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Business News/ Companies / News/  Metropolis to add 30 labs, 600-800 collection centres in FY24 as part of expansion strategy
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Metropolis to add 30 labs, 600-800 collection centres in FY24 as part of expansion strategy

Metropolis MD Ameera Shah said the company had managed to improve average realisations while increasing volumes

Ameera Shah, promoter and managing director of MetropolisPremium
Ameera Shah, promoter and managing director of Metropolis

Metropolis Healthcare Limited is planning to open an additional 30 labs and 600-800 collection centres in fiscal 2024. 

During FY21, the company had a target to add 90 pathology labs and 1,800 new collection centres in four years. Since then, Metropolis has opened 30 labs and 1,057 centres. The remaining 30 laboratories will be opened in the next year, said Ameera Shah, promoter and managing director of Metropolis.

The company's revenues dipped 7.7% year-on-year to 282 crore in the quarter ended March, and net profits fell by 16.5% to 33.5 crore. A notable reduction in covid testing revenues, which last year accounted for 20-22% of all diagnostic companies' earnings, was highlighted as a primary cause for the decline.

Despite the significant contraction of covid-related income, Metropolis' core business revenues – excluding the covid & covid allied, PPP contract and newly acquired Hitech Diagnostic Centres – saw an encouraging growth of 15% YoY, reaching 245 crores in Q4FY23.

Shah said the company had managed to improve average realisations by 2% while also increasing volumes by 13% year-on-year.

Competition within the diagnostic industry has heightened, particularly within the B2B segment, due to online platforms offering substantial discounts. Yet, the direct-to-consumer segment (B2C) has remained robust, with little impact on pricing as consumers continue to value quality reports from reliable pathology labs. Shah confirmed that Metropolis is determined to expand its B2C revenues, which have already increased to about 50% from around 42% just a few years ago. The B2C sector saw growth of 20% in FY23.

Metropolis continues to strengthen its presence in key Western Indian markets. The company recorded an 18% growth in B2C revenues in Mumbai and a 23% rise in Pune during Q4FY23, mainly due to increasing penetration, a dense network, and a robust brand presence. Additionally, non-Covid revenue from North India increased by 30% YoY for Q4FY23, contributing approximately 8-10% to the overall revenue.

The extensive expansions, however, are putting pressure on Ebitda margins, which came to 25.7% during Q4 compared to 26.9% in the year-ago quarter. A 1.2% dilution in margins due to expansion was noted. Future investments will mainly be directed towards lab and technology expansion, as well as infrastructure improvements.

Despite the lack of specific forward guidance, Shah expressed her hope that Metropolis would maintain its pre-covid growth rate of 15% and safeguard its margins in view of the ongoing expansions. She also noted a positive shift of customers from the unorganized to the organized sector following the pandemic, largely due to the perceived reliability of more advanced organized sector labs.

Shares of the company were 2.3% higher at 1,266.65 on the National Stock Exchange in early trade on Thursday.

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ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 18 May 2023, 10:00 AM IST
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