Accumulate Dr. Lal PathLabs; target of Rs 1070: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Dr. Lal PathLabs

DLPL's revenue, adj. EBITDA and PAT grew 11%, 16% and 27% YoY respectively in Q3FY19 and in line with our estimates in margin and earnings. With strong cash flow and growth in new customers and packaged offer, the company expects to maintain current growth in FY20E. The expansion of bundle-test offer and gradual ramp up of central lab in Kolkata (KRL) to improve further volume addition in FY20E and FY21E. 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, high-end test capability, network of collection centers and KRL to drive volume growth and profitability in FY18-20E.

Outlook

We maintain "Accumulate" and move forward our base of valuation to 35x of FY21E earnings estimates to derive new TP at Rs1,070.

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