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Dr. Lal Pathlabs Q1 Review - Resilient Performance: ICICI Securities

Dr. Lal Pathlabs Q1 Review - Resilient Performance: ICICI Securities

<div class="paragraphs"><p>A lab technician testing a sample. (Photo: Emin-Baycan/ Unsplash)</p></div>
A lab technician testing a sample. (Photo: Emin-Baycan/ Unsplash)

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ICICI Securities Report

Dr. Lal Pathlabs Ltd.'s Q1 FY23 performance beat our estimates driven by better than expected improvement in the base business. Revenue from Covid and allied tests (excluding Suburban) plunged 92.2% YoY.

Base business revenues (ex-Suburban) grew 15.4% YoY (three-year compound annual growth rate of 10.0%) to Rs 4.5 billion versus our estimate of Rs 3.9 billion.

Overall revenue fell 17.1% YoY, mainly on the high base of Covid-led revenues. Ebitda margin contracted 780 bps YoY to 23.4%. Adjusted profit after tax was down 56.0% YoY to Rs 577 million.

While intensified competition is likely to weigh on realisations in the near term, we believe changing revenue mix in favor of specialised tests will provide support.

We remain positive on Dr. Lal given its strong brand equity, focus on geographical expansion, mix shift towards specialty tests and strong return ratios with healthy free cash flow.

Click on the attachment to read the full report:

ICICI Securities Dr Lal Q1FY23.pdf

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