ValuePickr Forum

Metropolis Healthcare Ltd - Another Diagnostic Player

About Metropolis

Metropolis Labs is a chain of diagnostic companies, with its central laboratory in Mumbai, Maharashtra. Metropolis Healthcare has a chain of 106 clinical laboratories and 1130 collection centers across 7 countries including India. The healthcare company was founded in 1980, as a single laboratory with a revenue of about US$1.5 million and 4500 employees.

The company offers a broad range of clinical laboratory tests (3,487)
and 530 profiles. It follows a ‘hub & spoke’ model for quick and efficient delivery of services through laboratory and service network, which covers 197 cities in India. As of 9MFY19, its laboratory network consists of 115 clinical laboratories, comprising a global reference laboratory, 14 regional reference laboratories, 56 satellite laboratories, 44 express laboratories.

The company caters to both individual (1631 touch points) and institutional
customers (9552 touch points). Metropolis has also been awarded tender from National Aids Control Organisation (Naco). Outside India, the company
has laboratory operations in Ghana, Kenya, Zambia, Mauritius and Sri Lanka. Also, it has entered into agreements with third parties for collection and processing of specimens in Nepal, Nigeria, UAE and Oman.

Metropolis Healthcare came up with IPO in April month with a price band of Rs 877-880 per share. The issue comprised of 1,36,85,095 equity shares included offer for sale of up to 62,72,335 equity shares by promoter Dr Sushil Kanubhai Shah and up to 74,12,760 shares by CA Lotus Investments (investor selling shareholder).


Standalone Balance Sheet

Standalone Income Statement


Dr Lal path Labs , SRL Diagnostic , Thyrocare Technologies.

Observation (may be red flag also):
The company is seen doing lot of acquisitions and lot of subsidiary/ holding companies (according to their annual report around 19 of them including overseas) .

Risks and Concerns

  • Unorganized with too many small and regional players
    The diagnostic market is highly competitive with unorganized labs ruling the roost . Its major challenge to improve profitability and market share until the sector is consolidated under few branded names.

  • Government policy
    Any government policy on charges for the services/introduction of pricing list will adversely impact. Also in case government starts offering diagnostic as free service it will become a major roadblock for sector as well as the company.

  • High dependency on hospitals & doctors
    Almost every hospital has its own diagnostic center and general physicians provide locally run labs as preference to any diagnostic service . Though preventive care this may not be issue , it will be a major impact on the non preventive cases.

  • Branded competition
    SRL Diagnostics, Thyrocare and Dr Lal Pathlabs compete in the branded space. Any price reduction by these competitors will make metropolis to follow suit and impact the financials.

  • New & Evolving technologies
    Diagnostic is witnessing more evolving technology day by day . Any new cost effective technology can lead to decline in demand for the company unless metropolis is the
    lead players in it.

  • Geography
    Majority of the revenue is concentrated in Western India & South India Any region specific development will impact the company until the time it diversify all over India.

My View:

I strongly feel that diagnostic healthcare will be a closely watched sector in the coming years as people has become increasingly conscious about their health.

Though , lot of unorganized centers in each and every location is a biggest challenge , it will be interesting to see how branded companies succeed in this race.

This post is not a recommendation and individual investors are requested to do their analysis before investing.


1 Like

Buying spree continues :slight_smile:

So to clarify your red flag, the company is acquiring Individual Labs and local diagnostics to increase there network. This helps the company reduce its collection and testing period thus providing the patient quicker and accurate results. After a certain period (3-5 years) the contract signed with the above mentioned diagnostic labs become a wholly owned lab under the Metropolis Brand. Their international tie ups help the company grow outside India where the diagnostics are relatively untapped. In India, for every region the diagnostics segment is quite crowded

1 Like good read on Metropolis

1 Like

Disclosure: Recent addition in family portfolio

My investment thesis:

1 Like


interesting to note that
PAT of Metropolis = 1 + PAT of Thyrocare
ROCE of Metropolis = 7% + ROCE of Thyrocare
Sales of Metropolis = 235 Cr + Sales of Thyrocare
P/E of Metropolis = 32 + P/E of Thyrocare

In other words: (Metropolis had to do sales of 629 crore to achieve this PAT, Thyrocare achieved this PAT with sales of 394 crore)
In business words Metropolis is doing 59% more sales than Thyrocare

Personally I felt that Thryocare was way cheaper than Metropolis (From the 60+ test of Thyrocare packages start from 599, Metropolis has their labs and their packages start from 2000 onwards).
Equitywise I believe that margins are higher in Metropolis but Thyrocare is more personal and is run by a guy with a good heart (that does not mean its good for business, but I believe he is ethical, Metropolis might be professional)


Excellent comparision! thank you

Equity of Metropolis is extremely low for a sales of almost Rs 581 crores in FY 19. Eventhough Thyrocare is more on B2B still their margins are way better and the pricing is also much lower. Clearly shows Thyrocare optimizes its cost much more effectively. This is evident in PAT margin in H1 FY 20 at 32% against Metropolis at 20%. I would repose more confidence on Thyrocare against Metropolis.

1 Like

What is the view on pledge of such huge number of shares by promoters??

Is it not dangerous

Revised press release

Earnings call Q2’2019 invite

Investor presentation

Where to download Concall Transcript of Q2FY20?

You can listen to the concall audio here.

Even I think that the high level of pledge raises a doubt. Not sure why there’s a need for such pledging for them.

The pledge is mentioned as part of their RHP document as well. (page 102).

Yeah but there is no information given about why they took the loan in the first place? Despite being majority promoters to such a big company.

The same question was raised to them in earlier earnings call.