Laxmi Dental Ltd

MS. AASHITA JAIN – NUVAMA WEALTH MANAGEMENT LIMITED

Ladies and Gentlemen, Good Day and Welcome to the Laxmi Dental Q2 FY26 Earnings Call hosted by Nuvama Wealth Management Limited.

This conference call may contain forward-looking statements about the company which are based on beliefs, opinions and expectations of the company as on date of this call. The statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.

As a reminder, all participants will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing “*” then “0” on your touchtone phone.

I now hand the conference over to Ms. Aashita Jain from Nuvama Wealth. Thank you and over to you ma'am.

Thank you, Danush and good day, everyone. I, Aashita Jain on behalf of Nuvama Wealth Management welcome you all to the Q2 & H1 FY26 Earnings Conference Call of Laxmi Dental Limited.

From the management, we have with us today Mr. Rajesh Khakhar, Chairperson and Whole-Time Director, Mr. Sameer Merchant, Managing Director and CEO and Mr. Dharmesh Dattani, Chief Financial Officer.

I now hand over the conference call to “Mr. Rajesh Khakhar for his Opening Remarks.” Over to you, Rajesh sir.

Thank you so much Aashita for the introduction. Good afternoon, everybody. A warm welcome to all of you and thanks for joining our earnings call.

On this call, we are joined by our M.D. and CEO, Sameer Merchant, CFO, Mr. Dharmesh Dattani and Strategic Growth Advisors, our investor relations advisors.

The Results and the Presentation are uploaded on the stock exchange and company website. I hope everybody has had a chance to look at them.

Following a good start to the year, we continue to deliver a robust performance in Q2 FY26, achieving our strongest ever quarterly sale for the second time in a row. During the quarter, we delivered revenue of Rs.72 crores, representing a 26.5% year-on-year growth.

Such impressive revenue growth amid a volatile and uncertain global economic landscape highlights our business models resilience, the effectiveness of our strategic approach, our commitment to operational excellence and the deep industry expertise we have built over the years.

In terms of margin profile, we maintain a healthy EBITDA margin of 15.3%, while the PAT margin stood at 11.8%. PBT, which is before taking into account the share of our JV profit, increased by 93.2% YoY.

It is noteworthy that our healthy operating margin profile is despite the inclusion of scanner sales, which are strategic in nature and carry a relatively lower margin profile as compared to our core dental products.

Interestingly, during the first half of FY26, we exceeded the number of scanners sold during the entire year of FY25.

Notably, the margins were weighed down by around 90 bps due to the impact of US tariffs.

As a company, we remain deeply committed to advancing digital dentistry, the use of AI in this field, enhancing brand visibility, expanding our dental network and leveraging the growing opportunities within the dynamic dental industry.

We are confident in maintaining our strong growth trajectory and meeting our full year revenue guidance while preserving a healthy margin profile subject to ongoing global uncertainties.

Now, I will request “Sameer, to give you some more color on our business performance during the Quarter.” Thank you, Rajesh bhai. So, during the quarter, we scaled new heights in both dental lab and aligner solutions businesses. If you look at our product mix, excluding scanner performance for Quarter 2 FY26, the dental laboratory business grew by a solid rate of 29.9% year-on-year with a robust growth in both domestic and international markets.

Domestic lab business grew by 23.2% and stood at Rs.22.5 crores. This growth is primarily enabled by the scanner sold in the previous few quarters. This business will continue to grow at a fast clip with higher adoption of scanners amongst our dental network.

Our international lab business grew faster than the domestic lab business with a 39.2% year-on-year growth and stood at Rs.18.5 crores. This growth is driven by an increase in business from existing dentists as well as addition of new customers and new geographies during the quarter. This growth is coming despite the uncertainty around the tariff situation in the US.

To future proof our business, we are targeting expansion of our client base across newer geographies.

In Quarter 2 FY26, aligner solutions revenues rose by 12.3% on year-on-year basis to Rs.20 crores.

Within this, we have two parts, Bizdent, which is the clear aligner business and Vedia, which produces raw material and machine under the name of Taglus that is used for manufacturing aligners.

