Metropolis Healthcare Limited IPO Details, Analysis, Subscription & Discussion

metropolis-diagnostic-ipo-logo

Metropolis Healthcare Limited IPO Issue Details:

IPO date:                  03 April – 05 April 2019
Issue Size:                1204 Cr
Offer Price:              Rs 877 – Rs 880 Per Equity Share
Market Lot:              17 Shares & multiples
Exchange Listing:   BSE, NSE

IPO Timelines (tentative dates):

Allotment & refund:    11 April
Credit to Demat:           12 April
Listing on Exchange:   15 April

Company Promoters: DR. SUSHIL KANUBHAI SHAH, AMEERA SUSHIL SHAH AND METZ ADVISORY LLP

Objective of the Issue: The offer for sale which will provide provide liquidity to Shareholders and enhance brand visibility and image.

IPO Registrar: Linkintime India Pvt Ltd

Company Overview:

Incorporated in 1980, Metropolis Healthcare is the 3rd largest diagnostics service provider in India, by revenue. The company has presence across 19 states (197 cities) with leadership position in west and south India. offer a comprehensive range of clinical laboratory tests and profiles, which are used for prediction, early detection, diagnostic screening, confirmation and monitoring of the disease.

Metropolis Healthcare (MHL) offers a broad range of 3,487 clinical laboratory tests and 530 profiles. Metropolis service network caters to individual patients (B2C) as well as institutional customers (B2B).

Business Operation:

The company has implemented a ‘hub and spoke’ model for quick and efficient delivery of services through widespread laboratory and service network, which covers 197 cities in India.

Outside India, Metropolis have laboratory operations in Ghana, Kenya, Zambia, Mauritius and Sri Lanka

The Indian diagnostics market was valued at approximately ₹ 596 billion in the financial year 2018, and is projected to grow to approximately ₹ 802 billion by financial year 2020.

The company website: https://www.metropolisindia.com/

Metropolis Healthcare Ltd IPO Analysis:

Financial Performance:

metropolis-ipo-financials

Valuations as on 31st Mar 2018:
1. Earning per share (EPS): 20
2. Price to Earning ratio (P/E): 780/20=39
3. Return on net worth (RONW): 25%
4. Net asset value per equity share (NAV): 93.27

Company category:  medium-grower

Company Strength:

  • The company’s ‘hub and spoke’ model, whereby specimens are collected across multiple locations within a region for delivery to clinical laboratories for diagnostic testing, provides greater economies of scale and enhances consistency of testing procedures
  • Widespread operational network (6 countries, 19 states and 197 cities), asset-light growth of service network
  • Significant expansion of service network by contracting with Third Party PSCs(Patient Service Center), to service individual patients, with limited capital expenditure incurred.
  • Comprehensive test menu with wide range of clinical laboratory tests and profiles
  • Home collection service along with pick-up points and ARCs.
  • Customized wellness packages to institutional as well as individual patient base.
  • Mumbai’s GRL lab holds accreditation from the College of American Pathologists (“CAP”) Laboratory Accreditation Program and many others.
  • Strong and established brand with focus on quality and customer service
  • Detailed test report which covers result trend analysis and patient specific interpretations and comments by doctors in some cases
  • Established track record of successful acquisition and integration in India and overseas
  • Experienced and visionary senior management and qualified operational personnel
  • Recession proof and fast growing healthcare industry will leverage growth in coming future.
  • Scalable information technology infrastructure

Company Risks:

  • The diagnostics industry in India is highly competitive with several companies present in the market
  • Implementation of pricing policies by the Government or other authorities could adversely affect business
  • Technological advancement may lead to more cost-effective technologies
  • High employee attrition rate may affect company’s growth.
  • There are certain ongoing litigations pertaining to company’s Registered Office.
  • Company entered into related party transactions in past and that may be case in future as well.

Field Analysis:

  • Currently in India there is no govt regulation on pathological labs. As health is the prime importance, someday in future govt will put up regulation body. In that case, it will be positive for organised, standardized, quality labs like Metropolis Healthcare.
  • As per various interviews of company MD Ameera Shah, she is a visionary, capable to grow Metropolis a far beyond the boundaries with cost effective acquisitions and many other ways. Also, She is more focused towards customer service & friendliness, doctor awareness, quality and consistent service, institutional tie-ups, building relationships and many more.
  • On discussion with doctor community within my circle, I found that most of them trust and recommend Metropolis Healthcare labs for testing to their patients.

Peer Comparison:

Metropolis VS Dr Lal pathlabs peer comparison
Metropolis VS Dr Lal pathlabs peer comparison

Analysis Conclusion:

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  • Well established brand, widespread operational network, more focus on asset light 3rd party PSCs, successful acquisitions, growing industry are the positives
  • Also, visionary management, tie-ups with institutions, doctor’s trusted and recommended lab are the plus.
  • Good profit margin around (15%), medium growing financials and reasonable P/E (39) compared to competitor makes this IPO Subscribe to Listing gain to mid term gain perspective.

Metropolis Healthcare Ltd IPO subscription status:

metropolis-ipo-subscription-figures

Abbreviations:

EPS – Earning per share
P/E – Price to Earning
RoE – Return on Equity
QIB – Qualified Institutional Buyer
NII – Non-Institutional Investors
RII – Retail Individual Investor

Disclaimer & Conflict of Interest:

The above analysis is based on my understanding of the company and RHP of Metropolis Healthcare. You should research more and consult your financial adviser before taking any decision. I am going to apply to the IPO.

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