Dr Lal PathLabs Limited Research Report

Stock Data

Ticker: LALPATHLAB

Exchange :     NSE

BSE:         539524

Industry:      Diagnostic

Price Performance

Last 7 days             8.70%

YTD                     -38.28%

Last 12 months     -39.34%

The stock is showing a downward trend due to Tata 1mg’s disruption expectations in the diagnostic business. It is expected that due to the intervention of Tata’s B2C disruptive strategy in the industry, diagnostic firms like Dr Lal Path Labs, would see a significant drop in profitability.

Events to watch out for:

Dr. Lal PathLabs Ltd. has informed the Exchange that Record date for the purpose of Dividend is 09-Aug-2022.

Company Description:

Dr Lal PathLab is an Indian Diagnostics company. It was incorporated in the year 1995. As of today the current market price is Rs 2358.95. The market capitalization stood at Rs 17380.95 Cr.

The company has a wide range of portfolios. It includes pathology, radiology and cardiology tests. The customers of the company are individual patients and hospitals. It has its presence in large cities such as New Delhi, Mumbai, Bengaluru, Chennai, Hyderabad and Kolkata. 

Shareholding Pattern in Percentage

Dr Lal PathLabs Limited has decided the expansion of Bangalore Reference Labs. It has decided to open up new satellite labs in South India. The company has enabled digital tools and technologies to serve the patients. The vision of the company is to drive growth through patient and partner experience, leveraging digital technologies and improving geographical reach and test portfolio.

The revenue mainly comprises of three components, the Non Covid revenue, Covid Revenue and Allied revenue. The revenue has shown a sharp rise compared to last quarter. But there is a sharp decline in revenue compared to last year.

For Q1 FY 2023, the financial snapshot as follows. Operating Revenue decreased by 17% in Q1 FY23 to Rs. 503 Crores. The Non-Covid Revenue increased by 25% to Rs. 482 Crores. Covid and Allied contributed 4% to Revenue. Normalised EBITDA stood at Rs. 126 Crores. Normalised PBT stood at Rs 94 Crores. Normalised PAT stood at Rs 71 Crores. The board has recommended an Interim Dividend of Rs. 6 per equity share of Rs. 10 each. Net Cash and Cash Equivalents stood at Rs. 436 crores.

Business Outlook

The company target  to grow ahead of the industry. Expanding  across geographies  through Regional Reference Labs and cluster city approach for attractive markets. It is expanding its reach in the North, East & Central Indian markets.It is expanding its opportunity in the south and recently acquired the Suburban brand in the West.

For future growth Dr Lal PathLabs have inclined towards strengthening the existing operations.It has improved the quality & reliability standards. They have reduced the turnaround time for testing. The company has invested in online initiatives and branding. It has expanded its offering and increased its geographical parameters. It has improved the method of diagnostics testing. It has added Chronic & Lifestyle disease management services to the portfolio services and even expanded its reach in the corporate segment. It has concentrated in geographical expansion by setting up clinical laboratories and Regional Reference Laboratories.

Dr Lal PathLabs Limited has made Self Registration Kiosks for patients and also Self Report printing Kiosks for 24 by 7. It has introduced Online test / health package booking. Launched Phlebo Mobile App for home collection booking along with route plan. If the patient has undergone any test from Dr Lal PathLabs Limited he can view and download current and historical test reports directly.

Managing Director, Dr Lal PathLabs Pvt Ltd, spoke about a pilot project to transport blood samples via drones. He even emphasized that it will be more beneficial in the hilly region where it takes more time to bring the sample. This facility can be used as an emergency for such cases.

Dr Lal PathLabs has concentrated towards Genomic testing. It mainly focuses on Genetic testing. These tests are mostly done by using cutting edge technologies such as Next Generation Sequencing (NGS), MLPA, ddPCR, FISH & Sanger Sequencing.

The company has adopted digital histopathology. It has leveraged Artificial Intelligence for Histopathology. Digital Histopathology will be used for remote routine reporting. Reporting of Digital Breast cancer can also be done through AI based algorithms.

A Peer Analysis

	MCAP Cr	P/B	P/E	EPS	ROE%	ROCE%
Dr Lal PathLab	17,438.88	12.29	50.69	41.28	25.93	34.82
Metropolis Health.	7,654.44	8.82	39.88	37.49	32.63	41.73
	Dr Lab Pathology	Metropolis
	Incorporated in 1949	Established in 1980
	One of the largest diagnostics  chain	One of the largest diagnostics  chain
	200+ clinical labs , 455 test panel	Present across 19 states and 210 cities
	3000+ patient Service centre	Received 10 million patients in FY 20 and completed 19.6 million tests
	1961 radiology & cardiology test	10000+ patient touch points

Our View

The company has invested a lot for its product diversification. It has also expanded its geographical reach. On the basis of analysis on past 3 years the company has a good profit growth of 18.51%. The revenue grew 17.15%. The ROCE & ROE are quite healthy as per the industry perspective. The ROE for the past 3 years stood at 25.37% and ROCE of 33.18%. It is a complete debt free company in past 3 years.

The company is not concentrating on P/E, it is more inclined on cash/cash equivalent because they are aware that with this cash they can do more investments in technology, R&D and geographical expansion. So in next two to three years the company is expected to see a healthy profit. The share price will rise accordingly. Moreover the diagnostics stocks are bearish now after the post pandemic so from an investor perspective it won’t be a good decision to invest in diagnostics stocks now.