Metropolis Healthcare OFS IPO: 5 things you need to know

Mumbai-based diagnostics player Metropolis Healthcare is going to launch its IPO on 3 April 2019. The company, promoted by Father-daughter duo of Dr Sushil Kanubhai Shah and Ameera Sushil Shah, plans to sell as many as 13,685,095 shares in the upcoming IPO through the OFS (Offer For Sale) route. Here are five things you should know about Metropolis Healthcare OFS IPO.

Metropolis Healthcare OFS IPO: Business overview

The company’s precursor started operations in January 1980 as a partnership firm. Over the years, the company has transformed itself into a nationwide player offering a broad range of clinical laboratory tests and profiles. As of 31 December 2018, Metropolis Healthcare had presence in 197 cities in 19 states of India with leadership position in western and southern parts of the country.

The company offers a wide range of 3,487 clinical laboratory tests and 530 profiles aimed at identifying a disease or disorder as well as for health and fitness screening.

Metropolis Healthcare OFS IPO: Hub and Spoke model

Like other diagnostics players including Dr Lal Path Labs and Thyrocare, Metropolis Healthcare has implemented a ‘hub and spoke’ model for quick and efficient delivery of services. Its network covers 115 clinical laboratories, comprising (i) a global reference laboratory (GRL) in Mumbai, which acts as a hub of the network; (ii) 14 regional reference laboratories (RRLs) for conducting routine, semi-specialized and few specialized tests; (iii) 56 satellite laboratories for conducting routine and semi-specialized tests; and (iv) 44 express laboratories which are equipped to conduct routine tests.

The RRLs include four laboratories located outside India.

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Metropolis Healthcare OFS IPO: No new shares

The company is not offering any new shares in the IPO and all the shares offered will be sold by existing investors. As such, the company will not get any funds from the IPO proceeds.

Out of the total 13,685,095 shares to be sold in the IPO, 6,272,335 shares will be sold by promoter Dr Sushil Shah.

Metropolis Healthcare OFS IPO: Carlyle on board but to pare stake

Private equity (PE) firm Carlyle Group is the prime backer of the healthcare diagnostics company. Carlyle has nearly 31% equity stake in Metropolis Healthcare and is the biggest stakeholder. The PE firm will also participate in the OFS through CA Lotus Investments and will offer 7,412,760 shares. Following the IPO, Carlyle’s stake in Metropolis Healthcare will reduce to 16.47%.

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Metropolis Healthcare OFS IPO: Stable margins, debt free balance sheet

According to the figures published in the prospectus, Metropolis Healthcare has managed to post strong growth in revenues and profits in the last three years and for the nine months ended 31 December 2018. In the same period, its net margins have been stable in a tight range of 16% to 18.9%. This has been possible by a lean and strong balance sheet which is free of any long term debt.

Metropolis Healthcare’s financial performance (in INR crore)

FY2016 FY2017 FY2018 9M FY2019
Total revenues 490.6 567.7 651.6 566.8
Total expenses 366.4 410.4 491.3 431.2
Comprehensive income 80.0 107.5 110.5 90.6
Net margin (%) 16.3 18.9 17.0 16.0

 

Metropolis Healthcare OFS IPO: 5 things you need to know
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Krishna Bagra

Coming from a family of investors and financial analysts, Krishna learnt wading through regulatory filings pretty early in her career. At IPO Central, Krishna plays twin roles of contributor and head of research desk. She can also be reached at +krishnabagra .

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