EXPERTS RAISES DR LAL PATHLABS LTD., TARGET PRICE

Brokerage firm Nomura has maintained its 'Buy' rating on Dr Lal PathLabs and raised its target price to Rs 2,280 from Rs 2,150, indicating a potential upside of 12.4 percent from current levels. The revised outlook follows a strong performance in the September quarter, supported by broad-based growth in testing volumes, improved realisations and a multi-quarter high in EBITDA margins. Dr Lal PathLabs reported revenue of Rs 8.7 billion in Q2, registering a 19.6 percent year-on-year increase and 9.6 percent sequential growth. Sample volumes rose 13.4 percent year-on-year, while realisation per test improved 5.5 percent. The improvement in realisations was driven by price hikes under the Central Government Health Scheme and Ex-Servicemen Contributory Health Scheme, a favourable test mix with a higher contribution from specialised testing and an improved geographic mix. The company's core EBITDA increased 25 percent year-on-year and 13.2 percent sequentially. EBITDA margin expanded by 139 basis points year-on-year and 104 basis points quarter-on-quarter to 32.1 percent. Net profit also registered strong growth, rising 27.5 percent year-on-year and 13.8 percent sequentially. Meanwhile, the company's Swasthfit business contributed 26 percent of total revenue and remained broadly flat year-on-year, although it continued to grow at around 20 percent. Revenue growth excluding Swasthfit was also robust at 19.6 percent. In a strategic expansion move, Dr Lal PathLabs acquired a 70 percent stake in Surat-based unlisted SN Gene Lab for an upfront consideration of Rs 1,680 million. The acquisition will strengthen its presence in specialised segments, particularly onco-genomics and reproductive genomics.