Given the high fixed cost nature of the business, with nearly 60-65 per cent costs being fixed, analysts believe that the nationwide lockdown in the wake of Coronavirus outbreak will lead to a significant decline in EBITDA. On Tuesday, Prime Minister Narendra Modi imposed a nationwide lockdown in an attempt to stall the spread of coronavirus, which has 562 confirmed cases in India and has claimed 9 lives.
"We expect significant near term impact of Covid-19 on METROHL as lockdown across India will drive a sharp decline in walk-ins across its network while shutdown of clinics and hospitals OPD
services will impact B2B business which is unlikely to be offset by Covid-19 testing. Consequently we have cut our FY2021 revenue and EPS estimates by 7 per cent and 18 per cent, respectively. We expect the impact to be transient and expect a sharp recovery in FY2022," they said.
On Sunday, Thyrocare and Metropolis Healthcare
had received final government clearance to start testing Covid-19 among patients. Among companies in the organised space, top diagnostic chains (SRL Diagnostics, Dr Lal PathLabs, Metropolis Healthcare, Thyrocare and Apollo Hospitals) together have more than 100 accredited labs. This indicates that they will also be able to quickly on-stream their labs to start testing, say analysts.
At 11:00 am, the stock was trading 15 per cent higher at Rs 1,310.15 apiece on the BSE, as compared to a 0.09 per cent decline in the benchmark S&P BSE Sensex.