Bizdent is largely India-focused, whereas Vedia has a well-diversified global presence across multiple countries.

As mentioned in the previous earnings call, we continue to witness some competitive pressure in the domestic markets on a Bizdent business. While we reported a steady number on year-on-year basis, we were able to grow on a quarter-on-quarter basis. However, Vedia delivered a growth of 29.9% (This is on a YoY Basis). This showcases the superior quality of materials and their growing demand and acceptance across the global markets.

We were successfully able to add new customers as well as open up new geographies for Taglus.

In Quarter 2 FY26, scanner sales grew by 94.7% on a year-on-year basis. This is in line with our strategy towards digital dentistry by targeting to increase our digital penetration to more than 90% of the dentists we work with.

It is a win-win situation for all stakeholders as both the patient and the dentist get a good experience at the time of taking the impression and also it brings efficiencies to the entire process while saving a lot of time as well as cost.

Around 3% of revenue came from our other businesses which we are intentionally scaling down some of these businesses which are typically low margin in nature.

Now coming to our “JV's Performance: Kids-E Dental, on a quarter-on-quarter basis, this business delivered a growth of 21.4%, reflecting continuous and gradual improvement in the business performance. However, the base of last year was on the higher side as we added new geography and customers in that period. It is the nature of this business where we usually witness larger full kit orders in the initial phase of new customer addition which then gets normalized in the form of repeat orders.

From a long-term perspective, the company sees immense opportunities. In the global business, we continuously engage with DSO, large dental labs, chains of clinics to grow our business in the dental lab, Taglus and Kids-E Dental.

From a domestic perspective, we see significant potential for growth led by higher digital penetration driving sales for our dental lab and aligner solutions.

There are several tailwinds like rising dental awareness, stricter regulatory norms, the importance of good quality products and overall consolidation which will give a further boost to the market. With continuous focus towards investment in automation and R&D, we at Laxmi Dental are setting a foundation for the next phase of growth. Thank you so much.

I now would like to hand over to our “CFO, Mr. Dharmesh Dattani” to take it forward.

Thank you so much. Allow me to walk you through our financial performance. Let me give a glance at our “Consolidated Financial Performance During Q2 FY26.” Revenue from operations grew by 26.5% year-on-year, reaching Rs.72.3 crores, up from Rs.57.1 crores in the same period last year.

Gross profit for the year stood at Rs.49.5 crores, reflecting 14.5% growth on a year-on-year basis.

The contraction in GP margin is owing to revenue mix primarily driven by higher scanner sales.

Employee costs, which are a major part of our overall expense, stood at Rs.25.8 crores as against Rs.20.5 crores in Q2 FY25. The increase was on account of annual increments as well as ESOP expenses amounting to Rs.1.7 crores.

Our EBITDA for the quarter stood at Rs.11 crores, up 26.3% on a year-on-year basis, with margins at 15.3%. EBITDA margins for the quarter were impacted due to US tariff, ESOP expenses, and annual salary increments. Our adjusted EBITDA, which includes recorded EBITDA, 60% of Kids-E Dental PAT, 49% of IDBG AI Dent PAT, and ESOP expenses, stood at Rs.13.7 crores, reflecting a 25.7% year-on-year growth.

Finance costs declined significantly as we paid off the entire amount of debt from our books.

Our PAT for the quarter stood at Rs.8.5 crores, which is an increase of 44.7% year-on-year from Rs.5.9 crores.

Coming to our “H1 FY26 Performance.” Revenue from operations stood at Rs.137.9 crores as against Rs.116.8 crores in the previous year, reporting a YoY growth of 18.1%. EBITDA for the period stood at Rs.22.9 crores, with an EBITDA margin of 16.6%. Adjusted EBITDA for the period was Rs.28.4 crores.

The company reported a PAT of Rs.16.9 crores and a PAT margin of 12.2%.

We have done a CAPEX of around Rs.6 crores in H1 FY26.

Our cash and bank balance, including fixed deposits, stood at Rs.93.7 crores.

Currently, the company has Rs.64 crores of unutilized funds from the IPO proceeds, which will be deployed for CAPEX over a period of time.

