Metropolis Healthcare Ltd (MHL) is one of the leading diagnostics companies in India, by revenue, as of March 31, 2018. It has a widespread presence across 19 states in India.
Through the widespread operational network, MHL offers a comprehensive range of clinical laboratory tests and profiles, which are used for prediction, early detection, diagnostic screening, confirmation and/or monitoring of diseases. The company also offers analytical and support services to clinical research organizations for their clinical research projects.
During the nine months period ended December 31, 2018, it conducted 12.3 million tests from 6.6 million patient visits as compared to 16.0 million tests from 7.7 million patient visits during the financial year 2018. For listing benefits and unlocking the market value, MHL is coming out with a maiden IPO of 13,685,095 equity shares of Rs. 2 each via book building issue.
The entire offer is a secondary issue by way of offer for sale by existing stakeholders. It has fixed a price band of Rs. 877 – Rs. 880 per share. The company mulls mobilizing Rs. 1200.18 cr to Rs. 1204.29 cr and the issue will open on 3rd April and will close on 5th April. Minimum application is to be made for 17 shares and in multiples thereon, thereafter.
Post allotment, shares will be listed on BSE and NSE. MHL has reserved 75% of the issue for QIBs, 15% for HNIs and 10% for Retail investors. MHL has reserved 300000 shares for eligible employees. The issue constitutes 27.27% of the post issue paid up capital of the company. As this is a secondary issue, no money is going to the company.
The average cost of acquisition per equity share for selling shareholders in the IPO is Rs 35.48 (Dr. Sushil Shah) and Rs 454.81 per share (CA Lotus Investments). BRLMs to this issue are J M Financial Ltd., Credit Suisse Securities (India) Pvt. Ltd., Goldman Sachs (India) Securities Pvt. Ltd., HDFC Bank Ltd. and Kotak Mahindra Capital Co. Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue.
On the financial performance front, for last three fiscals, MHL has posted turnover/net profits of Rs 490.63 cr / Rs. 81.96 cr (FY16), Rs. 567.66 cr / Rs. 107.26 cr (FY17) and Rs 651.56 cr / Rs 109.75 cr (FY18). For the first nine months of FY19 it has earned net profit of Rs 88.77 cr on a turnover of Rs 566.82 cr. MHL operates on asset-light model and is a debt free company. It has posted an average CAGR of 18% in net profits for last three fiscals.
For last three fiscals, MHL has (on a consolidated basis) posted an average EPS of Rs 17.15 and an average RONW of 27.41%. Issue is priced at a P/BV of 9.43 based on its NAV of Rs.93.27. If we annualize latest earnings and attribute it on post issue equity, then asking price is at a P/E of around 37.3.