quite sure that we'll be in a better space.

[Rashmi Sancheti, analyst]

Okay. And one last question. You are saying that you will be adding 100 associates -- sales associates in FY '26 in domestic market. This will be targeting which regions you mentioned Tier 2, Tier 3 cities, but exactly which state would it be pan-India or it would be some dedicated state.

[Himanshu Baid, executive]

Because today Poly Med is a national company. So we are present pan-India. So in fact, the focus is to expand more in, let's say, Tier 2 and Tier 3. And in that segment also, South India and West India are the core markets we are targeting.

[Operator]

[Operator Instructions] The next question comes from the line of Suruchi Parmar from NX Wealth Management.

[Unknown Analyst]

I just wanted to ask like you have told that Europe and you have a considerable good share coming from Europe revenue. But you are saying that exports in this year might see a revenue growth of meager 5% or so.

[Himanshu Baid, executive]

Yes, 5% to 10%...

[Unknown Analyst]

Yes, yes, lowering your guidance. So it is just because of U.S. or Europe is also facing some problems, that's why you're lowering the guidance?

[Himanshu Baid, executive]

See, Europe is also facing challenges. I think we have seen it since beginning of the year. I think there has been like an inventory correction in Europe. And I think there was a disturbance in supply chain also. I think Chinese companies also started dumping product because of their lack of reach to U.S. market. So I think everything kind of got disturbed. But I think now the demand is back, the supply chain is kind of recalibrated. So -- and that's the reason we are confident that now we are getting back on the track.

So even with, let's say, minus 1% growth in international business in quarter 1, I think we are already saying that we should be between 5% to 10% of growth for the whole year, international business. So I think -- and I think still things are very fluid, I would say, globally. But I think at least we can see from now onwards, as we have seen first 4 years of this month -- of this financial year, first 4 months, I think we are more confident about the growth, what we can do. And of course, we are still conservative. Things can change a lot. Of course, we have adequate capacity to meet additional demand. So -- but at least we want to be a little bit more conservative and see how things are panning out in the next few months.

[Unknown Analyst]

And sir, do we -- will be benefited from this U.K. FTA.

[Himanshu Baid, executive]

Definitely, that's a big one. Sorry, I mention it. Thank you for reminding me. So again, U.S. FTA also now because earlier duty was around 4% to 5% for U.K. imports. Now it's getting 0. So I think -- and we see a renewed interest for U.S. companies -- sorry, U.K. companies to buy products out of India. So I think after the FTA, we have already received a couple of companies which are willing to expand their business with us. So I think it's very positive for us at least on the U.K. FTA side.

[Unknown Analyst]

So you are like bullish on acquiring more market share there?

[Himanshu Baid, executive]

Yes, definitely. So we are bidding for more products in the U.K. market. And I think hopefully, in 2023 because the NHS operates on a cycle every -- because 90% purchasing is done by NHS in the U.K. So it operates in a cycle. So the new bidding is happening for 2026, basically. So we have now bidded for almost 6 to 7 new product categories.

[Unknown Analyst]

So these products will be like in the critical care or vascular?

[Himanshu Baid, executive]

Core is vascular.

[Unknown Analyst]

So both will be there?

[Himanshu Baid, executive]

More Vascular is 95%.

[Operator]

The next question comes from the line of Keshav Kansal from SVP & Associates.

[Unknown Analyst]

Am I audible?

[Himanshu Baid, executive]

Yes, go ahead, please.

[Unknown Analyst]

Okay. Okay. So my question is particularly on your renal portfolio. So my question is, what are Poly Med's expansion plans in terms of the HDF as well as the CRRT portfolios. As I understand, these spaces are less penetrated currently in India. So how is the market overall looking like? And what is your take on this? And what -- is Poly Med going to do anything about it in terms of taking active steps in terms of either catering to the market or government advocacy. What exactly is Poly Med's view around this? That is what I wanted to understand.

