Lal PathLabs expects Swasthfit bundles to aid volumes, plans no further price increases
Summary
Predatory pricing is no longer a concern but the competition continues to remain stiff with a large number of players, noted Om Manchanda, the diagnostic company’s Managing Director.
Dr Lal PathLabs’ shares continued to rise on May 13, gaining nearly 7% early in the day. The diagnostics chain reported a 49% rise in January-March net profit to ₹85 crore on May May 10 and announced a dividend of ₹6 per share.
The company’s Managing Director Om Manchanda told CNBC-TV18 that he expects growth to continue to remain healthy led by the bundled Swasthfit products.
Swasthfit contributed roughly 24% to overall revenues in the fourth quarter, and Manchanda expects this to rise in the coming quarters.
He expects April-March 2024-25 annual revenue growth to beat the 11% clocked in the fourth quarter, and is confident of keeping the margin (earnings before interest, tax, depreciation, and amortisation) at 26%.
There are no price increases planned so far as predatory pricing or deep discounting is no longer a concern. The competition, however, continues to remain stiff with a large number of players, he noted.
The company plans to utilise the cash of ₹850 crore on books for three major purposes: regular dividend payouts to shareholders, expansion of labs, and acquisitions.
Manchanda said the company is open to both large and small-size M&A opportunities primarily in the South and Central markets.
For the Suburban chain of diagnostic centres, Manchanda expects margin to sustain at around 12-13% for the current financial year.
The company wants to continue its focus on digital initiatives, specialised tests, and wellness testing at affordable pricing.
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