Metropolis Q3 Results Review — Lower Volumes Impact Performance; Centrum Broking Maintains 'Add' On The Stock

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Centrum Broking Report

Metropolis Healthcare Ltd. delivered a miss on our estimates in Q3 FY25. Overall sales grew 11% YoY to Rs 3.2 billion. Ebitda grew 11% YoY to Rs 720 million with margins remaining flat YoY to ~22%. PAT for the quarter was Rs 314 million (+16% YoY).

Growth was driven by test volume growth of +11% YoY and a modest 2% YoY growth in revenue per test. Moreover, tier-III cities (26% of revenues) posted strong growth of 17% YoY on account of network expansion and continues to be a focus area of expansion.

Additionally, Core diagnostics acquisition is expected to be completed by end-Feb’25. Going forward, management expects the Ebitda margins dilution on account of Core acquisition. It also plans for inorganic expansion, particularly in North India.

Accordingly, we have reduced our earnings estimates for FY25E/26E/27E by 12% each to factor in lower profitability on account of higher expenses due to network expansion. We roll-forward to FY27E valuing Metropolis at PE of 39 times (versus 47 times earlier) at FY27E EPS to arrive at target price of Rs 1,970. Maintain Add.

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