Lal PathLabs expects Swasthfit bundles to aid volumes, plans no further price increases

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 amortization) 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 use 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, specialized tests, and wellness testing at affordable pricing.

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