Brokerages remain mixed on Dr Lal PathLabs performance for the September quarter, with Morgan Stanley maintaining its underweight call on the stock, citing a miss on estimates and valuation issues. Meanwhile, Citi remains positive on the stock as it sees better performance going ahead.
The diagnostic chain reported 12.8 percent jump in net profit at Rs 57.4 crore for the quarter to September.
Operating revenue increased by 14.1 percent to Rs 317.5 crore, the company said in a statement.
Operating margin declined to 28.5 percent as against 29 percent a year ago.
"We have seen accelerated growth of 14.1 percent in this quarter driven by higher patient volumes which was in sync with our expectations. We were able to increase our samples per patient with the help of momentum created towards bundling tests under the 'SwasthFit' brand," chief executive Om Manchanda said.
Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 810
The brokerage house said that September quarter results missed estimates and the company’s focus remains on volume growth.
Further, it sees range-bound margin in near term and the valuations look full.
It also highlighted that the company foresees revenue growth of 15 percent and margin of 25 percent in FY19.
The company could consider a price hike if volume growth is above 17-18%.
Brokerage: Citi | Rating: Buy | Target: Rs 1,150
Citi said that the company’s Q2 show was broadly in line with expectations.
The volume growth of 18% was partly offset by lower realization, it said, adding that the management commentary remains positive.
Further, it also said that the company expects volume growth and margin buoyancy to be sustained.
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