With this, we conclude our opening remarks and open the floor for Q&A. Thank you.

Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from the line of Tushar Manudhane from Motilal Oswal Financial Service. Please go ahead, sir.

Thanks for the opportunity. Sir, just on the gross margin front first, with the scanner sales expected to continue in the subsequent quarters as well, so, 68% to 70% is the kind of gross margin to look forward now?

Hi, Tushar. So, on that segment, again, it will depend on the mix of scanner versus our core dental business. If the mix remains currently what it is in Q2, then that should be the expectation. But we expect that along with scanner, we will grow the other businesses as well. So, what we foresee is mid-term to long-term, this mix should change and come back to originally where we were in the range of 75% to 80%.

Probably, that would be FY27 onwards because we expect subsequent second half also to have good scanner sales, is that the right understanding?

For now, yes, we expect that. The scanner momentum is good in the current year and also we expect it to stay reasonable in the next year as well.

And just secondly, on the international business, while you had US tariff impact, but the international lab business continues to be very strong. So, just trying to understand that, is it that the realization has been impacted while the overall revenue has been there and hence the profitability for the quarter?

So, the revenue is increasing primarily because not just on the US part and like we said, we are exploring new geographies, we have added customers, post our IDS event that we did in March in the different geographies as well. So, that is leading to the revenue. But again, yes, tariff is there.

Currently in that situation, that is why profitability has been impacted there. But like I said, we are seeing a lot of news coming in every single day. In fact, yesterday there was a news from Trump that it should have an agreement very soon. So, from a short-term perspective, we are absorbing that because we do not want to get into a panic situation and press that button for our customers who are long-term with us. But we see from a mid-term to long-term that this should not have an impact.

And lastly, as far as guidance is concerned with 24%-25% revenue growth, does that stand intact for FY26? And also, if you could help us understand in terms of the margin considering this US tariff volatility for FY26? Thank you.

So, I think what we mentioned during the start of the year that we are confident to do 20%-25% revenue growth and between 13%-15% PAT. Of course, this all is very fluid as it moves forward.

But currently, we are confident that we should be in that range.

So, on the margin side, given that we are at 15% EBITDA margin? 13% to 15% PAT? Okay. Thank you.

Our next question comes from the line of Ajay from Niveshaay. Please go ahead.

Thanks for the opportunity. Sir, my question is because I am fairly new to the company, I want to ask on the competition intensity. So, with this dental lab industry with only two large organized players like one is us and then DentCare in South. But what I have observed is several regional players like from where I belong in the Surat city, so, players like Advanced Dental in the West and maybe even a listed player like Vasa Denticity in North scaling up aggressively through their acquisitions in the dental lab like through Smile World. So, my question is, I mean, how is Laxmi Dental positioning itself to maintain its leadership edge and like what sort of structural or technological advantage do we have like among these regional or smaller players which maybe help us differentiate among themselves? And just a follow up on this because given the rising competition intensity and what I understand the business model works is because is that the reason why we are aggressively pushing towards selling scanners so that maybe that helps us getting more commitments from maybe the dentists that helps us getting better utilization at our factories? So, maybe you can maybe comprehensively answer that on the competition intensity and what strategies do we have to maybe I mean that would be really helpful?

I think on the competition side while you look at the dental lab scenario but again we have always seen Laxmi Dental as a complete end-to-end integrated dental company. So, in spite of whatever you said we were able to grow by 23% in the dental lab business. So, yes, competition is there in every category of business. To say that there is no competition in any business is it is not reality. So, what we feel is we are doing the right things and the scanner like you mentioned where we are focusing on digital dentistry is not just today, we started this almost seven years back with first time when we launched our service. And at the same time that time itself when we were the first people to bring in 30 scanners with 30 people of doing scanning, we have always thought that we should focus on competition which is within us what we feel we can do the best. And in that regard like we said we

have taken steps of digital dentistry which is helping us. We are India's only branded dental lab if you see where we sell our brand called Illusion Zirconia whose brand ambassador is Madhuri Dixit.

