In the past two months, Metropolis Healthcare has outpaced the market by surging 41 per cent, as compared to 7 per cent decline in the benchmark S&P BSE Sensex. With today’s rally, the stock has zoomed 125 per cent against its issue price of Rs 880 per share.
For the October-December quarter (Q3FY20), the company reported 22.8 per cent year-on-year (YoY) growth in its Ebitda (earnings before interest, tax, depreciation, and amortization) at Rs 63 crore against Rs 51 crore in Q3FY19. Ebitda margin improved to 28.25 per cent from 26.8 per cent.
Revenue during the quarter grew 17.4 per cent at Rs 223 crore on YoY basis, driven by volume growth through organic expansion while revenue per patient in Q3FY20 increased by 2.7 per cent YoY at Rs 923 as compared to Rs 898 in Q3FY19.
The management said the revenue diversification is improving, and the company is able to increase its revenue contribution from other cities which will be the growth engines for the future. The opportunity to increase market share in focus cities is very high especially through the B2C route and a combination of new network expansion along with improving revenue per center; this will create a long runway for growth, it said.
Metropolis Healthcare is a dominant player in West India, providing extensive coverage of tests and quality services. The industry is expected to grow at 15 per cent per annum between FY19 & FY22, driven by senior citizens, urbanization, growing awareness & rising income to bring a shift in preference towards organized players from inorganized players. The industry is highly fragmented, thus leading to bountiful opportunities for growth for organized players and thus gain market share.
“Metropolis Healthcare has successfully increased its presence in B2C channel thus raising its contribution in total sales through consolidating its presence in focused cities. This has resulted in nearly 16 per cent growth in number of patients in FY19 as well as in 9MFY20, against 8-9 per cent CAGR earlier. Besides, the company earns strong realizations compared to peers on account of higher contribution of specialized tests (41 per cent) to revenue, where there is less competition and higher margins,” brokerage firm Ashika Stock Broking said in company update. It has ‘buy’ rating on the stock with target price of Rs 2,200 per share.