Metropolis Healthcare expansion and TruHealth mix support margin-led earnings growth

Investment View and Fair Value

Kotak Securities Limited's company update dated August 28, 2026 retains an ADD recommendation on Metropolis Healthcare, with a 12-month fair value of Rs 655.

The constructive view is based on the expected expansion of the owned-centre network, establishment of mini-hubs, deeper penetration in Tier-III markets, traction across both B2C and B2B channels, and an improving margin trajectory.

Network Expansion and Market Opportunities

Metropolis Healthcare plans to increase its owned-centre count from 750 to 1,000 over the next three years. It also intends to establish 100 mini-hubs over the same period. Allied services through these mini-hubs are expected to improve customer engagement and support B2C growth.

Tier-III markets account for around 26 per cent of sales and are showing improving traction. North India has emerged as the company's fastest-growing region. Management also remains open to inorganic opportunities that could extend Metropolis Healthcare's geographic reach and capabilities.

Growth and Margin Outlook

Management has guided for 14-15 per cent year-on-year sales growth in FY27E, supported by stronger positioning in speciality testing, a higher TruHealth mix and improving throughput. Management is also targeting EBITDA-margin expansion of 100-150 basis points in FY27E. These represent management targets and guidance rather than Kotak forecasts.

Kotak expects network maturation following the expansion programme and a better margin profile in the Core business to support approximately 300 basis points of EBITDA-margin expansion between FY26 and FY29E.

The broker also expects cross-selling and optimisation, the scale-up of the newly commenced network, and higher Core margins to drive around 19 per cent EBITDA CAGR and around 26 per cent EPS CAGR over FY26-FY29E.

Key Drivers of the ADD View

• Sustained demand traction across B2C and B2B channels.
• Operating leverage from the expanded owned-centre and mini-hub network.
• Deeper penetration in Tier-III markets and continued momentum in North India.
• Stronger speciality-testing positioning, a higher TruHealth mix and improving throughput.
• A favourable mix shift, cross-selling and optimisation, and improvement in Core-business margins.

Risks and Investment Considerations

The report identifies a FY26 dividend yield of 0.3 per cent as a negative. The investment case is therefore more dependent on delivery of the planned centre and mini-hub expansion, sales-growth guidance, speciality-testing and TruHealth traction, throughput improvement, and the anticipated margin expansion than on income return.

The report states the fair value of Rs 655 but does not provide a detailed valuation methodology in the available summary.