Metropolis Healthcare to spend Rs 50-55 crore over two years to expand

The revenue distribution showed that the western region was the most significant contributor to its core business revenue, accounting for a 51 percent share

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26 Aug, 2025 12:21

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Metropolis Healthcare, a diagnostics service provider, plans to set up 30 laboratories and 800 collection centres in this financial year and the next, top company officials said.

The Mumbai-based company expects to invest Rs 50 crore to Rs 55 crore to expand its network, improve labs, and upgrade digital infrastructure over FY24 and FY25, founder and managing director Ameera Shah told Moneycontrol. This will increase the number of the company’s labs to 270 and 5,000+ collection centres.

The company added 12 labs in the first half of FY24, for a total of 167 in its network, according to a presentation to investors. It had 3,854 service centres at the end of September.

Metropolis Healthcare’s second-quarter net profit fell 11.9 percent year-on-year to Rs 35.5 crore and revenue rose 2.7 percent to Rs 308.5 crore. Its operating profit margin fell about 200 basis points to 24.3 percent due to the ongoing capital expenditure and after a large public-private partnership (PPP) contract ended in Q4 of FY23.

Core business growth in Q2, excluding revenue from Covid & Covid-allied and PPP contracts, was driven by volumes and the product mix and not so much by prices, company executives said. Metropolis did not significantly increase prices this year, although it is expected to raise them next year.

Analysts said diagnostic service companies have started to become rational in terms of pricing. The entry of startups and new companies in the diagnostics arena had triggered a pricing war, with companies slashing rates by offering discounts or clubbing multiple tests into one basket. “But in the last 3-4 months, players have again started to increase their prices. We can say that some pricing rationality has started to come,” said Sandeep Raina, executive vice president of research at Nuvama.

Shah said competitive pressures have always been a part of the business. “There are 300,000 labs and 85 percent of the market is unorganised. We know that the real competition is the unorganised sector,” Shah said.

Contrary to fears that organised competitors might stifle the growth of existing players, Shah explained that health tech companies primarily targeted the unorganised space, leaving a considerable market share for everyone. “There is space for health tech, space for unorganised, space for organised,” Shah said.

Also read: Metropolis Healthcare Q2 results: Net Profit down 11.9% to Rs 35.5 crore

The revenue distribution showed that the western region was the most significant contributor to its core business revenue, accounting for a 51 percent share. Though Metropolis executives agreed that there is a lot of competition in the western region, they said the market has the potential to grow.

“Our plan is to set up a lab in every district in Maharashtra,” CEO Surendran Chemmenkotil told Moneycontrol. He added that the north and the east are “opportunity” markets for the company.

The company said on an investor call that its focus in the B2B segment is on 80 percent of the business, which is with sticky customers, rather than pricing and discounts. The company’s revenue from B2C has been rising in recent quarters. In Q2, B2C contributed 52 percent of the total revenue and grew by 16 percent YoY, with patient volume growth of 14 percent.

Premium wellness was the fastest-growing segment for the company. Premium wellness revenue grew 27 percent, with test volume growth of 21 percent YoY in the quarter. The segment contributed to 14 percent of revenue and Chemmenkotil expects the share to expand to 20 percent in the coming years. “We see a lot of headroom there,” Chemmenkotil said.

Analysts also see a shift towards premium and preventive wellness packages. “Companies that are in the premium range and do complex tests at reasonable rates would make a cut in this industry. This is because people aspire to go to a premium guy and get accurate test results. Metropolis has positioned themselves as a premium brand along with best quality tests, which will be beneficial for them,” said Raina.

Metropolis Healthcare shares rose 1.2 percent to Rs 1,537 at the close on the BSE on November 8, extending its gains to 15.8 percent so far in 2023.

JM Financial said Metropolis Healthcare is its top pick in the diagnostics sector. “With price hikes early next year, PPP base reset in 4Q and ramp-up of newer labs, Metropolis’s earnings momentum should accelerate,” JM Financial said in a report after the Q2 results.

Analysts at Nuvama noted that the “management’s confidence on delivering mid-teens’ revenue CAGR and 26-27 percent margin by FY26 underscores their execution capabilities. The confidence stems from aggressive network expansion and pricing discipline.”

However, analysts at Yes Securities have a “reduce” stance on the company’s stock. They said the management has shifted focus from B2B to B2C to generate revenue, but the Metropolis brand lacks recognition in new locations, making the scaling-up of lab infrastructure challenging.

They said relying on higher patient realisation isn't sustainable. Better volume growth and lab utilisation are needed for a positive outlook.