Metropolis Healthcare lists at Rs 960: What should investors do now?

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.

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