Value investor- India mid & small caps

Bhaskar Chakraborty

Equity Capital Markets

Metropolis Healthcare Limited / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27829" target="_blank" data-smartkarma-citation="entities:27829:1">Metropolis Health Services Limited (MHL IN)</a> is the 3rd largest pathology chain in India and caters to the Rs600bn market growing at 15% Cagr. It is strongest in the lucrative Mumbai and Chennai markets.</li>
<li>Though India’s pathology market has seen intense price competition and price discounting, Metropolis managed to grow revenue/patient much ahead of peers</li>
<li>Its revenue/patient is 20% higher than its nearest competitor and the gap has been widening over FY16-18</li>
<li>It is the only major pathology chain to have accelerated revenue growth over FY16-18 despite the lowest A&amp;P spend</li>
<li>It managed to grow Gross Margin 330bps and hold Ebitda margins over FY16-18. Major competitors like <a href="https://www.smartkarma.com/entities/26927" target="_blank" data-smartkarma-citation="entities:26927:1">Dr Lal Pathlabs (DLPL IN)</a> (-340bps) and SRL (-520bps) saw sharp contraction in Ebitda margins.</li>
<li>On the flip side, its patient growth has lagged its retail network growth by a wide margin. Its cash conversion cycle is much longer than DLAL’s. It is also the most vulnerable to any government regulated price caps on testing in the future owing to its premium pricing.</li>
<li>Lastly, it doesn’t need any fresh money and the entire IPO is an offer for sale by the promoters and Carlyle Group.</li>
</ul>



Metropolis Health Services Limited (MHL IN) is the 3rd largest pathology chain in India and caters to the Rs600bn market growing at 15% Cagr. It is strongest in the lucrative Mumbai and Chennai markets.
Though India’s pathology market has seen intense price competition and price discounting, Metropolis managed to grow revenue/patient much ahead of peers
Its revenue/patient is 20% higher than its nearest competitor and the gap has been widening over FY16-18
It is the only major pathology chain to have accelerated revenue growth over FY16-18 despite the lowest A&amp;P spend
It managed to grow Gross Margin 330bps and hold Ebitda margins over FY16-18. Major competitors like Dr Lal Pathlabs (DLPL IN) (-340bps) and SRL (-520bps) saw sharp contraction in Ebitda margins.
On the flip side, its patient growth has lagged its retail network growth by a wide margin. Its cash conversion cycle is much longer than DLAL’s. It is also the most vulnerable to any government regulated price caps on testing in the future owing to its premium pricing.
Lastly, it doesn’t need any fresh money and the entire IPO is an offer for sale by the promoters and Carlyle Group.


Metropolis Healthcare IPO: Stands Apart in Pricing Power, Revenue Growth and Margins

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<a href="https://www.smartkarma.com/entities/27829" target="_blank" data-smartkarma-citation="entities:27829:1">Metropolis Health Services Limited (MHL IN)</a> (MHL) plans to raise US$100m+ in its Indian IPO. MHL is one of the largest diagnostic chains in the country. Carlyle invested in the company in 2015. 
MHL has registered steady growth and margins over the past few years. It has also aggressively expanded its network over the past few years, although revenue growth hasn't matched the network expansion.
MHL's recent financial performance has been in-line with its listed peers, <a href="https://www.smartkarma.com/entities/26927" target="_blank" data-smartkarma-citation="entities:26927:1">Dr Lal Pathlabs (DLPL IN)</a> and <a href="https://www.smartkarma.com/entities/22694" target="_blank" data-smartkarma-citation="entities:22694:1">Thyrocare Technologies (THYROCAR IN)</a>, while the company continues to lead its two listed peers in terms of revenue generated per test.

Metropolis Health Services Limited (MHL IN) (MHL) plans to raise US$100m+ in its Indian IPO. MHL is one of the largest diagnostic chains in the country. Carlyle invested in the company in 2015. 
MHL has registered steady growth and margins over the past few years. It has also aggressively expanded its network over the past few years, although revenue growth hasn't matched the network expansion.
MHL's recent financial performance has been in-line with its listed peers, Dr Lal Pathlabs (DLPL IN) and Thyrocare Technologies (THYROCAR IN), while the company continues to lead its two listed peers in terms of revenue generated per test.

Metropolis Healthcare Pre-IPO Quick Take - Steady Performance but Growth Lagged Network Expansion

India

Metropolis Healthcare Limited provides medical and laboratory services. The Company offers pathology testing, imaging and nuclear medicine, clinical trails, and home health services. Metropolis Healthcare operates chains of diagnostic centers across India.

Metropolis Healthcare Limited (METROHL IN)

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Metropolis Healthcare Limited (METROHL IN)

Metropolis Healthcare IPO: Stands Apart in Pricing Power, Revenue Growth and Margins

Metropolis Health Services Limited (MHL IN) is the 3rd largest pathology chain in India and caters to the Rs600bn market growing at 15% Cagr. It...

Bhaskar Chakraborty

Metropolis Healthcare Pre-IPO Quick Take - Steady Performance but Growth Lagged Network Expansion

Metropolis Health Services Limited (MHL IN) (MHL) plans to raise US$100m+ in its Indian IPO. MHL is one of the largest diagnostic chains in the...

Sumeet Singh

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