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Result Highlights

* Healthy end to FY21 with 29% jump in patient visits and 42% revenue growth on pandemic impacted base of last year

* More importantly, company appears confident of strong volume growth as seen in robust expansion plan in labs and service centres

* No guidance given but expect patient volumes to clock ~23% cagr on FY21 base

Our view: Metropolis management refrained from giving any guidance for FY22 on back of continued uncertainty. Albeit, we expect regular patient volumes to rebound strongly in current year (after 2% dip in FY21) so as to revert to prior trend rate of 13% growth witnessed in earlier years. On the other hand, realization/patient had jumped sharply as last year would have seen footfalls more on the specialty side compared to historical run rate; over next 2 years, we expect the patient mix to normalize towards the pre‐pandemic pattern and expect realization to hover in the range of Rs870‐880. An expansion in the lab network and addition of 1,800 (~70% increase) in service centres would embed position in existing markets and support entry into newer ones (over 3 years).

We expect the benefit of increased geographic foothold to add to patient growth from FY23 and drive strong volumes in FY24. Revenue mix would continually improve with ~40% of revenues coming from specialized tests in a normal year (56% in FY21 – heightened due to COVID), a strong barrier which can protect portfolio from price wars in the routine to semi ‐specialized test market. Metropolis has been an active player in M&A space and latest acquisition of Hi‐Tech Diagnostics (~Rs830mn revenues, acquired at 7x FY21E sales) would make Metropolis the largest brand in South and West India. We forecast strong growth over FY21‐23 driven by 1) 23% patient volume cagr 2) addition of ~Rs900mn annualized Hi‐Tech revenues 3) 225bps margin gain. We are 6% ahead of consensus on FY23 EPS and assume coverage with ADD rating and TP Rs2,800, based on 55x FY23 EPS.

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