Nomura downgrades Dr Lal PathLabs to reduce, cuts target price

Nomura downgraded Dr Lal PathLabs to 'reduce' from 'neutral' and also slashed target price to Rs 1,444 from Rs 1,471. The global brokerage said Dr Lal PathLabs' fourth quarter result was below its estimates and revenue was in-line with estimates.

Strengths of the company including a strong track record of operational excellence, robust balance sheet and benefits from consolidation in the diagnostic market are adequately reflected in the stock price, it said.

"We think the near-term earnings outlook remain challenging. The extension of the lockdown in India and aversion on the part of patients to visit doctors is adversely impacting volumes. Outpatient OPD is the key volume driver for the company," said Nomura. It added that Dr Lal PathLabs' valuations are at 19% and 129% premium to peers Metropolis and Thyrocare.