Metropolis to add 30 labs, 600-800 collection centers in FY24

During FY21, the company had a target of adding 90 pathology labs and 1,800 new collection centers in four years. Since then, the metropolis has opened 30 laboratories and 1,057 centres. Amira Shah, promoter and managing director of Metropolis, said the remaining 30 labs would be opened next year.

The company’s revenue fell 7.7% year-on-year 282 crore in the quarter ended March, and net profit fell by 16.5% 33.5 crores. A significant reduction in Covid testing revenue, which accounted for 20-22% of all diagnostic companies’ earnings last year, was highlighted as the primary reason for the decline.

Despite a significant contraction in COVID-related earnings, Metropolis’ core business revenue – excluding COVID and COVID allied, PPP contracts and newly acquired hi-tech diagnostic centers – saw an encouraging 15% growth, reaching 245 crore in Q4FY23.

Shah said the company has been able to grow average realizations by 2% while volumes grew by 13% year-on-year.

Competition within the diagnostic industry has increased, especially within the B2B segment, with online platforms offering substantial discounts. Nevertheless, the direct-to-consumer segment (B2C) remains strong with little impact on pricing as consumers continue to value quality reports from trusted pathology labs. Shah confirmed that Metropolis is determined to expand its B2C revenue, which has grown from around 42% a few years back to around 50% today. The B2C sector is expected to see a growth of 20% in FY2023.

Metropolis continues to strengthen its presence in key West Indian markets. The company reported 18% growth in B2C revenue in Mumbai and 23% in Pune during Q4 FY2023, mainly due to increased penetration, deeper network and stronger brand presence. Additionally, there was a 30% increase in non-Covid revenue from North India for Q4FY23, which contributes around 8-10% to the total revenue.

The broader expansion, however, is putting pressure on Ebitda margins, which came in at 25.7% during Q4, compared to 26.9% in the year-ago quarter. Margins declined by 1.2% due to expansion. Future investments will be primarily directed towards laboratory and technology expansion as well as infrastructure improvements.

Despite the lack of specific forward-looking guidance, Shah expressed hope that Metropolis would maintain its pre-Covid growth rate of 15% and protect its margins in view of the ongoing expansion. He also noted a positive shift in customers from the unorganized to the organized sector after the pandemic, largely due to the perceived credibility of the more advanced organized sector labs.

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