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Yes Securities Report
Dr. Lal Pathlabs Ltd.'s volume growth remained subdued at 4% YoY on reported basis and ~8% YoY net of RT-PCR tests. Price hikes and cost control led to a strong margin beat; albeit reckon management focus is firmly on driving topline growth from volumes rather than being fixated on margin.
Gradual expansion in tier-III and IV towns and acknowledgment of mature base in metros may lead to a transition period. At the same time, competitive intensity may have peaked translating into better pricing environment and less scattered volumes.
Dr. Lal Pathlabs's management guided to higher investments in H2 which would preclude margin hitting ~28-29% as seen in H1 though FY24 might still margin above management guidance on back of strong H1 performance.
We raise FY24 and FY25 earning per share by ~9-8% driven by primarily better realization and margin year to date.
However, lack of confidence on full fledged volume recovery continues to keep us away from the stock as retain 'Reduce' with revised target price Rs 2,500 (earlier Rs 2,300).
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