[Himanshu Baid, executive]

No, I think that's a great question, very great technical question, I will say. So see, basically, in India, SDF market is close to around 10%. And that's mostly dominated by large multinationals like Fresenius and Nipro. And 90% is basically the normal market. So what we are -- we have plans to launch our first HDF machine in 2026, dialysis machine. So that's what we are targeting.

And so we are already under development for that product, and it is currently under development, and then we'll go for clinical testing and the licensing of this product. So we are hopeful that sometime mid- to end of 2026, we will launch this new dialysis machine with HDF capabilities. And ERT, we have not put so much focus right now, but maybe that could be the next product development maybe for '27 or '28. But I think HDF is very promising.

[Unknown Analyst]

Okay. Okay. Understood. And like have you...

[Himanshu Baid, executive]

See, the only problem with HDF is that the cost of dialysis, that is -- goes up. And the government reimbursement is limited to INR 1,800 today under Ayushman Bharat. So whether it will include this under reimbursement or not is something is a question mark. But at least in the private sector, which is probably like 30%, 40%, that is where probably we can see usage of HDF. So even HDF machines, if you see, currently, we only deployed in private centers, not in places we are doing, let's say, scheme patients.

[Unknown Analyst]

Correct. Okay. But is Poly Med also seeing like growth in HD machines in other account archetypes such as charitable institutions, government hospitals.

[Himanshu Baid, executive]

No, no, no, no. Again, we are very conscious on the cost side of the product. So they don't want to -- and charitable is again so much subsidized, so they can't afford to have an HDF machine and the cost of the treatment also increases.

[Unknown Analyst]

Correct, correct. No, no. I was just particularly talking about HD also. HD is there, right? HD machines are penetrated.

[Himanshu Baid, executive]

Yes, yes, yes.

[Unknown Analyst]

Okay. Okay. And just one follow-up question on this. So are you also looking at the development of the HDF machine like in India only, you're going to be manufacturing in India.

[Himanshu Baid, executive]

In India. In India.

[Operator]

[Operator Instructions] The next question comes from the line of Harsh K Shah from Dalal & Broacha.

[Harsh Shah, analyst]

Just one question from my side. So if you could a bit of dwell upon the contract manufacturing contracts that you have won in the products of vascular and pain management. So as you mentioned, right, that these are new products.

[Himanshu Baid, executive]

So these are basically CDM opportunities.

[Harsh Shah, analyst]

Correct. Correct. Yes. But so how should one look at in terms of the scale-up of revenues? When should one expect this to kind of flow to our numbers this year, next financial year, some bit of highlights in terms of how big the scale -- I mean, how scalable is this, I mean, in terms of...

[Himanshu Baid, executive]

Basically, the first thing is to identify the relevant partners and getting into an arrangement. I think this is the first time we have explored this opportunity of CDMO. And in fact, if you remember a couple of calls ago, we were discussing about this for these opportunities. So now we have zeroed down. We have signed 2 contracts. And of course, both are very innovative products, patented devices basically. These are patented devices. So we are part of the co-development of this project and device in terms of its performance and manufacturing. So these are new devices. So I don't have a really relevant data to tell you that what kind of scale-up is would be there because these are new products will take 2, 3 years, 4 years to scale up to a certain level. But I think the revenue should start kicking in from next financial year because we have already started development, manufacturing development of these devices.

So already, the initial proof of concept is done. Regulatory approvals are getting in place. The 510(k) approvals for U.S. market. So these are getting in place. And also these products will be launched in other global markets. So the company which owns these devices, they've already started that process based on the initial pilot run. So now we are -- but to call out any numbers will be not the right time. Maybe next year, this time, I'll be in a better position to answer this question.

[Operator]

[Operator Instructions] The next question comes from the line of Parth Singhal from Swing Masters Private Limited.

[Unknown Analyst]

Sir, my question is, are -- is the company planning to enter in radiology space by any chance, like CT scans and MRI machines by any chance.

[Himanshu Baid, executive]

No, no No, not at this moment.

[Unknown Analyst]

Okay. How much revenue do we make in cardiology segment by selling stents.

