CLSA maintains 'buy' on Dr Lal PathLabs

MUMBAI: CLSA has maintained 'buy' rating on Dr Lal PathLabs and revised target price to Rs 1,320 from Rs 1,270 due to rolling forward of valuations.

Dr Lal PathLabs' volume growth in the past two quarters has been encouraging after CLSA said it likes Dr Lal PathLabs’ strategy to focus on volumes, particularly in an industry that lacks pricing power and said that focus will also be required on cost structure so as to minimise margin dilution.

The firm believes that the next share-price trigger for Dr Lal PathLabs could be Kolkata lab commercialisation due in the first quarter of FY19 which could be a key growth driver in the coming years.


"Dr Lal’s upcoming facility at Kolkata has received all regulatory approvals and pilot tests have begun. Commercial operations are due to begin in 1QFY19. It expects to achieve cash-breakeven in three years and is looking to capture 15 per cent share in the region," said CLSA. "We expect Kolkata to become another cog of volume growth in the coming years and to drive penetration in East India," it added.