Metropolis Healthcare shares surged over 8% on Friday, August 28, marking the sixth consecutive day of gains as the company delivered robust first-quarter results. The stock closed at ₹589.90, near its 52-week high of ₹609.05, with the current price representing a nearly 8% gain over the past year. The rally was driven by strong Q1 FY27 performance, where consolidated net profit increased 25.8% to ₹57 crore from ₹45 crore in the previous year, while revenue grew 16.6% to ₹450 crore from ₹386 crore year-on-year. EBITDA surged 27% to ₹113 crore with margin expansion to 25.2% from 23.1% in the corresponding period last year. The company's shares have closed in green for eight out of the past 10 sessions, reflecting sustained investor confidence in the diagnostic chain's growth trajectory.
JM Financial has retained its Buy rating on Metropolis Healthcare with a target price of ₹734, implying 27.2% upside from the current market price of ₹577. The brokerage calls it the cheapest among India's leading listed diagnostic players, citing attractive valuations, network expansion, stronger B2C growth and improving margins as key drivers. According to JM Financial, the stock currently trades at 34 times June 2028 estimated earnings, making it the cheapest among India's four leading listed diagnostics companies and trading at a discount of around 28% to the other three players. The brokerage values MHL at 45 times its estimated June 2028 earnings and expects the company to outperform its FY27 guidance of 14-15% revenue growth supported by stronger industry volumes. JM Financial forecasts revenue, EBITDA and profit after tax to grow at compound annual rates of 16%, 19% and 32%, respectively, between FY26 and FY29.
The Mumbai-based lab chain has outlined aggressive expansion plans targeting 1,000 owned B2C stores by FY29, significantly scaling its retail footprint. Management expects revenue growth of 14-15% in FY27 with EBITDA margin improvement of 100-150 basis points from 25.2% in Q1. As part of its FY26-FY29 plan, MHL aims to increase its centre-to-lab ratio from 24:1 to 35:1, higher than its previous target of 30:1, while developing around 100 mini-hubs, including 50 upgraded locations and 50 new centres. The company currently operates more than 5,000 labs and collection centres across over 750 towns, with B2C contributing 57% of revenue and plans to increase owned centres from around 750 to 1,000. Speciality testing is expected to increase from around 40% of revenue to 45% over three years, while TruHealth's contribution is targeted to rise from 18% to about 25% over the same period.
ICICI Securities has maintained its buy rating with an unchanged DCF-based target price of ₹675, citing strong growth visibility and sustained FY27 revenue growth guidance. The brokerage believes the recent and future M&A could provide meaningful upside to Metropolis's growth, particularly in expanding reach in existing geographies, enhancement of new technology and test menu, and potential foray into unexplored regions across India. ICICI Securities expects Metropolis Healthcare to register an earnings CAGR of 29% over FY26–28E with revenue CAGR at ~15%. Revenue growth is likely to stem from volume growth (9–10%) while test mix and realisation improvement may fetch the balance 5% YoY growth. The brokerage expects EBITDA margin to expand ~230bps YoY over FY26–28E and sees RoE and RoCE of 19.4% and 16.6%, respectively, in FY28E. In the next three years, margins can reach 27–28% led by better mix, operating leverage and Core Diagnostics' margins expanding to ~20% by FY28.
The focus on digital channels continues to yield meaningful results, with customers secured via digital medium providing almost 2x LTV compared to offline channels. According to Emkay Global's report, this digital channel currently contributes 25% of revenue and is expected to continue driving growth through improved customer acquisition and retention strategies. Management has reiterated its FY27 guidance of 14-15% revenue growth assuming no price increases, with EBITDA margin expansion of 100-150 basis points. The company's shift toward quality organized players and growing awareness about preventive testing will benefit market leaders like Metropolis Healthcare. Key downside risks identified by ICICI Securities include higher-than-expected competition and regulatory hurdles.
