| Experienced management and established track record of operations:
Hyderabad-based Virinchi Limited (VL) was incorporated in 1990 by Mr. Vishwanath Kompella and is engaged in providing IT-based products and services to fintech companies. The company’s flagship product, Q-Fund, is widely used by alternate finance companies in North America to provide short-term financing to sub-prime customers. In 2016, Virinchi Health Care Private Limited was incorporated as a subsidiary of VL, with an initial hospital capacity of 350 beds in Hyderabad, which has since been expanded to 600 beds. The Virinchi Group (VG), promoted by Mr. Vishwanath Kompella, benefits from his over three decades of experience across the IT and healthcare sectors. With an established presence of more than three decades in the IT industry, VL’s revenues are entirely export-oriented, primarily catering to the North American market. Acuité believes that the Group’s long operating track record, strong industry positioning, and promoter experience are expected to support a stable and sustainable flow of revenues over the medium term.
Above average financial risk profile:
Financial risk profile of the group is marked by comfortable net worth, moderate gearing and debt protection metrics. Group’s net worth stood at Rs. 319.09 Cr. as on March 31, 2025 compared to Rs. 359.27 Cr. as on March 31, 2024. The decline in net worth is on account adjusting the intangible assets, which has increased to Rs.153.48 Cr. as on March 31, 2025 from Rs.92.86 Cr. as on March 31, 2024. Virinchi group’s debt position stood at Rs.292.49 Cr. as on March 31, 2025 (comprising finance lease liability of Rs.132.50 Cr, long-term debts from bank of Rs.70.48 Cr, unsecured loans of Rs.31.03 Cr, short-term debt of Rs.31.41 Cr. and current maturities of long-term debt of Rs.27.07 Cr.) as against Rs.329.86 Cr. as of previous year end. The gearing remained healthy at 0.92 times as on March 31, 2025. The total outside liabilities to total net worth (TOL/TNW) also remained healthy at 1.17 times as on March 31, 2025 as against 1.11 times as on March 31, 2024. The debt protection metrics have remained moderate with interest coverage ratio (ICR) of 2.44 times and debt service coverage ratio (DSCR) of 1.18 times as on March 31st 2025. Debt to EBITDA stood at 3.01 times as on March 31, 2025 against 2.89 times as of March 31, 2024.
During FY2026, the group's long-term debt is expected to increase by Rs.6-8 Cr, primarily to fund the capex in the segment towards a data centre. Additionally, the promoters have infused equity of ~Rs.16 Cr. in VL and ~Rs.7.70 Cr. (including share premium) to meet the working capital requirements of the healthcare business and to support capital expenditure in the IT segment. Acuite believes that the financial risk profile of the group will remain moderate over the near term in the absence of large debt funded capex.
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| Moderation in scale of operations:
The Virinchi group reported moderation in its scale of operations during FY2025 and 9MFY2026, primarily on account of weaker performance in the healthcare segment owing to attrition of specialised doctors, which impacted patient footfalls and revenue. Group’s revenue stood at Rs.301.13 Cr. in FY2025 as against Rs.300.03 Cr. in FY2024, which was declined from Rs.311.94 Cr. in FY2023. The declining trend continued in 9MFY2026, with revenue of Rs.218.82 Cr. compared to Rs.233.08 Cr. registered in 9MFY2025 and expected to end FY2026 with revenue of Rs.295-300 Cr. Segment wise healthcare business (VHPL) revenue declined to Rs.104.15 Cr. in FY2025 from Rs.133.15 Cr. in FY2024 and further to Rs.65.5 Cr. in 9MFY2026, due to continued impact of doctor attrition.
Operating profitability of the group moderated to 29.89 percent in FY2025 from 36.40 percent in FY2024 and further to ~29 percent in 9MFY2026 (9MFY2025: ~31 percent), primarily driven by contraction in the healthcare segment (amid attrition of specialised doctors), resulting in lower operating leverage and compression in segmental EBITDA. Consequently, the PAT margin declined sharply to 0.16 percent in FY2025 (FY2024: 4.49 percent) and further to -5.35 percent in 9MFY2026, as the reduced operating surplus was inadequate to absorb the large fixed cost base, including depreciation and finance costs.
Acuite believes, the group’s scale of operations is expected to improve over the medium term, supported by ongoing corrective measures in the healthcare segment and expansion in IT services segment, which is likely to partly offset the volatility in healthcare earnings.
Intensive working capital operations:
The working capital operations of the group are intensive which is evident from the Gross Current Assets (GCA) of 201 days in FY2025 as against 224 days in FY2024. Stretch in GCA is mainly on account of elongated debtor days at 98 days in FY2025 from 90 days in FY2024. Receivable period in healthcare segment is generally stretched as the recovery from general insurance, ESI and government’s schemes takes 3-4 months to recover. However, debtors in I.T business will be recovered in 30-45 days. The creditor days stood at 209 days in FY2025 as against 181 days in FY2024. The fund based working capital limits were highly utilized at an average of ~96 percent in the past 12 months ending March 31, 2026. Acuite believes that working capital operations of the group will remain intensive over the medium term as the nature of its operations.
Highly competitive industry and stringent regulatory framework, reputational intensive healthcare sector:
Virinchi Limited and its healthcare subsidiary, Virinchi Healthcare Private Limited, operate in highly competitive and closely regulated environments, which pose common challenges to both entities. The IT segment is marked by intense competition from large, well-established players with superior scale, stronger bargaining power, and pricing advantages, in addition to exposure to industry-specific risks such as foreign exchange volatility. Simultaneously, the healthcare operations function within a stringent and evolving regulatory framework, where frequent changes in policies, compliance norms, and statutory requirements can materially impact operating flexibility and cost structures. Further, the healthcare business is reputation-sensitive, wherein any lapse in clinical procedures, service quality, or operational controls could adversely affect public trust and brand equity. Accordingly, sustained performance remains contingent upon the Group’s ability to maintain robust governance practices, ensure strict regulatory compliance, and uphold consistently high standards of service delivery across businesses.
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