[Himanshu Baid, executive]

No, we have just launched these devices. See this is a very first year of operation of this business. So for example, this year, our plan is to deploy around close to 20,000 stents. That is what the number we have in our mind that we'll be able to deploy. So that scale-up is already happening. So this is a very first year of operation, commercial operation. And then launching a lot of new devices, we are waiting for regulatory approvals for a lot of other devices to come from CDSCO.

So as and when we see receivable, we'll start scaling up. And these are not easy products to sell. So I think maybe only next year, we'll have full visibility where we can call out special numbers and say, okay, this is like Renal V today, we are able to give numbers because we have been working on the project for 5 years. So I think for cardiology, we'll need some time to really start giving numbers on how things will pan out in the next few years.

[Unknown Analyst]

And if I ask about dialysis machine, how much margin do we make in dialysis machine?

[Himanshu Baid, executive]

Sir, we don't give specific product margins.

[Operator]

[Operator Instructions] The next question comes from the line of Bharat Shah from ASK Investment Managers Limited.

[Bharat Shah, analyst]

Himanshu, on the international business, which is the most significant dominant 2/3 of our total business.

[Himanshu Baid, executive]

Correct, sir.

[Unknown Analyst]

I mean if you think about a year back, it appeared to us that nothing can go right -- sorry, nothing can go wrong with that business, strong margins, continuous traction, strong 22%, 25% kind of a growth and new product categories, and it looks like as if there is no stopping there. But in less than 1 year, it seems to be a picture which is radically different. Therefore, what do you think this should drive our thought process and planning process? What kind of impact it should legitimately have on that? Because our product plans, and I know that you have calendar year-by-year for product launches each quarter for a specific geography, specific category, specific product and for a period of years ahead.

So what kind of lessons need to be drawn from this in your opinion? In terms of our planning process, how we conceive the business opportunity or imponderables, how do we take into account so that this sudden [fake] company in a way is presented to us that we witnessed actually degrowth in the European territory, which I'm sure would have come as a root surprise to you. So...

[Himanshu Baid, executive]

Absolutely. So we saw that...

[Bharat Shah, analyst]

How do you think of all this.

[Himanshu Baid, executive]

So Bharat bhai, it's a great question. And I think I'll answer in 2, 3 parts. One is about the market. So the European market has been very flat. The only market we were growing -- the reason we were growing was we were taking market share from certain customers, companies there. Market has been very flat. Secondly, what we saw was some kind of an inventory kind of a derisking by European players. And why it has happened in the beginning of the year? Because because of this whole tariff situation with China, U.S.-China thing, a lot of Chinese companies started dumping products in the European market. And people were confused about the situation that -- how the situation is panning out.

So we also got a shock that how Chinese companies can dump products, pricing so much in the market and where it's even sometimes hitting below the belt also in terms of pricing. So that kind of -- and then, of course, this whole mismatch started happening. But what has happened in last 6 after this whole mismatch happened in first quarter of the European financial year and even in the second quarter, what we have seen is now the demand has come back. I think the inventory mismatch, which was there has kind of kind of flattened out. And now we are seeing the demand coming back.

So I think the most important key development is our U.K. market where we have seen demand coming back strongly and also in Germany. So these were -- Germany was something which was a laggard for us and Germany has actually started coming back on track, and I think that was very significant for us. And also, we have seen a huge growth coming in Italy because Italy where it was kind of a market where we had a lot of control and a lot of tender was getting slowed down because government -- the health systems were not granting new tenders, and they were delayed. And now most of these tenders have been awarded. And I think now we are seeing the demand coming back.

So overall and some new product offerings have come out because if you see -- recall, we got our EU approvals only in April, May. If you recall, we had also called out in the last call, most of the EU approval, which were renewed, the UMDR. And some of the approvals have only come in June. So you can see the record of our certificates on our website basically. So all these approvals have just recently come. So once these approvals are back in place, so now we are getting back on track and the accelerator is back on the revenue side. So I think now we are very confident about the European market coming back to growth. But what we have lost what we have lost. So we can't cover it today, what we have lost in the quarter has gone. So now for quarter 2, quarter 3 and quarter 4, I think Europe should come back on track.

