Metropolis' Ameera Shah resists listing

Rivals Dr Lal's and Thyrocare command valuations over 50 times earnings

Ameera Shah is often visited by merchant bankers who propose to take her pathology chain, Metropolis Healthcare, public. Their interest is mounting as the markets are pricing pathology chains at over 50 times their earnings.

The Delhi-based Dr Lal’s Pathlabs has a market capitalisation of Rs 8,100 crore, 51 times its earnings. The company has 172 laboratories and 6,526 collection centres. The Navi Mumbai-based Thyrocare Technologies is valued at Rs 3,744 crore, 56 time its earnings. It has seven laboratories and 1,041 authorised centres. This is against the average 22 times price to earning ratio of the 30 Sensex companies.

But the 37-year-old promoter of Metropolis Healthcare, credited with expanding her father’s single proprietary pathology laboratory in Mumbai into a 150-laboratory chain in 15 years, is in no hurry. “I am not swayed easily. My age provides me a much longer horizon,” says Shah.

Metropolis Healthcare has 1,200 collection centres and a presence in six countries, including Sri Lanka, Kenya, Ghana, Zambia, Mauritius and India. Shah plans to enter six more emerging markets and take the number of collection centres to 2,000 and laboratories to 190. Metropolis Healthcare is growing through internal accruals and has no debt on its books.

"In time we will need large funding. For small acquisitions we have internal accruals," Shah says. In the last 15 years, Metropolis Healthcare has made 25 acquisitions, most of them ranging from half-a-million to a million dollars.

"M&As can be looked only as a cherry on top. They cannot be regarded as bread and butter,” Shah says.

Metropolis Healthcare first raised funds from a private equity firm in 2005 when it had a revenue of Rs 30 crore. At that time, banks could not fund acquisitions so it raised the money from ICICI Venture, which invested Rs 35 crore. In 2010, private equity firm Warburg Pincus invested $85 million, providing an exit to ICICI Venture.

In 2015, when Warburg Pincus planned to exit, the Shah family bought out its 27 per cent stake for Rs 550 crore with the backing of KKR India. This increased the family's stake from 36 per cent to 63 per cent.

Eventually, private equity firm Carlyle bought out the stake of  GSK Velu, a Chennai-based doctor and promoter of several medical services enterprises, who had been associated with Metropolis Healthcare since 1998.

“Carlyle's exit is at least three years away, but we will not push for a public issue just to provide an exit to an investor," Shah says. This virtually shuts the door on merchant bankers.