METROPOLIS - Metropolis Healthcare Limited Share Price

Management's outlook for Metropolis Healthcare Limited emphasizes strong growth potential supported by strategic acquisitions and a focus on operational efficiencies. The company has successfully signed three acquisitions, including Core Diagnostics and two others, aiming to enhance its market presence in North India. The management projects regional revenue contribution from North India to grow from 8% to approximately 14-15% in FY '26.

Key forward-looking points include:

1. Revenue Growth: The company anticipates a revenue growth rate of about 12% in FY '26, supported by a planned patient volume growth of 7% and a realization improvement of approximately 5%. The contribution from the acquired entities is expected to grow by 13-14%.

2. Margins Expansion: Management aims for approximately 100 basis points of margin expansion, projecting an adjusted EBITDA margin of around 25.4%. They expect Core Diagnostics to reach single-digit EBITDA margins within the year through operational synergies.

3. Geographical Diversification: The strategy includes transitioning from a West and South-focused model to a more balanced, pan-India approach, enhancing revenues from North and East India.

4. Operational Priorities: Management emphasizes accelerating the expansion of collection centers, enhancing productivity, and pursuing operational efficiencies through cost rationalization and process automation.

5. Increased Focus on B2C: The company plans to continue its focus on growing B2C revenue, which constituted 55% of total revenue in FY '25. B2C revenue is projected to grow around 14-15% in FY '26.

6. Investment Focus: Capex is expected to decrease to approximately INR 50-55 crores in FY '26, prioritizing organic growth while remaining open to potential acquisitions that meet strategic criteria.

Overall, Metropolis Healthcare's strategy is positioned to leverage its expanded footprint and improve profitability while adapting to market dynamics.

Question: What is your volume guidance for the coming years? Can we expect the 100 bps margin expansion in FY '26, or will it be gradual?

Answer: We expect to achieve a patient volume growth of around 7% this year, up from 6% this past year. Regarding margin expansion, we anticipate an increase of about 100 basis points in FY '26, bringing our adjusted EBITDA to approximately 25.4% for the year.

Question: How much of the current revenue in FY '25 is from the B2C segment? What are your expectations for FY '26?

Answer: In FY '25, B2C revenue constituted 55% of our total revenue, with a growth of 17%. For FY '26, we expect B2C to expand by 1"“2%, continuing its upward trajectory as we focus on driving more revenue from this segment.

Question: Is it possible to provide a revenue breakup from Core Diagnostics, especially for genomics, and how are margins being improved?

Answer: Approximately 20% to 30% of Core's revenue comes from genomics. Margins are impacted by specialty revenues; however, we expect synergies through cost reductions from integration, leveraging our large distribution network, and enhanced sales, which should lead to rising profitability over time.

Question: In FY '26, will the acquired entities dilute margins or improve them?

Answer: The acquisitions are expected to contribute positively to margins. Core is forecast to reach single-digit profitability by the year-end, and the other two entities will operate at margins consistent with Metropolis, ensuring overall margin enhancement rather than dilution.

Question: Can we expect organic revenue growth in FY '26, and how will it compare to historical performance?

Answer: We are guiding for a 12% organic revenue growth this year, reflecting our historical performance. The contributions from our acquisitions will further boost total revenue growth to approximately 25-26%, improving our market position.

Question: What is the rationale behind potentially slowing down lab expansion and the capital expenditure framework?

Answer: The rapid lab expansion phase has concluded. Going forward, we plan to focus on optimizing existing facilities and enhancing our service footprint at approx. INR 50 crore for this year, ensuring stronger returns on investment and leveraging efficiencies gained from our acquisitions.