On the third side, we have great technology that we use not just with the scanner but the whole integration of scanners to the process and to the product delivery and also together combined with that our branding. It is important to remember that we are a 35-year-old company. Rajesh bhai started this in 1989 which was formalized in 2004, but name of our chairman and Laxmi goes back that long.

So, that trust is very hard to build on a short term with anyone. So, combining all those USPs that we have we are extremely positive that we will keep growing the dental lab business and we will keep being dynamic or whatever is needed whether it is a brand, whether it is digital dentistry, whether it is hub and spoke model to make sure that we always remain at a leadership position.

Got it, sir. Just a follow up like because you mentioned that Laxmi's history goes long back. So, I mean I just wanted to understand further on this like I mean how do we plan to ensure the retention and exclusivity of clinics, I mean as more and more labs adopt like maybe this digital workflow and maybe the competition increases, I mean I wanted to understand more on how does the industry function, is it like maybe a dentist when gets our scanners in their clinics, is it like they prefer a single vendor who can maybe give them the crowns or whatever the products we have for the labs, is it like some exclusivity which we have or is it like one can maybe even consider through the regional players? So, maybe more on how does the industry function and in that given how do we plan to ensure our retention and exclusivity of clinic, that will give better understanding?

Sure, that is a good question. Now on the industry part and what we have been able to do and how we would do it in the future in terms of retention, I think we have a history of 35-years showing growth, showing retention. The number one feature where you as a patient if you go to a dentist, if you choose a dentist you are choosing the dentist based on trust. Correct. You trust that if I go to this dentist he is going to deliver me the right things and that is the same thing for dentists when they come to us. The first thing in their mind is the trust. That I trust this company, it is 35-years-old, I trust it will give me a good quality, I trust it will give me a great service, and I trust in the brand itself.

So, those are the aspects from our side which we are focusing apart from… of course you can do a lot of other things, education, dental events, training programs, CDE programs, all of that is part and parcel of business. But these things stand out that there are very few like you said who have this level of relationships of 35-years, this level of trust.

Understood, sir. That gives a better understanding. And just one final question. On the scanner side, are we manufacturing these scanners or we like maybe part of our trading like maybe which we are maybe getting it from outside and then just getting them deployed in the clinic, just if you can clarify on this?

So, currently we have a private label agreement which so the scanners are manufactured based on our specs, but in the future we are open to more models.

And because from what I observed is the scanners are filled with Chinese scanners and there are again some German and Korean and few of the import data which we may be able to gather, so, there are even a lot of imports which are coming from Germany of the scanners, so, wanted to know on our procurement like are we sourcing from which geography if you can maybe help?

So, that I think is a lot of information. With the questions that you are asking, are you a dental technician, are you running a dental company?

No, sir. No, sir. Just that I have done some like a conversation with a lot of dentists around me to maybe understand because the space is a lot attractive and given how things are changing, I mean, I see the space which we are in a good big opportunity underlies and our focus on maybe international labs and the aligner segment and then the Kids-E. So, I mean overall we are very well placed. Just wanted to understand and get more clarity on the business front, I mean maybe the competition intensity and I mean how does the business really function? So, I have had a lot of conversation with a few doctors and that is why just confirming and getting more understanding on this.

No, that is good. Only thing I will simply say is anything that we do we are always looking at vertical integration on the backward side. So, backward integration we have done it with our aligner business, we have with our pediatric business, and in the future if we have to do it with any of our other businesses whether it is scanners or other material business we will do that where it will help us create more value for Laxmi Dental and their investors.

Understood, sir, understood. I will join back in the queue and thank you so much for giving detailed answering.

Our next question comes from the line of Kamlesh Bagmar from Lotus Asset Managers. Please go ahead.

Thanks for the opportunity, sir. I had just one question on like cash flow. So, in this quarter if I see your payables, so you had paid roughly around Rs.23 crores of payables in this first half, so, let us say it has almost virtually come to like Rs.5-odd crores. So, what has been the reason for paying for such a sharp reduction in trade payables?

So, in the last year we had come out with the IPO and there were certain payables relating to those IPO expenses which were sitting in those trade payables account which got cleared during the H1.

So, therefore, those are the payments related to those IPO expenses and hence you are seeing a decline.

