Comments
JMFL
Dr Lal PathLabs (Buy)
CMP: ₹1,701
Target: ₹1,750
Dr Lal PathLabs reported a muted performance in 3QFY20 with sub-par growth of 2 per cent in the Delhi NCR market even as growth in the Rest of India (RoI) markets remained strong (+19.8 per cent y-o-y). Revenue/EBITDA/PAT of ₹ 327.9 crore / ₹82.3 crore/ ₹54.1 crore grew by 12 per cent/25 per cent/18 per cent y-o-y and were -4 per cent/-13 per cent/-20 per cent vs our estimates. Patient volume growth (+11.3 per cent y-o-y) missed our estimates by 5 per cent primarily on account of a harsh and prolonged winter in NCR with the competitive intensity in Dr Lal’s core market continuing to accelerate. Realization per patient (₹688, +1 per cent y-o-y) was in line with our estimates.
Dr Lal continues to focus on expanding its presence in the Western & Southern markets via acquisitions with the strong balance sheet offering sufficient room for exploiting inorganic growth opportunities in new geographies. While we are more cautious now given the sharp run-up in the stock price, we will wait for a quarter to see if the slowdown in NCR is structural in nature.
We cut our FY20/21E EPS by c.5 per cent and arrive at a Mar’21 target price of ₹1,750.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.