India's Dr. Lal PathLabs Q2 profit slumps on falling COVID income, higher expenses

Dr. Lal PathLabs

08/11/2022 10:21

BENGALURU, Nov 8 (Reuters) - Indian medical diagnostics
firm Dr. Lal PathLabs Ltd  DLPA.NS  on Tuesday reported a 24.5%
drop in September quarter profit as a sustained decline in
revenue and volume from its COVID-19 related business and higher
expenses weighed on margins.
    Consolidated profit for the quarter ended Sept. 30 came in
at 717 million rupees ($8.76 million), compared with 950 million
rupees a year ago, the company said in an exchange filing.
    Analysts on average had expected a profit of 769.8 million
rupees, according to Refinitiv data.
    Total expenses rose 15.1% to 4.40 billion rupees, while
quarterly revenue from operations rose 7.1% to 5.34 billion
rupees. 
    A string of diagnostic firms, including New Delhi-based Dr.
Lal PathLabs, made windfall gains from the pandemic, with
millions getting tested for coronavirus infection.
    However, with competition intensifying amid a slew of new
brand launches, including Tata Group-backed 1mg and Reliance
Industries-owned Netmeds, analysts are turning sceptical of Dr.
Lal PathLabs' prospects.
    "We believe margins reported during FY21 (peak of COVID-19)
will not be repeated anytime soon and the industry will revert
to its long-term revenue growth in the range of 10% to 12%,"
analysts at Antique Stock Broking wrote in a report in
September.
    The share of revenue from COVID and allied business slumped
to just 3.7% from 10.1% last year. Revenue from the non-COVID
business climbed 14.7% to 5.14 billion rupees, the company said
in an investor presentation.
    "Instead of increasing the test prices, we are focusing on
driving volumes to achieve scale benefits, thereby maintaining
our margins," said Om Manchanda, managing director of Dr. Lal
PathLabs.
    Earnings margin before interest, taxes, depreciation and
amortization fell to 26.9% from 28.4%. 
     The firm would continue to invest in expanding to smaller
towns and cities across the country, Executive Chairman Arvind
Lal said. 
($1 = 81.8900 Indian rupees)
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Falling profits    https://tmsnrt.rs/3fMVEx7
Revenue breakup for Dr. Lal Path Labs    https://tmsnrt.rs/3FUcHbn
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Nandan Mandayam in Bengaluru; Editing by Sherry
Jacob-Phillips and Dhanya Ann Thoppil)
 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))