Emkay Global Financial's research report on Dr Lal Pathlabs
DLPL reported a steady Q4, with EBITDA beating street/our estimates by 6% and adj PAT improving 34% on YoY basis. Strong performance in core markets (Delhi NCR), buoyed by network expansion, offset the persistent muted performance of Suburban (mid-single digit revenue growth). Step up in network expansion and focus on bundled testing for illness should support volume growth in coming years; we expect revenue CAGR at 12% over FY25-28E. Margins are likely to contract by ~100bps in FY26 as investments in network and digital initiatives would be partially offset by improving contribution from Swasthfit and operating leverage. A strong net cash balance sheet, industry leading margins, and improving return ratios provide comfort on valuations.
Outlook
We retain BUY on DLPL with unchanged TP of Rs 3,100 for Mar-26E, based on DCF methodology and implying 2-year forward PER of 44x (vs LTA of 48x).
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