If one wants to buy, he/she can accumulate Metropolis Healthcare below its issue price, experts said.
Metropolis Healthcare shares started trade on the first day at Rs 960 on the BSE on April 15 — a 9 percent premium to issue price of Rs 880.
The stock has managed to hold Rs 950 level given the positive market conditions and good response to its public issue. It closed at Rs 959.55 after hitting day's high of Rs 981.30 and low of Rs 934.80.
Metropolis Healthcare, the third largest listed diagnostic chain, raised Rs 1,204 crore through public issue which was subscribed 5.84 times earlier this month.
After its good listing which was largely on expected lines, the question arises whether to hold current shares, sell those shares or buy more to make a portfolio?
Moneycontrol spoke to several analysts to know what investors should do and most of them said Metropolis Healthcare is a good long-term bet given likely growth in healthcare sector, company's strong brand name and strong growth potential.
"Metropolis is available at discount to its listed peer Dr Lal PathLabs based on FY19E earnings. The industry is poised to grow in favour of the organised sector with rising requirement for high end testing & consolidation in industry," Nikhil Shetty, Research Analyst - Institutional Research, BP Wealth said.
If one wants to buy, he/she can accumulate the stock below its issue price as it is expected to give double-digit returns in next one-two years, experts said.
Milin Desai, Analyst, IIFL Securities told Moneycontrol that 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."
Nikhil Shetty, Research Analyst - Institutional Research, BP Wealth
The company is seeking to expand its presence in a large under-penetrated market which is dominated by smaller, unorganised players. Considering the superior brand trust, strong growth potential in under-penetrated tier 2 and tier 3 cities coupled with better margins, we are optimistic on future growth prospect of the company. Hence, we recommend to hold for the long term.
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.
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.
Milin Desai, Analyst, IIFL Securities
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.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.