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Metropolis Healthcare Ltd.

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ABOUT

  • Metropolis with the tagline of ‘The pathology Specialist’ is one among the most well known diagnostic chains based in India. Founded in the 1980’s the company now has 115 clinical laboratories and 1631 patient touch points all over the world.
  • It has made a remarkable presence in around 19 states of India specifically the west and south regions.
  • The diagnostic center employees more than 4500 employees and conducts millions of tests every year. Going by the data of year 2018, Metropolis conducted 16.0 million tests from approximately 7.7 million patient visits.
  • The company has it’s headquarter in Mumbai and internationally operates in countries like Sri Lanka, UAE, Kenya, Ghana, Mauritius. Metropolis holds revenue of ₹651.5 crore (going by the financial year 2018-19).

 

BUSINESS STRATEGY

  • Unique strategy of expanding their reach by dividing cities into categories – The Company has a unique way of targeting city wise growth by dividing the cities according to their market capitalization and working on them accordingly. They have divided the cities into three categories Focus cities, seeding cities and other key cities.
  • Focus cities – In India the company has kept five cities under the list of its focused cities. The names include Mumbai, Bangalore, Chennai, Surat and Pune. The company focuses on deepening the penetration in the above mentioned cities by opting technological up gradation in the field of medical science and enhancing their laboratory capacity. They also focus on increasing doctor’s engagement. Along with it the company wants to have a dedicated team working towards its marketing and making the best use of CRM (Customer relationship management).
  • Seeding cities – Metropolis has identified 8 seeding cities in India where it can make their presence strong. The name of the cities includes Rajkot, Nashik, Nagpur, Kochi, Raipur, National Capital Region (“NCR”), Kolkata and Guwahati. The company believes that these cities will provide it with mid to long term growth.
  • Other key cities – The cities under this category have satellite or express laboratories or ARCs. Till now this category has 166 cities and it will use asset-light model for expanding its service network in the following cities.
    The best part about the plans remains to be its yearly evaluation so that the progress can be measured accordingly and further work on its development can be done.
  • Increasing facility for patients and working towards society awareness - Metropolis wants to make services like house calls, e-services, and longer operating hours for patient touch points and call centers, and home delivery of test reports, easily available to its patients and hence it is focusing on working towards the same. The company along with it services also believes in serving the society and therefore it often conducts campaigning activities to spread awareness about diseases and its preventions.
  • Expansion of Service Network using Third Party PSC model- Companies Third party PSC model includes services like APSCs (associate patient service centers) and D-APSCs which are Metropolis-branded patient service centers. These models enable us to grow our revenue by providing management and branding. The company also plans to grow its PSCs in Focus and Seeding Cities.
  • Focus on Increasing our Business from Individual Patients – With a CAGR of 20.72%, were the maximum revenue was generated from individual patients the company plans to increases more of it. The company by having Employ focused sales and support team and by Undertake targeted marketing initiatives wants to increase the percent rate even higher. Metropolis wants to create visibility and increase their presence in the market.
  • Pursue New Avenues of Growth – The Company is working towards certain fundamentals which will help making Metropolis even a bigger brand name with easy service provider. It aims towards increasing its test packages making it more personalized which will ultimately help it increase the revenue per patient and also the revenue generated per test.
    Metropolis wants to pay more attention towards specialized tests which have less competition and higher margins due to advanced technology, skilled manpower and complex processes involved.        The company regularly participates in Public-Private Partnership tenders by leveraging on their experience as the current provider of HIV-1-Viral load tests under its contract with NACO which helps it get additional PPP tenders in future. Similar, opportunities for PPP tenders also arise in the African where the company operates as well and it intends to participate in these tenders on a selective basis.
  • Focus on Consolidation Opportunities in a Largely Unorganized Diagnostic Sector – The Company is ready to take maximum advantage of the expected consolidation opportunities and shift towards organized providers in the Indian diagnostics market which is being considered as largely unrecognized.
    Metropolis is also evaluating acquisition opportunities at this time; however the discussions are in preliminary stage. The company believes its expertise and demonstrated track record will help it meet its targets easily in the coming year.