Okay, got it. Thank you, sir. But lastly like what working capital days we are bringing like say factoring in because I was of the assumption that these trade payables are more of like say part of your regular operations? So, Rs.23 crores of like say payment for that listing or listing or IPO-related expenses which seems to be too high given the fact that we had hardly Rs.130-140 crores of IPO.

So, those close to Rs.20-21 crores-odd figures were pertaining to the IPO-related expenses and therefore you are seeing those declines.

Okay. And for our assumption how much working capital days we can factor in?

Currently, it is in the range of about 65-days-odd. Great, thanks a lot.

Our next question comes from the line of Devansh Tandon from Findoc. Please go ahead sir.

Hi, thanks for the opportunity. My question is regarding the EBITDA margins which is currently at 15.3%. I understand that it is mainly due to increase in scanner sales, but going ahead are there any plans of increasing the margins or is it possible that it can go to a previous size of around more than 20%?

So, for us that is where we intend while you said about the margin. So, currently if you see on an H1 basis we are 16.6% already while the quarter is at 15.3% and H1 is 16.6%. That is where typically H2 for us historically have been stronger than H1 subject to of course what the situation is happening globally, but then that is where we intend and we aim to deliver.

So, is there any timeline by which you are targeting to achieve that?

If you ask us timeline I would love to do it next quarter, but then we have to see how all the dynamics are, but I would say in terms of long term that is for us a number which internally we are very confident about.

Okay. And my next question is regarding your ad spending. So, it is visible that some of our peers in segment are spending aggressively on their ads. So, we as a company Can you repeat please?

My question is regarding your ad spending. Some of our peers are spending aggressively. So, are we as a company planning to increase our brand visibility by expanding more on our advertisements?

For now, I think we are comfortable to what we are doing and we have said that our spend on all the promotions combined is less than 5% and that is where we intend to stay for now. Okay, sure. Thank you.

Our next question comes from the line of Akash Shah from Investec Capital Services Limited. Please go ahead.

Hi, sir. Hi, sir. Sir, just wanted your reiteration on the gross margin and EBITDA and PAT margin guidance for FY26, '27 and '28?

I think we on a perspective it is very hard for us to tell you '26, '27, '28 but what you should see that as Laxmi Dental we have said that 20% is at least the target or first target first benchmark to reach in terms of the EBITDA and PAT margin for this year we have already said 13% to 15%. So, keeping that in mind as an organization as we keep exploring new geographies, domestic versus international expansion, branded versus technology play that we are doing, we hope that in the future we can give you more clarity on how this will move upwards.

Sure, sir. So, sir in response to the question of an earlier participant you said that this EBITDA margin guidance will be met in the mid-to-long term. So, is that understanding, correct? Yes, that is correct. Okay. Thank you, sir.

Our next question comes from the line of Sarosh Sethna from Raeden Capital. Please go ahead.

Hi, good afternoon, sir. Sir, I just wanted to get some sort of color as to could you just cover what you do in the pediatric space and where you are aiming for that sector to be at in a couple of years time?

Sure. So, on the pediatric side, Sarosh, I would define us as a full-fledged pediatric solutions company whether it’s a crown that a kid needs from steel crowns, zirconia crowns, bioflex or flexible polymer crowns to MTA putty to space maintainers to silver diamond fluoride. So, there are a lot of products that we have in that range. And if you ask us what is our vision for that company in the future like it is for whole of Laxmi Dental is to be truly international company which is working in, I would say every country on the planet where we can sell the product. Currently we are confident and we feel that our product range is such that we can sell in every country on the planet provided we do the right amount of BD to reach the country and we get the regulatory clearance to sell in that country. So, that is the similar vision across all our businesses.

Okay. And from a revenue breakdown point of view, what is the goal for this sector to eventually be at?

Again on the revenue side more than that I would say on the growth side like we have said in the past, 20-25% growth for this year and like I said as we come closer we will keep giving you more updates on the holistic business. On the individual business, there are different milestones internally that we have, but we would always like to focus from an investor perspective to give business which is more holistic than individual.

Okay, thank you. I will come back into the queue.

