Research Summary Dr Lal PathLabs Limited Q4 FY 2022

Overview

Dr Lal PathLabs Limited is an Indian diagnostic company. It was incorporated in 1949. The headquarters is situated in Delhi, India. It has 70+ years of experience in diagnostics. It has successfully served 100 million patients in the last 5 years.  It has 277 clinical labs, including the National Reference Lab at Delhi and Regional Reference lab in Kolkata. It has 4,731 Patient Service Centers (PSCs) and 10,599 Pick-up Points(PUPs).

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. 

Understanding the Business Model

Financial Snapshot (Figures in Rs Crores)

Operating Revenue increased by 12.7% to Rs. 485.5 Crores. The EBITDA stood at Rs 130.7 Crores. The PBT is Rs 83.5 Crores in Q4 FY22. PAT is Rs 62.1 Crores in Q4 FY22. For FY22, Dr Lal PathLabs Limited has served 27.3 million patients with a revenue of Rs 2,087 crores. In Q4 FY22 the non-COVID revenue is Rs 419.7 crores with a registered growth of 12.2%. For FY22, non-COVID revenue is Rs 1,691 crore, registering a growth of 34.5%.Covid and Allied contributed 13.6% to revenue in Q4 FY22.

Operating Highlights for Last 4 years

Outlook of the company

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.

Analysis of Ratio’s for past 5 years

	FY 18	FY 19	FY 20	FY 21	FY 22
ROCE%	37.9	34.78	32.94	36.03	32.6
ROE%	25.32	23.76	23.74	26.89	26.39
ROA%	311.72	359.22	21.28	25.65	16.74
Debt/Equity	0	0	0	0	0.24

According to industry perspective, the company needs to improve the ratios. There is a sharp fall in ratio in FY22. The company has zero debt in last 4 years. However, in FY22 it has increased to 0.24.

SWOT analysis

Strength- There is an improvement in Net Profit quarter over quarter. The company has low debt as per balance sheet.  The company has a strong cash generating ability from its core business. There is a zero promoter’s pledge.

Weakness-The business includes lots of regulatory hurdles as it is a healthcare business.

Opportunity- The companyis expanding itself in Southernand Western India.

Threats –The company has a regional concentration in revenue. The revenue mainly comes from the Northern region of India. In order to grow further the company should focus more on Merger & Acquisitions. There is a stiff competition from diagnostic companies and Ecommerce players. The business is dependent on doctor’s referral.

Comparative Analysis

Dr Lal PathLabs	Metropolis	Thyrocare
Incorporated in 1949	Established in 1980	Established in 1996
One of the largest diagnostics  chain	One of the largest diagnostics  chain	200+ test
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	50 profiles comprising test for preventive care and wellness
1961 radiology & cardiology test	10000+ patient touch points
Market Cap of Rs 20000 crores	Market Cap of Rs 11000 crores	Market Cap of Rs 5000 crores

Industry Analysis

The growth of the diagnostics industry is solely dependent on technological advancements in the healthcare industry, and doctors relying more on evidence-based treatment. Moreover, the labs which are attached to the hospitals generate more revenue. They emphasize more on patient count compared to the quality of the test. To survive in this industry Dr Lal PathLabs is concentrating on enhancing its product mix, geographic mix and channel mix.

Strategy for Future Growth with Digital Innovation

Dr Lal PathLabs Limited has made Self Registration Kiosk 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.

Projects in Pipeline: 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.