Dr. Lal Pathlabs Q1 Results Review - Lack Of Volume Precludes Constructive Stance: Yes Securities
Revenues came in line with 7.6% YoY growth (9.7% non-Covid growth); sample growth of 6% but little by way of volumes.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Dr. Lal Pathlabs Ltd. reported a rather sharp margin surprise despite lackluster volumes which was traced to price hikes taken in some of the commonly ordered tests. Albeit the all important volume metric continues to be lackluster, and all the growth was driven by realisation and mix improvement.
As competitive intensity settles to a new normal which is higher than that prevalent during pre-Covid times, pricing as a lever cannot be relied upon to drive growth.
Also, Q1 had a higher growth rate in Delhi NCR which would have presumably come with better margin; as rest of India picks up, margin too would trend lower in next one-two quarters.
With little visibility on volume pick up and still simmering competition, we do not see reason to change our stance; similarly, Q1 numbers were largely in line and with margin likely to trend lower, reckon our earnings remain largely unchanged barring assumption of higher other income.
Roll over 50 times multiple to FY25 and retain 'Reduce' with revised target price Rs 2,300 (earlier Rs 1,875).
Click on the attachment to read the full report:
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.