Buy Metropolis Healthcare; target of Rs 675: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Metropolis Healthcare's Q2FY27 performance was driven by an 11% growth in test volumes and a 5% jump in revenue per test, resulting in 15.8% YoY revenue growth.
  • The company's EBITDA margin expanded 180bps YoY to 27%, supported by higher utilization of its lab network and productivity improvement initiatives.
  • Management revised its FY27 revenue growth guidance to ~16% and expects EBITDA margin expansion of 160-180bps in H2FY27.
  • The integration of Core is progressing well, with EBITDA margins scaling to double digits.
  • Metropolis' presence in oncology and genomics testing is strengthening, with these areas expected to drive growth.

Thesis Validation Checklist

  • Investors should watch for steady growth momentum, driven by specialty test volume growth and favorable test mix.
  • Margin expansion, driven by operating leverage and productivity improvement initiatives, is expected to continue.
  • The company's ability to integrate Core and drive growth in oncology and genomics testing will be key to its success.
  • Regulatory hurdles and higher-than-expected competition are potential risks to the investment thesis.