 

INITIAL PUBLIC OFFER (IPO)

Bid/Offer Opens On: April 3,2019
Issue Type: Book Built Offer
Bid/Offer Closes On: April 5,2019
Issue Price: Rs 877-Rs880 Per Equity Share
Issue Size 13,685,095 Equity shares of Rs 2(Up to Rs 1,204.29 Cr.)
Face Value: Rs 2 per Equity Share
Market Lot: 17 Equity Shares
Listing At: BSE & NSE

 

SUBSIDARIES

  • Desai Metropolis Health Services Private Limited - It got converted into a private limited company under the Companies Act, 1956. Desai Metropolis carry on the business of inter alia, running a pathological and clinical diagnostic laboratory and to act as consulting pathologists with a view to provide complete comprehensive ultra modern diagnostic services.
  • Lab One Metropolis Healthcare Services Private Limited – converted into a private limited company under the Companies Act, 1956. Lab One Metropolis Healthcare carry on the business of inter alia, running a pathological and clinical diagnostic investigation and research centre with a view to provide complete, comprehensive ultra modern diagnostic services.
  • Micron Metropolis Healthcare Private Limited (“Micron”) - Incorporated as a private limited company under the Companies Act, 1956. Micron Metropolis Healthcare carry on the business of, inter alia, running a pathological and clinical diagnostic laboratory and to act as consulting pathologists with a view to provide complete comprehensive ultra modern diagnostic services.
  • Amin’s Pathology Laboratory Private Limited (“Amin”) – It is a private limited company incorporated under the Companies Act, 1956. Amin’s Pathology Laboratory carry on the business of, inter alia, of in India and abroad of buying, selling, packaging, manufacturing distributing, transporting, storing of items such as pharmaceuticals, health or wellness products, drugs, medicines etc., and to run a pathological and clinical diagnostic laboratory and to act as consulting pathologists with a view to provide complete, comprehensive ultra-modern diagnostic services.
  • Ekopath Metropolis Lab Services Private Limited (“Ekopath”) – It’s a private limited company under the Companies Act, 1956. Ekopath Metropolis Lab Services carry on the business of inter alia, running a pathological, microbiological, immuno – biological laboratories and clinical diagnostic laboratory and to act as consulting pathologists with a view to provide complete, comprehensive ultra modern diagnostic services.
  • Sudharma Metropolis Health Services Private Limited (“Sudharma”) - Incorporated as a private limited company under the Companies Act, 1956. Sudharma Metropolis Health Services carry on the business of inter alia, running a pathological and clinical diagnostic investigation and research centre with a view to provide complete, comprehensive ultramodern diagnostic services.
  • Dr. Patel Metropolis Healthcare Private Limited (“Patel Metropolis”) - Incorporated as a private limited company under the Companies Act, 1956. Dr. Patel Metropolis Healthcare carry on the business of inter alia, running a pathological and clinical diagnostic investigation and research centre with a view to provide complete, comprehensive ultramodern diagnostic services.
  • R. V. Metropolis Diagnostic & Health Care Center Private Limited (“RV Metropolis”) - Incorporated as a private limited company under the Companies Act, 1956. R. V. Metropolis Diagnostic & Health Care Center carry on the business, inter alia, to establish, build, organise, manage, operate, own, run medical diagnostic laboratories, centres, scan centres, clinical and pathological testing laboratories, x-ray and ECG clinics.
  • Metropolis Histoxpert Digital Services Private Limited (“Histoxpert”) - Incorporated as a private limited company under the Companies Act, 2013. Metropolis Histoxpert Digital Services carry on the business of inter alia providing all kinds of services to pathological, microbiological, immuno-biological laboratories & hospitals and to conduct other medical tests, services analysis & research and to develop, operate and maintain a business to provide outsourced/managed digital pathology services to hospitals, laboratories, clinics, doctors, diagnostics centers and walk in patients.
  • Bokil Golwilkar Metropolis Healthcare Private Limited (“Bokil”) - Incorporated as a private limited company under the Companies Act, 1956. Bokil Golwilkar Metropolis Healthcare to carry on the business of, inter alia, running a pathological and clinical diagnostic investigation and research centre with a view to provide complete, comprehensive ultramodern diagnostic services.
  • Raj Metropolis Healthcare Private Limited (“Raj Metropolis”) - Incorporated as a private limited company under the Companies Act, 1956. Raj Metropolis Healthcare carry on the business of, inter alia, running a pathological and clinical diagnostic investigation and research centre with a view to provide complete, comprehensive ultramodern diagnostic services.
  • Metropolis Healthcare (Mauritius) Limited (“Metropolis Mauritius”) - Incorporated as a private limited company under the Companies Act 2001. Metropolis Healthcare carry on the business of, inter alia and all business activities, which are not prohibited under the laws of the Republic of Mauritius and the Laws of the countries where the company is transacting business. All such other things as are incidental to or the company may think conductive, to the conduct, promotion or attainment of the objects of the company.
  • Metropolis Star Lab Kenya Limited (“Metropolis Kenya”) - Incorporated as a private limited company under The Companies Act (Kenya). Metropolis Star Lab Kenya carry on the business of inter alia, diagnostics and pathology.
  • Metropolis Healthcare Lanka (Pvt) Limited (“Metropolis Lanka”) - Incorporated as a private limited company under The Companies Act 2007 (Sri Lanka). Metropolis Healthcare Lanka carry on the business of inter alia, diagnostics and pathology.
  • Metropolis Bramser Lab Services (Mtius) Limited (“Metropolis Bramser”) - incorporated on June 8, 2012 as a private limited company under The Companies Act 2001. Metropolis Bramser Lab Services carry on the business of inter alia, diagnostics and pathology.
  • Metropolis Healthcare Ghana Limited (“Metropolis Ghana”) - Incorporated on September 26, 2008 as a private limited company under the Companies Act, 1963 (Ghana). Metropolis Healthcare Ghana carry on the business of inter alia, diagnostics and pathology.
  • Metropolis Healthcare Uganda Limited (“Metropolis Uganda”) - Incorporated on July 22, 2015 as a private limited company under the Companies Act, 2012 (Uganda). Metropolis Healthcare Uganda carry on the business of inter alia, diagnostics and pathology.
  • Metropolis Healthcare Tanzania Limited (“Metropolis Tanzania”) - Incorporated on August 19, 2018 as a private limited company under the Companies Act, 2002 (Tanzania). Metropolis Healthcare Tanzania carry on the business of inter alia, diagnostics and pathology.

