Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Markets / Mark To Market/  Dr Lal PathLabs sees firm investor confidence driven by growth opportunities
BackBack

Dr Lal PathLabs sees firm investor confidence driven by growth opportunities

Dr Lal is a debt-free, cash surplus company and has maintained a three-pronged strategy for capital utilisation. Dividend payouts and investments in the business, such as in technology, new machines/instruments, and expanding lab network, have remained key strategies

Diagnostic chains will have the upper hand due to their expertise in testing. Premium
Diagnostic chains will have the upper hand due to their expertise in testing. 

Shares of Dr Lal PathLabs Ltd have risen more than 78% year-to-date and now trade near fresh highs. The company, like its peers, benefited from the pandemic and associated surge in testing, coupled with rising non-covid volumes. Market share gains by organised testing laboratories, geographical expansions being undertaken by the company, and digital initiatives, among others, have helped drive growth.

Analysts at Edelweiss Securities Ltd expect a 22% CAGR rise in core pathology contributions during FY21-24. Given Dr Lal’s strong brand equity, improving geographical spread, and digital investments, it is well placed to benefit from structural tailwinds in the diagnostic industry, they said.

The company has adequately diversified its revenue stream and lowered its dependence in the Delhi National Capital Region, having expanded into other regions. It commenced pilot operations at Bangalore reference lab, and also in six satellite labs at Borivali and Vashi in Mumbai. More benefits are to accrue with the start of Mumbai reference lab, once it meet licensing requirements.

Analysts say large national-level pathology companies such as Dr Lal PathLabs could also tap partnerships with regional companies for revenue synergies. Some of the large labs in India are regional and do not have any material national presence. The company nevertheless will have to handle operational challenges associated.

Rising online opportunities, meanwhile, have also been providing growth opportunities. While multiple health tech platforms have emerged, offering integrated healthcare services, such as e-pharmacy and tele-consultation,a nalysts at Motilal Oswal Financial Services Ltd (MOFSL) believe that diagnostic chains will have the upper hand due to their expertise in testing. Unlike other services and e-commerce activities, the quality and accuracy related with pathology tests remain the most important.

Dr Lal is a debt-free, cash surplus company and has maintained a three-pronged strategy for capital utilisation, said a recent report by MOFSL. Dividend payment and investments in the business, such as in technology, new machines/instruments, and expanding lab network, have remained key strategies. Inorganic expansions remain the third important aspect which company is regularly working on.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 13 Sep 2021, 11:43 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie