Metropolis Healthcare Limited

Started in 1980, Mumbai based Metropolis Healthcare Limited is a chain of diagnostic companies. It has 106 clinical laboratories 1130 collection centres in seven countries. In India, it has laboratories across 18 states and 173 cities for monitoring of disease, early detection, and diagnostic screening. The company also provides analytical and support services for the clinical research projects to some clinical research organizations. In the last financial year (2018), approximately 7.7 million patients visited the lab and around 16.0 million tests conducted in the clinics. Metropolis offers 3,480 clinical laboratory tests and 524 profiles which combines a variety of tests for the specific disease. To provide better services, it has implemented a 'hub and spoke' model. Outside India, the company has a presence in Ghana, Zambia, Kenya, Sri Lanka and Mauritius for laboratory operations and in UAE, Nepal, Nigeria, and Oman for 3rd party services. It has been recognised by Biotrains for "excellence in customer service and delivery" and FICCI for "service excellence (diagnostic center)" and LH Insights for "best in health and fitness" in 2018. The competitive strengths of the company are:1. Well positioned for expected industry growth2. Widespread operational network3. Comprehensive test menu4. Focus on quality and customer service5. Robust information technology structure As per financial performance, Metropolis has posted total income/net profits of Rs. 490.63 cr. / Rs. 81.96 cr. (FY16), Rs. 567.66 cr. / Rs. 107.26 cr. (FY17) and Rs. 651.56 cr. / Rs. 109.75 cr. (FY18) . For upto Q3 of FY19, it has reported net profit of Rs. 88.77 cr. on total revenue of Rs. 566.82 cr. So company has posted good and consistent results year on year. Company operates on asset light model and is a debt free company. Metropolis has posted an average EPS of Rs. 17.15 and average RoNW of 27.41% for last three fiscals. Issue is priced at a P/BV of 9.43 as per NAV of 93.27 on 30.09.18. If we annualise latest earnings and attribute it on post issue equity, then asking price is at a P/E of around 37.3. On BRLM's front, for ITI Capital Limited this is the 3rd IPO in last three fiscals and from last 2 IPOs, one opened below issue price and another above issue price. As of now, from last 2 IPOs, one is trading below issue price and remaining above issue price. ( As on 22.01.19 ) As per financials, company's has shown good results, RoNW is 27.41% for last three fiscals and issue is priced at P/E of around 37.3. Company is in business of chained health diagnostic business with reach in most of the part of country. The issue is fully priced, but as its a debt free company and showing good growth with asset light model. So we give SUBSCRIBE rating to this IPO.

• 1 Dr Sushil Kanubhai Shah
• 2  Ameera Sushil Shah
• 3  Metz Advisory LLP