Metropolis Healthcare Confident Of Achieving 13–15% Revenue Guidance

Diagnostic lab chain Metropolis Healthcare's Chief Executive Officer Surendran Chemmenkotil is confident that the company will maintain 13–15% revenue growth guidance on the back of expansion of its B2C, tier 3, TruHealth wellness packages, as well as speciality portfolio operations.

In the September quarter of the current financial, net profit of Metropolis Healthcare Ltd. increased 31% year-on-year to Rs 46.7 crore against Rs 35.7 crore in the previous fiscal's similar period.

Revenue from operations rose 13.4% to Rs 349.8 crore in Q2FY25 from Rs 308.5 crore in the same quarter last year.

Ebitda jumped 22.2% at Rs 91.5 crore against Rs 74.9 crore in the corresponding quarter last year. Margins in Q2 were 26.2% against 24.3% in the year-ago period.

Chemmenkotil told NDTV Profit that the company’s growth received a push due to its expansion efforts in B2C operations, tier 3, and TruHealth as well as speciality portfolios. “With the combination of these three, our performance has been very consistent in line with the guidance (of 13– 15%) we have been giving all the time this year,” he said.

Despite the positive impact of the expansion, Chemmenkotil believes that margins could remain flattish, which he explained to the company "defocusing" from its institutional business and the government business. "We wanted to do businesses which are reasonably good in terms of margins and easy to do,” he pointed out, adding, “So a combination of all these three things put together at 13% to 15% looks to be the right guidance that I can provide at this point.”

On increasing revenue share from the B2C and B2B segments, the Metropolis Healthcare CEO said, “We have almost 56% of revenues coming from B2C. That is going to get better. We are planning to take the B2C revenue to almost 60% in the coming quarters. And our B2B is about 34–35%. We will also get it better because if you have seen the last two quarters, we have done very well on the B2B segment.”

While B2C is a margin-accretive business, Chemmenkotil said that in the short term, there could be some Ebitda erosion due to costs associated with setting up new labs. Metropolis Metropolis Healthcare is looking to add 90 labs by the end of this year.

“In the first couple of years, when you set up a new lab, there's always a little bit of erosion in the margins because by the time a lab gets to a positive Ebitda, it normally takes anything between 24 to 30 months,” he explained.

“The Ebitda erosion because of the new infrastructure addition may continue for a couple of more years. That's one of the reasons why a little bit of margin improvement to the B2C will get offset there,” Chemmenkotil added.

Shares of Metropolis Healthcare Ltd. closed 1.7% higher at Rs 2,151.70 apiece on the NSE on Monday, while the benchmark Nifty 50 ended 0.03% lower at 24,141.30.