Metropolis Healthcare’s shares increased 3% in today’s intraday trading in the morning, reaching Rs 2,250 per share on the BSE, following the company’s announcement of its acquisition of Core Diagnostics.
As of 11:58 AM IST, Metropolis shares were trading at Rs 2,192.40, up 0.25% from the previous session.
This uptick in stock value reflects investor optimism about Metropolis’ strategic move to strengthen its position in the rapidly growing cancer diagnostics sector.
A Strategic Move into Cancer Testing
The acquisition of Core Diagnostics will significantly enhance Metropolis Healthcare’s capabilities in advanced cancer testing, especially in Northern and Eastern India.
Core Diagnostics, known for its expertise in oncology, will provide Metropolis with an expanded market share in the specialized diagnostics sector.
The deal is structured with Metropolis acquiring a 100% stake in Core Diagnostics, which includes Rs 246.8 crore in cash (55%) and stock (45%).
With the Indian oncology market projected to grow at a compound annual growth rate (CAGR) of 17.5% from 2023 to 2028, Metropolis is positioning itself to capitalize on the increasing demand for cancer diagnostics.
The acquisition will combine Core’s specialized cancer expertise with Metropolis’ established infrastructure, helping to solidify its leadership in the sector.
Enhanced Reach in Key Regions
The acquisition strengthens Metropolis’ presence in Northern and Eastern India, where Core Diagnostics generates a significant portion of its revenue.
This expanded geographical footprint will allow Metropolis to offer a broader range of cancer diagnostics to its existing customer base while improving its relationships with key hospitals in these regions.
Surendran Chemmenkotil, CEO of Metropolis Healthcare, noted that the acquisition would also provide opportunities for cross-selling both companies’ test offerings.
Core Diagnostics’ Growth Trajectory
Core Diagnostics has demonstrated impressive growth over the years, with a 22% CAGR over the past three years.
In FY2023-24, the company reported revenue of Rs 110 crore. Founded in 2012, Core operates in over 200 cities across India, and its state-of-the-art laboratory in Gurugram is NABL- and CAP-accredited, ensuring high-quality standards.
Strengthening National Leadership
Metropolis Healthcare, established in 1981, operates across 22 states, three union territories, and more than 700 towns.
The acquisition of Core Diagnostics adds further strength to its already expansive network, enabling the company to deliver specialized cancer diagnostics nationwide.
Metropolis aims to leverage Core’s expertise to establish a Centre of Excellence in Cancer Diagnostics, further reinforcing its leadership in the oncology field.
Financial Advisory and Legal Support
Alivio Advisors served as the exclusive financial advisor to Metropolis Healthcare in this acquisition, while legal advisory was provided by Saraf & Partners. PwC conducted thorough financial due diligence, ensuring the deal’s compliance and smooth execution.
Core Diagnostics’ Financial and Market Impact
With Core Diagnostics’ revenue of Rs 110 crore for FY2023-24, Metropolis expects to increase its footprint in the specialized diagnostics market, particularly in cancer testing. The deal is expected to close within 60 days, pending shareholder approval.
Ameera Shah, Executive Chairperson of Metropolis Healthcare, highlighted the strategic importance of the acquisition: “By integrating Core’s specialized cancer diagnostics with Metropolis’ resources, we aim to further establish our leadership in this critical healthcare segment.”
Strong Market Performance
Metropolis Healthcare’s stock has performed strongly in 2023, outperforming the broader market. The stock has surged 31% year-to-date and 32% over the past year, compared to a 12% gain in the BSE Sensex during the same period.
The company’s market capitalization stands at Rs 11,258.05 crore, and its high P/E ratio of 85.25 times reflects strong market expectations for future growth.
Disclaimer – The information contained in this article is for informational purposes only. MarketScope Daily does not provide investment advice, and readers are advised to conduct their own research and consult with a financial advisor before making any investment decisions. Investing in the stock market carries risks, and past performance is not indicative of future results.
