Focus is on building capacity for home visits – Ameera Shah of Metropolis

Update on the Indian Equity Market:

On Friday, NIFTY closed marginally higher at 8,660 (+0.2%). The top losers in NIFTY50 were Bajaj Finance (-7.9%), Hero Motocorp (-7.9%) and IndusInd bank (-5.7%). Top gainers in NIFTY50 were Coal India (+6.4%), Axis Bank (+6.2%) and Cipla (+6.1%). Top sectoral losers were Auto (-2.4%), Media (-1.1%) and Realty (-0.4%) and top sectoral gainers were Bank (+1.8%), Pvt Banks (+1.7%) and Metal (+0.8%).

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Excerpts from an interview of Ameera Shah, MD of Metropolis and Sudarshan Jain, Secretary-General of Indian Pharmaceutical Alliance with CNBC -TV18 dated 26th March 2020:

• A lot of people have similar symptoms to COVID-19, flu-like symptoms, sore throat, fever, and cough and are wanting to get checked. So, they are seeing a lot of demand in cities for patients with prescriptions wanting to test for coronavirus.
• Right now they are focusing on building the capacity for home visits but the biggest challenge that they are having at this point is their manpower who are willing to go for home services to people’s houses.
• They are having a challenge in having enough instrumentation, enough reagents and chemicals to do the testing.
• While they could collect samples in Delhi, Chennai, or Bangalore, bringing them to Mumbai is becoming a challenge because of the lack of commercial flights.
• The stocks are available for 3-4 months requirement. As far as hydroxychloroquine and azithromycin is concerned, they have got the capacity to produce 3-4 million tablets of hydroxychloroquine in the country. So, they are totally prepared and they have got all the capability for the production of the goods.
• Zydus Cadila and IPCA are the world’s largest producers and they can totally prepared to supply whatever the requirement. They are ramping it up and are in discussions with all the city governments. They are totally prepared for supplying the products.

Consensus Estimate: (Source: market screener and investing.com websites)

• The closing price of Metropolis Healthcare was ₹ 1,370/- as of 27-March-2020.  It traded at 44x/ 37x/ 31x the consensus earnings estimate of ₹ 31.4/ 36.6 /44.5 for FY20E/21E/22E respectively.
• The consensus target price for Metropolis Healthcare is ₹ 1,577/- which implies a PE multiple of 35x on FY22E EPS of ₹ 44.5/-.