PROMOTERS

  • MR VIVEK GAMBHIR 
  • MR SANJAY BHATNAGAR
  • MR MIHIR DOSHI
  • DR. SUSHIL KANUBHAI SHAH
  • AMEERA SUSHIL SHAH
  • METZADVISORY LLP
  • MR MILIND SHRIPAD SARWATE

SHAREHOLDING PATTERN

Name of Shareholders

Number of Equity Shares Percentage of Share Capital (%)
CA Lotus Investments 15,653,435 31.20
Metz Advisory LLP 14,630,120 29.16
Dr. Sushil Kanubhai Shah 9,997,580 19.92
Dr. Duru Sushil Shah 9,209,230 18.35
Ameera Sushil Shah 181,845 0.36
Dr. Nilesh Shah 110,505 0.22
Dr. Pranav Desai 78,225 0.16
Dr. K. Ramesh Kumar 66,835 0.13
Vani Ravi Kumar 57,730 0.12
Ravi Kumar H.N 47,420 0.09
Total 50,032,920 99.71

 

INDUSTRIAL ANALYSIS

HEALTHCARE GROWTH TREND IN INDIA(US$ BILLION)

GOVERNMENT HEALTHCARE EXPENDITURE AS A PERCENTAGE OF GDP IN INDIA

OVERVIEW OF INDIA’S DIAGNOSTIC MARKET

CAGR

(FY2015 to FY2018)-16.5%

(FY2015 to FY2018)-16%

  • Segment –Wise Break-up of diagnostic industry, in the financial year 2018 and projected break up in the financial year 2020:
  • Cumulative FDI inflows From April 2000 Up to March 2019 into the healthcare sector (US$ billion) in India:

COMPANY ANALYSIS

The financial profile of the four leading pan-India diagnostic chains, for the financial year 2018:

Company Name Operating Revenue(Rs million) EBITDA % Profit After Tax(PAT)%
Dr. Lal PathLabs Limited 10,569 25 16.3
SRL Diagnostics 8,540 18.9 -
Metropolis 6,472 27.2 17.3
Thyrocare Technologies Ltd. 3,560 40.7 26.2

 

FINANCIAL OVERVIEW

(Figures in Millions

Year

Total Income

Net Profit Total Assets Long Term Borrowing Total Expense

As at 31 March 2016

4,906.34 819.55 3,959.16 4.59 3,664.22

As at 31 March 2017

5,676.59 1,072.57 5,151.59 3.64 4,103.91

As at 31 March 2018

6,515.55 1,097.47 5,303.40 2.01 4,912.54

As at 31 Dec 2018

5,668.20 887.71 5,838.75 0.77 4,311.55

 

  • Total Income

        

  • Total Assets

 

  • Net Profit

 

  • Long Term Borrowing

 

  • Total Expenses

 

STATISTICAL OVERVIEW

Year RONW(%) EPS (Rs)
2016 27.55 15.25
2017 31.46 20.48
2018 24.66 20.61

 

MAJOR INDUSTRY PLAYERS & COMPARISION

For the year ended March 31, 2018

Name of

Company

Revenue from operation (in Rs million)

Basic EPS (Rs) P/E

RoNW

(%)

NAV

(Rs)
Metropolis Healthcare Limited 6,435.67 20.61 NA 24.66 83.58
Peer Group          
Dr. Lal Pathlabs Limited 10,569.18 20.85 50.57 21.61 96.93

 

REFERENCES

  • METROPOLIS HEALTHCARE LIMITED RED HERRING PROSPECTUS (sebi.gov.in)
  • metropolisindia.com
  • https://www.ibef.org

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