Our next question comes from the line of Ravi George from Tradejini Financial Services. Please go ahead.

Hi, good afternoon. This is Ravi here from Tradejini Financial Services. Congratulations on the strong top line momentum this quarter. So, I had a few questions to understand the underlying trends.

So, my first question is on Kids-E dental segment. So, do you have any R&D or CAPEX that is planned in this segment and Kids-E Dental seems to be getting back on track like other international regulatory approvals and export registrations moving as per plan?

Great, thanks. Firstly, thank you so much for congratulating us. We appreciate that. Number two, on the Kids-E side yes you are right, we have seen good growth quarter-on-quarter and the regulatory clearance in the different countries is moving as per plan. So, we can expect once we get those clearances this will move stronger.

And can you talk about the R&D expense that you have planned?

So, R&D expense is not major I would say. We have an R&D team, we are doing R&D, but it is reasonably in control.

Fine, fine. Sure. So, I have one more question. See, on the aligner side the B2B2C segment seems to have stabilized after facing competition earlier. Now, what changes have you made in pricing, branding or channel strategy, have you offered any kind of discounts to regain momentum?

So, I do not think that is the strategy. The reason if you see we have been able to in fact improve our margins from what we were last quarter to this quarter in Bizdent which is the aligner business from 6.8% to 15.8%. That is the primary reason that we are not going on that path. We are trying to focus and see, the best part which we explain the investors who are with us that we are an end-to-end integrated company. So, when we see certain scenarios which on a short-term basis could have an impact, we are always focusing on the margin part and then we will make sure the growth is on the

other segments. And similarly, because every segment, every business goes through this process and that is exactly what we feel in our mind that currently if the aligner segment is doing this, we actually on quarter-on-quarter are growing, it is not that we are not growing, we are growing the top line, we are improving the margin and that is how we see it forward that we will always be focused on growing the top line along with the bottom line. At no point in time we intend to really overspend on what we are doing to just have the top line.

I have one question. You have this large cannabis that you have built. So, how are you planning to use the data and could there be a software or subscription component or something like that over time?

There could be many things. Once you are in technology, like you said, building technology, deploying the hardware, deploying all the necessary software to make sure it works seamlessly, is a very tough thing to do, which is what we are doing right now. But when we have that base, currently the base is 1,000, 1,200, 1,500, once this base becomes in the next couple of years, 5,000, then all the efficiencies of scale, the efficiencies of subscription model, the software model, a lot of things will open up for us. And that is why this strategy has been so important for us since the last couple of years, that this will give results in the next mid-term to long-term where the company and the investors will really see the difference that we are creating. Thank you. Thank you so much, sir.

Our next question comes from the line of Aashita Jain. Please go ahead, ma'am.

Let me ask one question on this aligner business. You mentioned the competitive intensity is high in this business. Could you please elaborate on this and how are we positioning ourselves in this space and what is the strategy going forward in this segment?

Hi, Aashita. So, on the aligner business, like I said, our positioning in the past, we being the branded player, we having the trust factor, so the positioning is very similar that we will keep our brand in terms of trust is the number one component that when someone prescribes Illusion Aligner as a dentist, they have to be assured of the result. But at the same time, we are expanding the product portfolio like we have introduced Teen Aligners, which was not part of our portfolio, it has just started. We have introduced PEOT, which is pre early orthodontic trainers for pediatric patients. So, we are expanding the product range, at the same time increasing the penetration amongst existing dentists who are already with illusion dental lab and increasing our portfolio to different kinds of dentists, like not just the orthodontist, but the general dentist as well as the pediatric dentist. So, that on a mid-to-long-term will make sure that we are constantly growing since we are not just expanding

in geography, but we are also expanding the dentist network in terms of the type of dentist, orthodontist, general dentist, pediatric dentist and also the range of products that we are expanding.

And any comment on the competitive intensity?