[Bharat Shah, analyst]

Which means if you look at in the first quarter, we have degrown as far as...

[Himanshu Baid, executive]

Yes, we've degrown by minus 6%, 7%...

[Bharat Shah, analyst]

Right. And year in entirety, we are saying we'll grow 5% to 10%, which means the remaining 9 months should be a period of decent double-digit growth rate for.

[Himanshu Baid, executive]

Absolutely. Absolutely, That is the point I'm calling out that we should come back to that double-digit growth, high double-digit growth. And that is what we are -- we're also calling out again.

[Bharat Shah, analyst]

So domestic grew in the first quarter by 20%. But year in entirety, we are saying we should grow 30%. That means the 9 months, we should grow well over 35% to make that happen.

[Himanshu Baid, executive]

That is already on the card. This is already under the process Bharat bhai. Because we have started 2 new divisions last year. And these 2 divisions have become active, so the cardiology and critical care. So they are ramping up. As we have talked about our stent deployment from 1,300, 1,400 stents go to 20,000 stents by end of the year. And then critical oncology segment is growing. And then our renal segment is growing, is growing at a healthy rate. So all in all, domestic and we are hiring 100 people in domestic market, 22 already been hired in the first quarter. So all in all, I think -- and -- but in the private sector, we've already grown 25% in quarter 1 in private sector, which is 90% of our business. So overall, that ramp-up is already happening.

[Bharat Shah, analyst]

And which means the remaining 9 months should represent materially different outcome compared to the first quarter. And given the scale, hopefully, margins also should be higher?

[Himanshu Baid, executive]

Bharat bhai, hopefully, yes, you're right. The math clearly says that. When you do the math, it clearly says because even in the first quarter, our gross margins have improved. It's not that our gross margin has decreased because we decreased our export sales. So we have done a lot of hard work in terms of launching new devices with higher margins. So we continue to work in that direction where we maintain a steady margin and healthy margin. So yes, as the revenue kicks up more, most of the expenses get already absorbed in the initial period. And I think we should see some margin improvement. But still we are saying we are going to have a muted guidance of 25% to 27%. But definitely, the target is to beat that number.

[Bharat Shah, analyst]

And to that extent, Himanshu, would it be fair if one were to say that actually domestic market, we need to regard it a bit more than what we have done probably so far.

[Himanshu Baid, executive]

I totally agree Bharat bhai.

[Bharat Shah, analyst]

Disregarded...

[Himanshu Baid, executive]

I think we have disregarded before COVID, we were disregarding this market. Only after COVID, we realized the true potential of domestic market because then there was a huge push even from the private sector to buy local products because the imported products were not available after COVID. There were export restrictions, there were import restrictions from different countries. So the industry kind of carved out out of this whole COVID wave. And you've seen the Medtech sector has grown phenomenally after the COVID -- COVID wave. When you look at a few companies where Apax invested in Healthium or Meril has got new investments, especially in their -- because of the cardiology and orthopedic business. So there is a renewed, I would say, interest from private sector in the local products, which are now equally good in quality.

[Bharat Shah, analyst]

Right. So in a way, it was probably for at least some time [Foreign Language].

[Himanshu Baid, executive]

[Foreign Language] You see the market, the trends are changing. And I think that's our -- now the real trajectory which we can see in the domestic market. Market is not growing at 30%. Market is growing at around 12%, 13% health care industry. But we are growing much faster than that. That means we are taking market share from international players.

[Bharat Shah, analyst]

Right. And what will we say about the next year? Should we expect that Europe and international territory will come back to...

[Himanshu Baid, executive]

100% Bharat bhai. We have 15 new launches planned next year in European market because we have one more cycle of approvals, which is happening pending right now, especially for our critical care products, which are also better margin products. And also, we are increasing our presence in Italy through manufacturing. So our current -- our operations in Italy are also seeing some uptake. So I think Europe will come back strongly, I think -- and our focus has been Europe. So I think 1 or 2 quarters are not going to make any difference in our long-term strategic plan.

