InvestorQ : What are the prospects of Dr. "Lal Path" Labs with a 3-year perspective?

What are the prospects of Dr. "Lal Path" Labs with a 3-year perspective?

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Purvesh answered.
1 year ago

Whether you look at performance or prospects, Dr. LalPathlabs offers you a very good option to participate in the fast-growing diagnostic services market. Dr. LalPath Labs operates in the high growth diagnostic testing space and has been expanding rapidly in the last few years. For the fourth quarter ended March 2019, the company reported 13% growth in revenues to Rs.301 crore and an 18% growth in PAT to Rs.47.5 crore.
The 16% net profit margin and the 24% EBITDA margin makes the company a truly profitable proposition. Currently, "lalPath" labs" operates a total of 200 clinical labs, 2659 patient service centers and a total of 6426 pick-up points. The company also has a cash pile of Rs.707 crore giving it enough leeway to manage its working capital and also funding its expansion through internal resources.
The big bet on Dr. "Lal path Labs must be on the bigger shift to organized healthcare and testing services. According to CRISIL estimates, the diagnostics services market in India is estimated to be at around $10 billion (Rs.69,000 crore). The organized segment of diagnostic testing services is dominated by Dr. LalPath Labs, SRL and Metropolis Healthcare, They currently account for 15% of the organized testing market but that has the capacity to grow in a big way.
Also, the universal healthcare scheme of the government and the big rural thrust will open up a huge opportunity for LalPath Labs. At the current market price of Rs.1044, the company trades at over 40X rolling earnings. That is understandable when you consider that the company has EBITDA margins of nearly 25%. From a 3 year perspective, Dr. LalPath Labs can be a very good play in the rapid medical testing business and also on the bigger share that the organized diagnostic business will get.