YES Securities' research report on Metropolis Healthcare
Metropolis reported a largely in-line quarter as revenues declined 1% QoQ and 7% YoY on account of 1) lower Covid sales YoY and 2) lack of PP government tender revenues which ended in Feb 3) 7% rise in HiTech sales. Margin came in line with expectation at ~25%, up 40bps YoY. Metropolis FY24 revenues would be impacted to the extent of Rs670mn as PP government tender receded from the base in Feb’23. Also, we presume zero Covid sales and Hi-tech being subsumed in the base after a full year of consolidation. Metropolis volumes have been growing at ~5% since FY20 which is due to twin impact of Covid and entry of new players. We continue to believe Metropolis can clock better volume growth than peers like Dr Lal though reinvestment of EBIDTA to the tune of ~150bps would keep a lid on FY24 margin. We trim revenue growth on back of slightly lower volume growth assumption and flat margin in FY24.
Outlook
Accordingly lower FY24 and FY25 EPS forecast by 10-11%. Continue to value Metropolis at 35x PE which is in line with its pre Covid multiple and retain BUY with revised TP Rs1,520 (earlier Rs1,720).
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