[Bharat Shah, analyst]

So will it be fair to say that Europe will chug back to that 20% plus kind of a journey?

[Himanshu Baid, executive]

It's very hard to say. Bharat bhai it is very hard to say. I don't want you to hold my neck for that. But I think we are on track. And I think even in the coming quarters, you will see the improvement. I'm very sure. And definitely, see, we have one thing very clear. We will commit only what we can do. We will not commit something higher and say, oh, we didn't do it. There were XYZ reasons. We know -- and even in the beginning of the year, we have called out the international market business is looking slightly different than what it was previous year, and we have called out earlier. And even now we see first quarter, we have seen that though there is no impact -- significant impact on margin, if you see EBITDA margins only dropped by 70 bps.

[Bharat Shah, analyst]

Yes.

[Himanshu Baid, executive]

In spite of India business growing significantly, exports showing almost a flat trajectory, still our margins, that means we have done in terms of product improvement, better profitability. So we have done a lot of hard work in the hindsight in the back end. So that is going to give long-term rewards where exports growth come back, India business grows with a higher trajectory. So all that will show into numbers in coming quarters.

[Bharat Shah, analyst]

Sure. One last question. How do we take into our planning system, these new insights so that we are not kind of caught up with a sudden surprise of a kind that we got thrust into in this quarter. The signs of the were there in the last quarter when you...

[Himanshu Baid, executive]

There were signs in the last quarter already. See, Bharat bhai see always you have to recalibrate. So our recalibration was focused more on India. That was our first recalibration. So then we said, okay, we were recalibrating for the U.S. market. We said we'll not be overdependent on one market like Europe. And now you have seen that we have opened a subsidiary in Brazil for our direct presence in Brazil and B2C category.

We'll know -- earlier we were B2B, we are going B2C. So for every market, we are strategizing and seeing what the right thing to do. And we are taking long-term views on every market. See, Poly Med is not for a short term. We have products manufacturing ecosystem. So we are taking long -- and today, we are still the second largest Medtech company after Meril in India. And Meril operates in a very different segment.

[Bharat Shah, analyst]

If you just allow me one last short one. Therefore, '26, '27, if I have to put a little broad outlook, domestic growth, which you said at a strong 30%, which in 9 months will mean even higher, something similar should continue in the year thereafter, right, with the manpower and product initiative.

[Himanshu Baid, executive]

Yes. Domestic market, we are very hopeful that will continue and it's a high 25% number. So I've not called out a number for next year, so I can't give you exact precise detail or any guidance. But I think during the year, we will [top] up the guidance for next year because we have a very concrete business plan, Bharat bhai. Every year, when we give a guidance, we have a very concrete business plan. That is what we will do in each segment. And you rightly said initially, for every market, we have a very strong plan and what product we launch, when we will launch, how we will launch. So it's a very clear path defined.

[Bharat Shah, analyst]

And Europe, of course, will continue from where we are now beginning to pick up the trade. So if not...

[Himanshu Baid, executive]

Europe we're already seeing...

[Bharat Shah, analyst]

Healthy double digit should be there.

[Himanshu Baid, executive]

Yes, yes. We are already seeing the green shoots -- already we have started seeing the green shoots.

[Operator]

The next question comes from the line of Shubham Harne, Purnartha Investment Advisers.

[Unknown Analyst]

Just want to know the status of plants which are building and how much growth is dependent on these plants?

[Himanshu Baid, executive]

So basically, the plant, which is coming in Palwal in Haryana, this is for expansion of our renal capacity in years to come. So with the current capacity, we'll be able to manage up to FY '26, '27. Now going beyond FY '26, '27, we need additional capacity for renal. So that is what we are building there. And also in the cardio space, as we build more capacity, we'll be building. So all these are planned for FY '27, '28 capacity building in our core category business, which is cardiology, renal care, which are new businesses, that is where we are expanding more.

