Dr. Lal Pathlabs Q3 Results Review - Weak Volume Outlook: Yes Securities

Yes Securities Report

Dr. Lal Pathlabs Ltd. reported a weak revenue quarter as growth declined 1.5% YoY and on a like to like basis excluding Suburban (since it was consolidated for only 45 days in Q3 FY22), reckon decline is more like ~5% YoY.

Patient volume declined ~5% YoY and again due lack of full Suburban benefit in base quarter, core Dr. Lal Pathlabs volume would have had a larger fall YoY.

Margin came in at 23% on better cost control as also transaction related costs in the base quarter the company management conveyed what has been largely evident about volume compound annual growth rate being 2-3% lower than pre Covid baseline.

More importantly, there has been a lack of volume revival in recent quarters with an increasing likelihood that FY24 too would be a work in progress year for initiatives to bear fruit.

We lower volume growth to mid-single digit next fiscal from our earlier forecast of 10-11% which basically postpones recovery by a year.

Accordingly, we lower estimate for FY24 by 20% while FY23 is largely unchanged.

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