Dr Lal PathLabs shares jumped on Friday, extending gains to a second straight session after the medical diagnostics firm reported a strong set of results for the July-September period. The Dr Lal Pathlabs (LALPATHLAB) stock rose by Rs 162.5, or 6.6 per cent, to touch Rs 2,627.7 at the strongest level in intraday trade on BSE, coming within inches of a 52-week high about a year ago. 

Dr Lal PathLabs Q2 results

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During market hours on Thursday, New Delhi-headquartered Dr Lal PathLabs reported a 52.9 per cent year-on-year increase in consolidated net profit to Rs 111 crore for the quarter ended September 30, 2023.

Its revenue increased 12.6 per cent to Rs 601 crore for the second quarter of the current financial year, according to a regulatory filing. 

The company's EBITDA margin, a key measure of profitability, improved by 270 basis points (bps) on a year-on-year basis to 29.6 per cent.

What analysts say on Dr Lal PathLabs after the medical diagnostics firm's Q2 results

Many analysts remain negative on Dr Lal PathLabs shares. 

According to Goldman Sachs, which maintained a 'sell' rating on the medical diagnostics company but raised its price target for the stock to by Rs 50 to Rs 2,150, Dr Lal PathLabs' margin improvement was surprising on account of strong seasonality but pointed out that its patient volume growth remains below the pre-pandemic levels. 

Analysts at Goldman Sachs also highlighted that the emergence of credible competition in key regions will lead to a structural decline in volume growth for Dr Lal PathLabs. The brokerage's price target implies a 12.8 per cent discount in Dr Lal shares to their closing price on Thursday. 

Brokerage Rating Price Target Downside vs Thursday's close
Goldman Sachs Sell Raised to Rs 2,150 from Rs 2,100  12.8%
Citi Sell Rs 2,290  7.1%

According to Citi, another brokerage to maintain a 'sell' rating on Dr Lal after the company's earnings announcement, a strong season and a better mix drove the July-September earnings. 

It, however, added that patient volume growth still appears to be subdued at the company.  

About Dr Lal Pathlabs | What does Dr Lal PathLabs do?

A provider of diagnostic and related healthcare tests and services, Dr Lal PathLabs offer patients and healthcare providers a host of diagnostic and related healthcare tests and services for use in core testing, patient diagnosis, and the prevention, monitoring and treatment of disease and other health conditions, through its’ integrated, nationwide network. 

As of March 31, 2023, the company had 277 clinical laboratories, 5,102 patient service centers (PSCs) and 10,938 pick-up points (PUPs), according to a company statement. 

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