Buy Dr Lal Pathlabs; target of Rs 3250: Emkay Global Financial

Emkay Global Financial's research report on Dr Lal Pathlabs

DLPL’s Q3FY25 results were largely in line with street/our estimates, with Swasthfit continuing to grow 25%+ YoY for six quarters. Return of double-digit revenue growth in DLPL’s core Delhi NCR offset the muted performance of Suburban (9% revenue growth with EBITDAM of 12.3%). With competition hiking prices (both online and organized chains), and the management continuing to prioritize volume growth over pricing, we build in 12% revenue CAGR over FY25-27E.

Outlook

Margins should remain stable with operating leverage and higher Swasthfit contribution offsetting the network investments. A strong net cash balance sheet, industry leading margins, and improving return ratios provide comfort on valuations. We retain BUY with revised down Dec-25E TP of Rs3,250 (4.4% cut, based on DCF), implying Dec-26E PER of 43x.