India's Dr. Lal PathLabs beats Q1 profit view on strong testing demand

Dr. Lal PathLabs

27/07/2023 11:35

BENGALURU, July 27 (Reuters) - Indian medical
diagnostics firm Dr. Lal PathLabs  DLPA.NS  on Thursday beat
estimates to report its first rise in profit in seven quarters,
as demand for non-COVID health testing more than offset rising
costs. 
    The company, which is the biggest Indian diagnostics firm by
revenue, posted a 43.2% jump in consolidated net profit to 826
million rupees ($10.08 million) in the quarter ended June 30.
    Analysts, on average, had estimated a profit of 712.5
million rupees, according to Refinitiv data. 
    The rise in profit comes at a time when the medical
diagnostics sector has been facing weakness, as waning COVID-19
fears erase windfall gains it made during the pandemic.
    Sustained demand for lab testing outpaced higher costs, with
employee benefit expenses climbing over 8%, raising total spends
by 2% to 4.38 billion rupees. 
    Revenue from operations rose more than 7% to 5.41 billion
rupees, led by a 9.7% growth in the company's non-COVID
business. 
    Margins on earnings before interest, taxes, depreciation and
amortisation expanded to 27% from 23% a year earlier. 
    Executive Chairman Arvind Lal said in a statement that the
company plans to expand to Tier-3 and 4 cities, in spite of
analysts flagging margin pressure on a growing non-metro
portfolio.
    The Gurugram-based company, which competes with rivals like
Thyrocare Technologies  THYO.NS , Metropolis Healthcare
 METP.NS  and Vijaya Diagnostic Centre  VIJA.NS , is the first
to report earnings in the sector. 
    Shares of Dr. Lal PathLabs closed up 3.2%. 

($1 = 81.9225 Indian rupees)

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Sonia
Cheema)
 ((Hritam.Mukherjee@thomsonreuters.com; Twitter:
@MukherjeeHritam;))