Dr Lal PathLabs shares zoom 8% after Q4 results. Should you buy or sell?
Dr Lal PathLabs saw an 8% surge in shares to Rs 2,539.65 on the BSE following a 51% YoY increase in net profit to Rs 86 crore for Q4FY24. Analysts have varying opinions, with Kotak and JM Financial maintaining positive outlooks, while Goldman Sachs remains cautious.
of surged 8% today on BSE to the day’s high of Rs 2,539.65 after the company reported a 51% year-on-year (YoY) jump in to Rs 86 crore for the quarter ended March 2024 led by improved volumes of . rose 11.1% to Rs 545 crore in Q4FY24, compared to Rs 491 crore in Q4FY23. In FY24, the diagnostic chain serviced 27.6 million patients and tested a total of 78.2 million samples, representing a growth of 8.1% in samples over the previous year.
Here’s what from various have to say about the stock:
While competition is still likely to pose a threat to volumes, KIE said that it expects Lal PathLabs’ to pick up steadily in suburban and tier-3/4 towns, aided by its robust brand recall and customer trust. An increasingly benign competitive landscape alleviates any major concerns on structural volume growth and margins. The brokerage has retained its ‘add’ rating with a of Rs 2,560.
“While there is hardly any room for gross margin expansion, operating leverage-led margin expansion will be reinvested for network expansion. DLPL plans to open 20 hubs predominantly in Tier 3+ towns. With a cash balance of INR 9.6bn and private market valuations cooling down, there is sufficient room for inorganic expansion (upside risk). DLPL is trading 1SD below average PE making the risk-reward extremely favorable. We prefer DLPL as our ‘top pick’ in the sector,” stated the brokerage firm.
The brokerage has maintained a ‘buy’ with a target of Rs 2,735 for the stock.
Dr Lal PathLabs’ Q4FY24 result was in line with ICICI’s estimates. It reported 10% volume growth in Q4FY24 while pricing growth was mere 1%. Competition in the diagnostics industry seems to be normalising with volume growth likely to pick up in
coming quarters and cash of Rs 940 crore may be utilised for M&A to improve presence in South India and other fast-growing cities, according to the brokerage firm.
has maintained an ‘add’ rating for the stock with a target price of Rs 2,660.
Global brokerage firm, Goldman Sachs states that Lal PathLabs showed a subdued volume growth despite a favorable base and the core business growth was driven by better realizations/mix. The guidance also implied growth to remain below pre-covid levels.
It has maintained a ‘sell’ rating on the stock and cut the target price to Rs 2,150.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Here’s what from various have to say about the stock:
Kotak Institutional Equities
While competition is still likely to pose a threat to volumes, KIE said that it expects Lal PathLabs’ to pick up steadily in suburban and tier-3/4 towns, aided by its robust brand recall and customer trust. An increasingly benign competitive landscape alleviates any major concerns on structural volume growth and margins. The brokerage has retained its ‘add’ rating with a of Rs 2,560.
JM Financial
“While there is hardly any room for gross margin expansion, operating leverage-led margin expansion will be reinvested for network expansion. DLPL plans to open 20 hubs predominantly in Tier 3+ towns. With a cash balance of INR 9.6bn and private market valuations cooling down, there is sufficient room for inorganic expansion (upside risk). DLPL is trading 1SD below average PE making the risk-reward extremely favorable. We prefer DLPL as our ‘top pick’ in the sector,” stated the brokerage firm.
The brokerage has maintained a ‘buy’ with a target of Rs 2,735 for the stock.
ICICI Securities
Dr Lal PathLabs’ Q4FY24 result was in line with ICICI’s estimates. It reported 10% volume growth in Q4FY24 while pricing growth was mere 1%. Competition in the diagnostics industry seems to be normalising with volume growth likely to pick up in
coming quarters and cash of Rs 940 crore may be utilised for M&A to improve presence in South India and other fast-growing cities, according to the brokerage firm.
has maintained an ‘add’ rating for the stock with a target price of Rs 2,660.
Goldman Sachs
Global brokerage firm, Goldman Sachs states that Lal PathLabs showed a subdued volume growth despite a favorable base and the core business growth was driven by better realizations/mix. The guidance also implied growth to remain below pre-covid levels.
It has maintained a ‘sell’ rating on the stock and cut the target price to Rs 2,150.
Also read:
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Source: Stocks-Markets-Economic Times
