Metropolis Healthcare plunges 23% in two days on disappointing Q3 results

Shares of Metropolis Healthcare continued to reel under pressure for a second straight day, down 9 per cent at Rs 1,870.90 on the BSE in Tuesday’s intra-day trade. The stock has fallen 23 per cent in the past two trading days after the company reported a disappointing set of numbers for the December quarter (Q3FY22).

At 01:58 pm; the stock was trading 4 per cent lower at Rs 1,965, as compared to a 2.4 per cent rally in the S&P BSE Sensex. The trading volumes on the counter jumped four-fold with a combined 2.5 million equity shares having changed hands on the NSE and BSE. The stock has corrected 48 per cent from its 52-week high of Rs 3,579 touched on December 30, 2021. It had hit a 52-week low of Rs 1,846.50 on March 19, 2021.

In Q3FY22, Metropolis Healthcare’s earnings before interest tax and depreciation and amortization (ebitda) margin contracted 530 bps at 27.5 per cent from 32.8 per cent in Q3FY21. Reported profit after tax declined 30 per cent year-on-year (YoY) at Rs 41.20 crore.

Revenue from operations were muted at Rs 293 crore as against Rs 275 crore in the year ago quarter, due to a sharp drop in volumes from a government contract.

The company has made increased investments in digital & marketing, manpower & customer experience initiatives in order to strengthen its brand. This has impacted margins, which the management believes, is a short term phenomenon.

Metropolis Healthcare said non-covid business could have grown faster, however the company witnessed sharp drop in volumes from a government contract. The company expects the testing volumes from government to normalize in Q4FY22.

Further, unseasonal heavy rains in South India impacted revenues. Covid volumes witnessed significant growth YoY, however price capping for covid tests impacted the revenue growth, the company said.

In Q4FY22, the company expects better profitability on account of higher QoQ volumes from large government contract and benefits of investments in digitization and marketing. The costs related to investments in digitization and marketing to partly continue in Q4FY22.