I mean, it is there, like one of the persons previously mentioned that this is like a go-to category for a lot of people. So, yes, there are people who are coming in, smaller startups doing something, aggressive discounting, but all in the end, it is going to be survival of the fittest and we are extremely fit in terms of our book if you see. As a company, we are solid in terms of growth, we are solid in terms of EBITDA, we have great PAT. So, all in all, if we have to weather the storm for a couple more quarters, we will weather it. But eventually, everyone will fizzle out and there may be a few players left and then the growth exponentially will start again. In spite of that, but if you see, we are still growing quarter-on-quarter, so it is not that we are not growing, we are still growing. But it is just that we are pacing our growth in a way not to burn too much.

Understood. And just on this Kids-E Dental, you mentioned that the country registrations are going well. But when do you expect the historical growth rate of 25%-30% to come back in this business and country registrations to be over for the Kids-E dental?

So, I feel that based on the feedback that we have had from our regulatory team, Q4 is when we expect to get the CE, which is an important step. CE opens up almost close to 40-countries for us in the world. And then the next step is going to be MD-SAP. So, once CE opens up, I think we should go back to the numbers that we were in the past in terms of growth.

Understood. And just lastly, on this lab business margin, if we see for the last two quarters, we were in the range of 20%-plus, now for this quarter, it is 15%. While you mentioned about the tariff impact and increments as well, but anything else to highlight and how should we see these margins now moving in the coming quarters?

So, see, operation efficiency will drive as we will get more geographies, more customers, this will drive the efficiency. Two, again, tariff is there, if tariff goes away, this straightaway goes up. So, we just have to wait and watch of how the global scenario pans out.

Understood. That is it from my side. Thank you. Thank you so much, Aashita.

Our next question comes from the line of Smith Gala from RSPN Ventures. Please go ahead.

Yes, thank you for the opportunity. I just wanted to understand the scanner sales that we are doing in a bit more detail? Firstly, I wanted to understand what kind of benefit the scanner actually provides?

I understand that we are selling the scanner at lower cost, but it gives us a benefit of increased scale in the future, and for the dentist, it gives them more accuracy. So, what was the mistake rate or the error rate in the past which the scanner sale is solving?

So, Smith, thank you for your question. We usually look at it in a more holistic way that when a dentist adopts a scanner and when we sell a scanner, there are two different parts, correct? So, let us go to the dentist first. They are most important here as customers. When a dentist adopts a scanner, it is not just that the remake rate or the error rate goes down. Of course, that is absolutely understood that once you move to digital technology, it is going to be better than the physical technology that they are using. But at the same time, the turnaround time where, say, a physical impression from anywhere in the country, they want to send it to Mumbai or even say within Mumbai, it is going to take them morning session to evening session, six, eight, ten hours, any other city takes 24-hours, but with a digital scan, it is going to take them two minutes. That is one part. Number two for then is tremendous patient comfort. I do not know, Smith, if you or someone in the family would have made a crown or a cap and you had that silicone thing getting in your mouth and staying there for three minutes for it to set and remove, it is not the most comfortable feeling that you have. Correct? True. Yes.

Yes. That feeling completely goes away. So, the scanner moves, a dentist who start say previously maybe say within the first month or within the first three months, we can take a scan like in 30- seconds. So, it just moves around in 30 seconds in your mouth, and the scan is done. So, that comfort is absolutely amazing for a patient. Number three, the OPEX versus CAPEX for a dentist. Now, when a dentist makes an impression, it could range from 300 to 700 or maybe up to 1,000 depends upon what kind of materials they are using and what kind of product that they are giving in your mouth.

But when they use a scanner, it is a capital cost, the scanner does not have any operation cost, they can just scan. What is using is just electricity on a laptop. That is it. So, that way, the dentist has tremendous efficiencies as compared to CAPEX and OPEX. So, there is no inventory that he needs to maintain. Number four is when they send a scan versus an impression, now, you imagine, I am sure everyone who is on the call here would have had to go to a dentist when the dentist calls and say, your impression is proper, you will have to come back again, I have to do it again. Because the physical impression goes to a dental lab, the dental lab will turn the negative replica, which is an impression to a positive replica, which is a plaster model. And then we identify, oops, there is a little bit of an issue, and then the dentist calls you back. Versus digital, we have a service which we really focus on and we are really pushing a lot of techs in that it is called LSV, which is Live Scan Verification. The Live Scan Verification when a dentist scans, currently takes about three to five minutes based on the internet bandwidth for a dentist to scan, reopen that scan and you can give him

