September 13, 2021 03:53 PM
Shares of Dr Lal PathLabs Ltd have risen more than 78% year-to-date and now trade near fresh highs. The company, like its peers, benefited from the pandemic and associated surge in testing, coupled with rising non-covid volumes. Market share gains by organised testing laboratories, geographical expansions being undertaken by the company, and digital initiatives, among others, have helped drive growth.
Analysts at Edelweiss Securities Ltd expect a 22% CAGR rise in core pathology contributions during FY21-24. Given Dr Lal’s strong brand equity, improving geographical spread, and digital investments, it is well placed to benefit from structural tailwinds in the diagnostic industry, they said.
The Dr Lal PathLabs Ltd has adequately diversified its revenue stream and lowered its dependence in the Delhi National Capital Region, having expanded into other regions.
It commenced pilot operations at Bangalore reference lab, and also in six satellite labs at Borivali and Vashi in Mumbai. More benefits are to accrue with the start of Mumbai reference lab, once it meet licensing requirements.
Analysts say large national-level pathology companies such as Dr Lal PathLabs could also tap partnerships with regional companies for revenue synergies. Some of the large labs in India are regional and do not have any material national presence. The company nevertheless will have to handle operational challenges associated.