Dr Lal PathLabs: Street worried over rising pressures

Growth rate and margin could see downward trend in near term

The stock of Dr Lal PathLabs fell 6.4 per cent after brokerages cut their margins and earnings estimates for the company due to rising pressure on pricing and volumes.

Morgan Stanley, which has cut its target price to Rs 700 from Rs 888, said the company would face substantial pressure, given competitive intensity. Some pressure was visible in the company’s March quarter performance, when its operating profit margin declined 298 basis points year-on-year to 23.6 per cent.
 

The pressure mounted on account of competition in the business-to-business (B2B) segment, promotional and employee expenses as well as costs associated with setting