live feedback within five minutes. So, that is like you do not have to go back, you are okay to wait 10 more minutes versus going back to a dentist. So, that is one of the key factors that a patient visits are reduced. So, on the dentist side, these are all great parameters, which while they want to invest in digital dentistry and from the lab side to us, we do not need a physical shipment, so we are saving logistics, we do not need to convert a physical impression to a plaster model and then convert it to digital. So, that is less steps, less people in the system. We do not need to wait for a dentist or for us to call them saying, oops, there is a problem in this impression, can you make a new impression? So, we are spending twice on logistics for the same impression versus when they send digital, we can answer them right away. And then once it comes digital, our efficiency in the lab also improves. So, all in all, this is a tremendous win-win for this. If you study more, I would request anyone who wants to do this study more online about how developed countries in US and Europe have done this and they have been super successful.

Okay. And one quick question, the 13% to 15% PAT margins, which you guided is including the tariff impact or excluding the same? Sorry, can you repeat that? I missed it.

The 13% to 15% PAT margins, which you have guided for FY26 is including the tariff impact or excluding the same?

Right now, if you see our H1, we are at 12.2%. So, in our mind, we feel we can still do it between 13% to 15% even at the current scenario, but like I said, we have to see if 50 becomes 10 or 50 becomes 100, nobody knows, you do not know, I do not know what happens. But for now, if we are at 12.2%, we are healthy and we said that H2 is always stronger than H1.

Okay. Thank you. All the best for the future.

Our next question comes from the line of Veer Rajesh Vadera from Niveshaay. Please go ahead.

So, my first question was earlier we used to take minimum work commitments from dentists while deploying our scanners. Since scanners are a high-ticket investment and smaller clinics usually avoid such cases, so are we still following the same commitment-based model or has the structure evolved as scanner penetration has increased? And my second question was regarding Vedia Solutions. Under Vedia Solutions, we manufacture raw materials for aligners and our related dental products. So, considering players like Prevest DenPro makes margins of 35% EBITDA and in the same raw material manufacturing business. So, how would we see margin potential of Vedia Solutions, particularly at that segment?

Great. So, I will go to the first question where you said on the scanner model. Now the scanner has two models. Like you said, not every dentist will be able to afford it today, but eventually in the next, I would say five years, majority would have it like an x-ray. In the past, they had physical x-ray.

Now, a lot of dentists, I would say majority percentage have digital x-ray. Similarly, we see that the scanner industry will pan out that way. And that is the precise reason model one is with minimum commitment. The model two is we give scan as a service. So, we have our salespeople who have a scanner with them and by appointment, they go to a dentist and along with the help of the dentist, they can do a scan. For that, the dentist has to pay a very small fee, which is similar or lesser than what they would spend on an impression. So, those two models are hybrid because what that does is when we give scan as a service, it opens up them for utilizing the scanner, using the scanner and two, creates a sales funnel for us because we precisely know that X number of dentists are calling us maybe 5x a month or some of them are calling us 15x a month. So, when we see that traction moving upwards is when we go back to the dentist in terms of selling the scanner. Now, coming to your question two on the Vedia part, already, if you see on the Q2, we are at 23.6%, and we see today we are still investing in terms of BD, in terms of marketing, in terms of R&D to create a profile of products in terms of regulatory clearances where we want to move to 150 countries in the world. But once we are on a stabilized position, I think this is a good business where it can see a margin upwards of close to 30% in the future.

Okay. And under Vedia, as per my knowledge, we are manufacturing some thermoforming machines. So, are we also selling that machine? Yes, we are.

That is also like scanner, the trading part or these are manufactured by us? No, we manufacture it ourselves. Okay. Thank you.

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

Thank you. With this, I conclude the call. If you have any further queries, please contact SGA, our investor relations advisors. Thank you, everyone for joining us today on this earning call. Thank you so much, everyone. Thank you.

Thank you so much. On behalf of Nuvama Wealth Management Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.