Dr. Lal PathLabs surges 16% on strong Q4 results

The stock surged 16% to Rs 931, also its 52-week high on the BSE in intra-day trade after the company reported a better than expected 27% YoY growth in net profit at Rs 402 million in Q4FY18.

Shares of Dr. Lal PathLabs have surged by 16% to Rs 931 per share, also their 52-week high on the BSE in intra-day trade after the company reported a better than expected 27% year on year (YoY) growth in net profit at Rs 402 million in March quarter (Q4FY18). The company had profit of Rs 316 million in year ago quarter.

Total revenue during the quarter under review grew 21.4% at Rs 2,668 million against Rs 2,199 million in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, tax, depreciation and amortization) margins improved 100bps to 25.8% from 24.8%.

“Normalised EBITDA growth during the quarter at 26.3% underlined our efforts on optimising costs as well as higher volumes recorded from gains in patient volumes and tests per patient. The outlook for the coming year looks encouraging as our strategy to grow with focus on building networks, test bundling and specialised tests continues to gain momentum,” said Dr. Om Manchanda, CEO - Dr. Lal PathLabs.

The brokerage firm Prabhudas Lilladher expected net profit of Rs 274 million and EBITDA margin of 19.5% for the quarter.

Edelweiss Securities expected top-line to grow 18% YoY, albeit on a low base, lead by a strong volume growth. EBITDA margin (around 22%) was expected to grow around 70bps sequentially as Q3FY18 was a seasonally weak quarter. Net profit was to grow 19.7% YoY at Rs 375 million.

“With strong cash flow and growth in new customers, the company expects to maintain current growth in FY19E. The expansion of bundle‐test offer and commencement of central lab in Kolkata (KRL) to improve further volume addition in FY19E and FY20E,” analyst at Prabhudas Lilladher said in result update.

“Management expects competitive intensity to remain strong with price war, regulatory interference and expected price ceiling of government. DLPL remain confident of its brand power, service quality and KRL to drive volume growth and profitability in FY18‐20E,” the brokerage firm said with maintain “Accumulate” rating on the stock and retain target price at Rs 1009.

Dr. Lal PathLabs is a provider of diagnostic and related healthcare tests and services in India.

At 10:53 am; the stock was trading 9% higher at Rs 880 on the BSE, as compared to 1% rise in the S&P BSE Sensex. The trading volumes on the counter jumped multiple-fold with a combined 816,186 shares changed hands on the BSE and NSE so far.