BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Metropolis Healthcare Ltd. reported core business growth of 12% driven by 9% volume growth and ~3% increase in realisation. Including pubic private partnership contract in the base and decline in Covid, volumes declined 1% YoY.
Metropolis reiterated its lab and service centre expansion plans – additional 90 labs (to 270) and 1800 service centres (to 5,500) by 2025. While ~60% of the labs are coming in new geographies, management comments of first going after business-to-business business in these new geographies would pull down margin of incremental revenues.
Although volume growth has been better than some of the peers, we note that it is still being driven by existing centres as ~15% lab addition ex-Hitech over last two years is not likely contributing corresponding volumes.
Overall, volumes have not matched the pre covid run rate despite the larger sourcing infra built up particularly by franchises. Price growth seen for Dr. Lal Pathlabs Ltd. and to a smaller extent in Metropolis cannot be relied upon as a sustainable trigger.
Till we get a semblance of sustained volume growth, would be difficult to get outright constructive on both the companies. We cut volume growth assumption for FY24 leading to 14% cut in current year earnings and rebasing of FY25 estimate by ~9%.
Given the lack of volume triggers, see little scope of price-to-earning rerating and downgrade to 'Reduce' with revised target price Rs 1,400 (earlier Rs 1,520).
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.