Key highlights from Dr Lal PathLabs Ltd (LALPATHLAB) Q2 FY23 Earnings Concall
Q&A Highlights:
- [00:16:43] Rahul Agarwal with Incred Capital enquired about 2Q23 performance according to the company’s expectations. Arvind Lal EC said the company’s opinion is that the performance is slightly in line with what it was doing earlier.
- [00:17:20] Rahul Agarwal of Incred Capital also asked that on Suburban, non-COVID revenue being flat QoQ. Arvind Lal EC replied that the company expected slightly higher growth, but there were some challenges in stabilizing the asset. However, going forward the company expects to bounce back on this.
- [00:17:39] Rahul Agarwal from Incred Capital enquired about staff cost declining from 1Q23 to 2Q23 to INR91 crores and if there is any one-offs. Ved Prakash Goel CFO clarified that there is a charge of RSU, which was reduced by about INR8.5 crores.
- [00:20:33] Sriraam Rathi of BNP Paribas enquired about margins going forward. Ved Prakash Goel CFO answered that 2Q is always higher margin quarter. LALPATHLAB said it will be able to maintain its margins going forward, which used to be pre-COVID level of around 26%, including Suburban.
- [00:22:06] Sriraam Rathi of BNP Paribas asked about revenue trajectory for 2H23, if it will be lower. Arvind Lal EC said that 3Q is the lower quarter in the company’s portfolio, with 2Q being the highest.
- [00:32:22] Prakash Kapadia from Anived Portfolio asked about EBITDA margins going forward for Suburban from current levels. Arvind Lal EC said it’s early stage. The focus right now is to stimulate topline growth than worry about EBITDA margins. The immediate focus is to be able to build collection infrastructure in Mumbai.
- [00:34:33] Prakash Kapadia of Anived Portfolio enquired that on the test menu if that’s going to be an important addition to Suburban to drive growth. Arvind Lal EC replied that that’s the plan and it will happen once the accreditations are done. LALPATHLAB is also looking at a close integration between suburban and LPL test menu, leveraging both.
- [00:36:43] Sayantan Maji of Credit Suisse asked about the regions that grew faster compared to the corporate average in 2Q23. Arvind Lal EC said that the company’s core markets of UP, Punjab, Rest of North, and South all grew at a very fast pace.
- [00:43:55] Nitin Agarwal of DAM Capital asked about the good patient volume growth number that the company would be looking at. Om Prakash Manchanda MD said it’s difficult to give that figure as the industry is in a state of flux. The whole excitement created by COVID is dying down. So the real trend can be seen in the next two quarters.
- [00:45:56] Sameer Baisiwala of Morgan Stanley enquired about company’s distribution expansion and if it’s on track. Bharath Uppiliappan CEO answered that it’s on track and the company is seeing good response from Tier 2 plus cities and in South. Also the expansion plan continues both on collection center and lab network.
- [00:48:52] Rishabh Tiwari with Allegro Capital asked about non-COVID revenue growth of 6.6% in 2Q23, and how much is coming from volume and price. Arvind Lal EC said that there is no price erosion. Bundled test and super specialty contribution is moving up. Therefore, half will be volume and half revenue realization, but not price increase.
- [00:53:30] Rishi Modi from Marcellus asked about the company doubling its tech expenses in the past few years and in which areas it’s investing. Arvind Lal EC answered that on the front end, all digital properties like website, app etc. On supply chain side, LALPATH is putting lot of digital assets to monitor the sample flow.