Buy Metropolis Healthcare; target of Rs 1720: YES Securities

YES Securities is bullish on Metropolis Healthcare has recommended buy rating on the stock with a target price of Rs 1720 in its research report dated February 14, 2023.

Broker Research

February 20, 2023 / 21:11 IST

26 Aug, 2025 12:21

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YES Securities' research report on Metropolis Healthcare

Metropolis exhibited a marginal miss on revenues and margin as Q3 sales declined 2.5% YoY and OPM fell ~100bps. Albeit, the internals were better than the headline print as B2C (~60% of core Metropolis sales) revenues grew 15% excluding Covid and allied tests; ex-Hitech and PPP contracts, sales up 13% - driven by healthy 9% volume growth and 3% price contribution. Margin were lower as network expansion (~12 labs and ~400 centers in 9m FY23) led to ~120bps impact. Metropolis management appeared optimistic on volume growth which appears tad better than Dr Lal though we would be mindful of base effect as Hitech got integrated in Q3 last year. Company alluded to increased competition in the semi-specialized tests and, we reckon, this would renew focus on test menu above and below the segment. Addition of lab and collection infra in the focus cities should support volume growth leading to 12-13% topline growth over next 1-2 years. Believe Metropolis has had a better handle on volume growth compared to peers like Dr Lal and hence our confidence on presuming higher volume growth over next 2 years. Albeit, we have cut FY23 and FY24 estimates by 5-12% on flat realization assumption (vs 3% growth earlier) and also introduce FY25 estimates.

Outlook

Our TP gets rolled over to FY25 and we cut target multiple to 35x (prevailing pre-Covid) from 45x and retain BUY with revised TP Rs1,720 (earlier Rs1,900).

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