[Unknown Analyst]

So in Palwal, we are manufacturing for renal, planning to manufacture.

[Himanshu Baid, executive]

Yes, that is what we -- and also we're expanding our transfusion capacity.

[Unknown Analyst]

Okay. And...

[Himanshu Baid, executive]

We're also doubling that capacity there.

[Unknown Analyst]

Okay. And other than Palwal?

[Himanshu Baid, executive]

Other one is in Haridwar. Haridwar will be for domestic expansion, mainly whatever products we are making for domestic market. That is where we'll continue to expand our capacity in Haridwar.

[Unknown Analyst]

And by when it can go live?

[Himanshu Baid, executive]

These are all planned for next year -- mid of next year.

[Unknown Analyst]

So Palwal as well as Haridwar next year -- mid of next year.

[Himanshu Baid, executive]

I already mentioned, I think, in our earlier calls also.

[Operator]

The next question comes from the line of Zain from Dolat Capital.

[Zain Gulam Hussain, analyst]

Hello. I'm audible.

[Himanshu Baid, executive]

Yes, yes, please go ahead. I can hear you.

[Zain Gulam Hussain, analyst]

Sir, I just want to ask about dialysis machine. Post installation of dialysis machine, do you receive any services or do you provide any services for the repair maintenance?

[Himanshu Baid, executive]

Yes, yes. So we give warranty for 3 years. And after the warranty, then these are service contracts.

[Zain Gulam Hussain, analyst]

And can you quantify how much -- how much is the servicing...

[Himanshu Baid, executive]

No, no. We don't have any significant service revenue. So we don't call that number out.

[Zain Gulam Hussain, analyst]

And second...

[Himanshu Baid, executive]

That's not part of our core strategy. I think the important thing is to sell the machine servicing is just part of a maintenance thing. So it is not part of the core business.

[Zain Gulam Hussain, analyst]

Okay. And second question on other income, it was high. So does it include Forex or anything?

[Himanshu Baid, executive]

Treasury, mainly treasury.

[Zain Gulam Hussain, analyst]

Mainly treasury.

[Operator]

The last question for the day comes from the line of Harsh from Marcellus.

[Harsh Shah, analyst]

Just one question. On the European side, can you give us an update on the Chinese competitive intensity? You alluded that it had increased during the first quarter. But are you seeing that the madness sustained during this period as well.

[Himanshu Baid, executive]

Could you repeat that? Harsh, sorry, it was not very clear to me.

[Harsh Shah, analyst]

Am I audible?

[Himanshu Baid, executive]

Yes, you're audible now. The question was not very clear.

[Harsh Shah, analyst]

Yes. So the question is with respect to the Chinese competitive intensity. You alluded that it increased during the first quarter where they were selling at very low pricing. Are you seeing this competitive intensity sustained during the current quarter as well?

[Himanshu Baid, executive]

No, no. As I said, we are already seeing green shoots, and we are already seeing the market bouncing back. So I think we are pretty confident now that this quarter, Europe will do better than what has done in the past.

[Operator]

As there are no further questions from the participants, I now hand the conference over to management for closing comments. Thank you, and over to you, sir.

[Himanshu Baid, executive]

So thank you again, everyone. And I think, yes, it was a tough quarter, but I think we have been very resilient in terms of the business. The strength -- the fundamental strength of the company are very strong. The R&D pipeline is very, very strong. And the hiring, we have done significant hiring, and we continue to add more people, more headcounts in the organization. Of course, it's a cost, but then it helps us to build for future.

So I think that's what we are building. And I think overall, I think we would maintain a similar guidance, what we have told earlier, with India growing 30%, international growing 5% to 10%. But yes, as time progresses, next few months are very critical for global businesses. And I think we are pretty hopeful that certain tariff issues will be resolved soon, and then that will help us to go stronger in the U.S. market and maybe also in Europe in the near term. Thank you again very much, everyone, and thank you for being on the call.

[Operator]

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

[Himanshu Baid, executive]

Thank you everyone.