Buy Dr Lal PathLabs, target price Rs 1,860: CLSA

CLSA has maintained buy rating on Dr Lal PathLabs and lowered target price to Rs 1,860 from Rs 2,100. Shares of Dr Lal PathLabs ended up 0.57 per cent at Rs 1,410.10 on Thursday while the BSE Sensex closed 1410.99 points up (+4.94%) at 29,946.77.

Dr. Lal Pathlabs Ltd., incorporated in 1995, is a midcap company with a market cap of Rs 11832.06 crore.

Investment Rationale


The pan-India lockdown should impact patient volumes in both B2C and B2B segments for Dr Lal PathLabs even though its labs fall under essential services, said CLSA. The brokerage has lowered volume assumptions by 2-5 per cent over FY20-FY22. Dr Lal PathLabs is well-placed to capitalise on the volume-led growth story in India as patients shift toward unorganised diagnostic players, said CLSA. .


Financials

Dr. Lal Pathlabs Ltd. key Products/Revenue Segments include Hospital Services which contributed Rs 1164.84 crore to sales value (99.99 per cent of total sales) and Other Operating Revenue which contributed Rs .05 crore to sales value (0.00 per cent of total sales)for the year ending March 31, 2019.
For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 327.90 crore, down -10.31 per cent from last quarter sales of Rs 365.60 crore and up 12.10 per cent from last year same quarter sales of Rs 292.50 crore. The company reported net profit after tax of Rs 54.90 crore in latest quarter.