Momentum to continue in healthcare stocks, brokerages say; diagnostic companies’ shares surge up to 10% intraday

Diagnostic companies' stocks were in focus on Tuesday as a surge of up to 10 per cent was seen on an intraday basis in these stocks on the BSE. Experts believe that the outlook for India's healthcare industry remains positive. The sector has shown remarkable growth in the recent past and the momentum will certainly continue in FY23, the opined. 

Individually, Metropolis Healthcare gained the most and was up by over 9 per cent to Rs 2445 per share, followed by Vijaya Diagnostics Centre which was up 4.5 per cent and trading at Rs 461.5 per share. Dr Lal Path Labs was up over 4 per cent to Rs 2850 per share on the BSE intraday trade. 

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While Thyrocare and Krsnaa Diagnostics each gained around 3.5 per cent to Rs 846 and Rs 555 per share, respectively on the BSE intraday trade. 

The Indian diagnostics industry offers consistent, the long-term growth potential of around 11-12 per cent and national diagnostic chains would continue to outperform industry growth, a domestic brokerage firm IIFL Securities said in its report on the sector. 

Given increasing health awareness post-Covid, a higher share of wellness, specialized, and home collection segments will continue to aid realizations, the brokerage added. 

IIFL Securities believe the fragmented market structure provides consolidation opportunities to larger players. Besides, it suggests that margin pressures led by increasing competitive intensity from hospital-based labs and pricing cuts might be necessary to accelerate the consolidation trend.  

On the contrary, Equirus believes, emerging technologies to change the industry landscape, as India will go through a ‘digital health’ revolution with the introduction of technologies such as wearable tech, virtual reality, telemedicine, robotics, and artificial intelligence.  

Many healthcare companies have started adopting these technologies, which in turn will improve patient engagement, field force effectiveness, and supply chain management, it added. 

IIFL Securities initiates coverage on Metropolis and Thyrocare with a Buy rating and upgrades Dr Lal PathLabs to Add. Metropolis is the brokerage’s top pick.