Why Metropolis Healthcare Share Price is Falling

The pharma sector has been witnessing a mix of tail and headwinds in 2022.

Midcap companies, which had kept their focus on the domestic market, witnessed tailwinds while larger companies faced headwinds due to the USFDA (US Food and Drug Administration) and pricing pressure.

In the past year, many large-cap pharma stocks have experienced significant corrections. One such stock that recently felt this heat was Metropolis Healthcare.

Metropolis Healthcare's share price has plunged over 11% in the last month.

Let's find out why the company's shares are falling.

#1 Sky-high valuation

The company shares have been trading at a high valuation since the beginning of the financial year 2022, as rally was seen post March quarter results.

The company is currently trading at a PE (Price to Earnings) multiple of 53.5x, while the average industry PE multiple stands at 36.1x. This makes the shares of the company overvalued on the PE front.

Considering these valuations, it is possible that investors have booked profits, leading to the price correction.

#2 IT Department raid

In November 2022, the IT (Income Tax) department conducted searches at the premises as part of a tax evasion investigation.

The raid was launched on 16 November 2022 at the premises of the company in Mumbai.

The tax department is still scanning the documents recovered during the searches, including operations during the Covid-19 pandemic.

The final result of this search is still under the scrutiny of the IT department.

Following this inspection, Metropolis Healthcare's shares saw a sharp 6% drop in its share price intraday.

#3 Weak quarterly results

Metropolis Healthcare's revenue declined marginally to Rs 3 billion (bn) due to the core Western India market underperforming.

The west market for the quarter contributed 51% of the overall topline compared to 57% in the same quarter last year.

Even as patient visits increased during the quarter, it could not generate the same revenue from those patients compared to the June quarter.

Revenue per patient fell to Rs 942 from Rs 977 in the June quarter, despite patient visits increasing by 13%.

As a result, the company reported a 31% YoY decline in the net profit at Rs 405 million (m) for the September 2022 quarter, down from Rs 582.6 m a year ago.

With the accelerated shift from the unorganised to the organised sector coupled with increased health awareness among customers, the management is expecting the growth in revenues to pre-covid levels.

How shares of Metropolis Healthcare have performed

Metropolis Healthcare's share price is down 59% in a year. So far, in 2022, the shares are trading lower by 63%.

In the last month, the company's shares are down by 11%.

The company touched its 52-week high of Rs 3,579.9 on 30 December 2021 and its 52-week low of Rs 1,277.8 on 19 December 2022. The shares of the company are today trading at its 52-week low.

Metropolis Healthcare Share Price - 1 Month Performance

About Metropolis Healthcare

Metropolis Healthcare is an India-based diagnostics company that operates through the pathology services segment.

It offers a range of clinical laboratory tests and profiles used for prediction, early detection, diagnostic screening, confirmation, and monitoring of the disease.

The Company also offers analytical and support services to clinical research organisations for their clinical research projects.

Its services include pathology testing services, corporate wellness, labs, and clinical research services.

Metropolis Healthcare further offers a range of tests and profiles that include advanced tests in the diagnosis of cancer, neurological disorders, infectious diseases, and an array of genetic abnormalities.

It owns a chain of diagnostic centers across India, South Asia, Africa, and the Middle East.

For more details about the company, you can have a look at Metropolis Healthcare company fact sheet and quarterly results on our website.

You can also compare Metropolis Healthcare with its peers.

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