Target: ₹1,775
CMP: ₹1308.90
We interacted with Metropolis Healthcare’s management, the discussion provided us insights into current competitive trends, growth outlook and strategy. The competitive intensity has marginally abated although pressure still persists in the B2B segment.
The company is contemplating price increases in the specialised segment which remains largely insulated from competition.
The management’s revenue growth aspiration remains 15%+ (excluding PPP) with EBITDA margins expected to sustain current levels (26-27 per cent) despite new centre costs, digital spends, B2B pricing pressure and forex movements.
The management cautioned against a PPP expiry in Q4 which will be gradually offset by a new contract win (about 2 per cent impact). Hitech’s performance was disrupted by a local peer encroachment which has now stabilised.
Amid this disruption, the management completed transition and expects Hitech to grow in double digits with current EBITDA margins c.100bps already above company average. The management reiterated that the income tax search concluded with no unaccounted assets.
Metropolis Healthcare risk-reward continues to be favourable post the steep correction, overstated concerns and improving outlook. Buy with a Mar’25 Price Target of ₹1,775.