New year stock - Metropolis

Buy - METROPOLIS

CMP (NSE) 15:54, 17 May

1,932.75 -13.85-0.71%

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Sector

Pharma/Healthcare

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Reco. Price

3,440

Period

12-Months

Target Price

3,956

upside

%

Stop Loss

0

Last updated on

31 Dec, 2021

Metropolis is India's third-largest diagnostics player, with a strong B2C pathology franchise in five focus cities of Mumbai, Pune, Chennai, Bangalore, Surat and a combination of B2C & B2B business in >200 other cities in India. Metropolis offers 4,000+ diagnostic tests to individual patients, hospitals, other healthcare providers and corporates. It operates 125 clinical labs (including its Global Reference Lab in Mumbai) which are serviced by ~2,000 Patient Service Centers and ~10,000 Touch Points. Over FY16-20, Metropolis' patient volumes have seen 10% CAGR, while overall revenues have clocked at 16% CAGR. B2C segment, which accounts for 44% of Metropolis’ overall revenues, has grown at a much faster rate, of 20% CAGR, during this period.

Investment Rationale

Opening-up in core markets should drive better growth: Although Metropolis’ non-Covid revenue growth was muted vs. DLPL, mgmt. has guided that growth should pick-up with relaxations of lockdowns in Metropolis’ core markets of Maharashtra/South India. However, govt. business which accounts for single-digit revenue share for Metropolis is likely to be weak in 3Q; albeit, annual govt. volumes are expected to remain steady. Ramp-up in specialised & home collection (HC) segments continues to be strong, with specialised tests accounting for 43% of the non-Covid business and HC contributing 22% of B2C non-Covid business

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