Add Dr Lal Pathlabs, target price Rs 2,910: HDFC Securities

HDFC Securities has an add call on Dr Lal Pathlabs with a target price of Rs 2910. The current market price of Dr Lal Pathlabs is Rs 2566. Dr Lal Pathlabs., incorporated in 1995, is a Mid Cap company with a market cap of Rs 21380.49 crore, operating in Hospitals & Allied Services sector.

Dr. Lal Pathlabs' key products/revenue segments include Hospital Services and Other Operating Revenue for the year ending 31-Mar-2022.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 621.80 crore, down -8.84 % from last quarter Total Income of Rs 682.10 Crore and up 11.59 % from last year same quarter Total Income of Rs 557.20 crore. The company has reported net profit after tax of Rs 98.10 Crore in latest quarter.

The company?s top management includes Brig.(Hony) Dr.Arvind Lal, Mr.Rohit Bhasin, Mrs.Somya Satsangi, Mr.Rajit Mehta, Mr.Gurinder Singh Kalra, Dr.Archana Lal Erdmann, Mr.Rahul Sharma, Dr.Vandana Lal, Dr.Om Prakash Manchanda, Mr.Arun Duggal. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2024, the company has a total of 8 Crore shares outstanding.

Investment Rationale
The diagnostic sector experienced de-rating in the last few quarters due to moderate earnings growth, and DLPL is trading at 42x/37x PE; this is at an 15/24% discount to its long-term mean of 49x. HDFC Securities has tweaked its estimates and rolled forward the target price to Rs 2,910, based on a 43x FY27E EPS (~10% discount to the average PE of 49x), which implies 26x EV/EBITDA. While the brokerage has built in 5% patients and 10% samples volume CAGR for FY25-27E, they will keep track of the improvement in volume and earnings growth. HDFC Securities maintains an ADD rating.

Promoter/FII Holdings
Promoters held 53.91 per cent stake in the company as of 31-Dec-2024, while FIIs owned 26.82 per cent, DIIs 12.87 per cent.