Dr. Lal Pathlabs Q1 Results Review - Lack Of Volume Traction Keeps Us Away: Yes Securities

Yes Securities Report

Dr Lal Pathlabs Ltd. delivered no surprises in volume growth or revenues in Q1 and rather we reckon patient footfall growth at 5.5% was again underwhelming while test volume was up 9% YoY. With ever increasing Swasthfit share to 25% (vs 22% YoY) and rising 150 basis points every year, some of the repeat patient volume in the discretionary bucket would be upsold the wellness program.

This could be pulling down the overall footfall growth though patient volume originating due to sickness should be unaffected. Margin continues to hold at higher level despite Suburban operating profit margin at 14% and penetration in to tier-III and four towns.

We lower patient volume growth assumption to ~6-9% from 8-10% earlier offset by better realisation due to rising Swasthfit share. Overall, estimates remain unchanged; indeed, in the last 12 months, our FY25 revenue estimate have hardly changed at Rs 24.8 billion even as elevated margin has driven EPS upgrade (~11% to Rs 52).

We retain our target multiple and target price at Rs 2,550, based on 40 times FY26 earnings per share and downgrade to Sell as lack of volume growth keeps us away.

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