Saurabh Mukherjea's team adds Metropolis Healthcare to Little Champs portfolio

Overall, the recent performance of Marcellus’ portfolio has not been something to write home about.

Saurabh Mukherjea-led Marcellus Investment Managers has added another stock – Metropolis Healthcare – to its Little Champs Portfolio, which focuses on investing in quality midcap and smallcap companies for a long term.

The portfolio management services (PMS) provider said it has been adding the stock in its portfolio for the last few months.

Metropolis Healthcare was founded by Sushil Shah in the 1980s as a B2B lab focussed on specialty testing. Over the years, through combining technical acumen of Shah and business acumen of Ameera Shah, Metropolis has expanded to over 150 labs and 2,800 collection centres primarily in South and West India.

Mukherjea’s team said there were two primary drivers that led to addition of Little Champs Portfolio that already has names like GMM Pfaudler, V-Mart, Alkyl Amines, Paushak, Suprajit Engineering, among others.

The first reason is that over its decades long operations Metropolis has developed a strong connect with the medical community around quality and accuracy of its reports; and the second reason they cite is its leaps and bound improvement on B2C front.

“Over the last 15 years the company successfully built its B2C network to go closer to the consumer with over 45 percent of business now coming from the B2C channel. The learning which the firm has gained over the last 15 years will prove to be a great asset in future to further strengthen the B2C business,” Marcellus said in a note.

“Going forward, growth will be led by further additions of more specialty tests to the test basket and accelerated B2C expansion led by network expansion, investments to augment home collection and hiring of relevant talent,” it added.

Overall, the recent performance of Marcellus’ portfolio has not been something to write home about. In fact, its Little Champs Portfolio has been among the worst performers in the last one year, bleeding over 12 percent of portfolio value. This is against 12 percent gains in BSE 500 TRI.

Earnings wise, though the Little Champs portfolio delivered YoY allocation weighted average PBT growth of 23 percent (median 18 percent) along with weighted average RoCE of 23 percent (median 19 percent) for FY23.