Diagnostics chain Metropolis Healthcare, after receiving a good response for public issue, will make its debut on bourses on April 15.
The company has fixed issue price at higher-end of a price band of Rs 877-880 per share.
The Rs 1,204-crore public offer was subscribed 5.84 times during April 3-5, driven by a strong subscription from qualified institutional investors.
After a good response to the issue, analysts who spoke to Moneycontrol expect 5-10 percent listing gains. But if the gains are more than that then one can book some profits.
On the other hand, if on the day of listing or afterwards the stock price falls below issue price, then one can start accumulating, experts said.
"We expect Metropolis to list above issue price. However listing gains are expected to be in range of 5-10 percent," Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.
Prashanth Tapse, AVP research, Mehta Equities said, "We recommend investors to book profits if the listing generates 12-15 percent gain on allotment price."
"Considering markets situation, investors may well get an opportunity to accumulate Metropolis post listing around Rs 800-820 in the near term," he added.
But all analysts are betting on the stock for long term given strong brand name, wide geographic coverage, rising healthcare sector and expected strong earnings in coming years. They expect double-digit returns in coming years.
Here is what analysts say about long term prospects of the company:
Astha Jain, Senior Research Analyst at Hem Securities
We advise investors with long term horizon to hold the stock on listing day as the company, being one of the leading diagnostics companies in India, has a wide operational network, young patient touch point network and an asset-light growth of service network.
Also, the company has a strong and established brand with a focus on quality and customer service. Company’s brand and reputation, economies of scale and wide geographic coverage are well positioned to leverage from the underlying opportunities in the Indian diagnostics space.
Milin Desai, Analyst, IIFL Securities
Investors can definitely remain invested for the long term and accumulate in case the price dips below the issue price. One can look at returns of more than 20 percent over the next two years.
We believe that the company can establish its brand name in the seeding cities, most of which have a regional reference lab. These reference labs can enable it to lower the turnaround times for results in these markets. Additionally, these labs facilitate expanding the catchment areas, from where a non-critical test can be sent to respective reference centres.
As it operates in cities like Rajkot, Nashik, Nagpur, Kochi, Raipur, National Capital Region, Kolkata, and Guwahati, we expect it to establish a connection with the doctors and physicians which are critical for patient referrals.
These strategies should enable it to garner market share in the B2C segment, mainly in the smaller of the above-mentioned cities and drive overall growth.
Moreover, both Metropolis and Dr Lal Pathlabs would benefit from being a diagnostic chain. They are far more superior compared to standalone centres in terms of infrastructure, comprehensive test menu, etc.
Prashanth Tapse, AVP research, Mehta Equities
We believe Metropolis is well placed for long term investment considering the rising healthcare sector and the second largest market share diagnostic player in India. We expect the company to deliver strong earnings growth in the coming years considering the fragmented and under-penetrated diagnostic market in India.
Hence we recommend investors to accumulate (price around Rs 800-820) the stock with a view of making long term wealth with one year target near Rs 1,000-1,050.
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