Multiple headwinds could act as margin tourniquet for diagnostics

Competitive pressures, valuations cap gains from current levels

After a mixed performance in the July-September quarter (second quarter, or Q2) of 2022-23 (FY23), listed players in the diagnostic health care space could witness near-term headwinds due to competitive pressures, a seasonally weak December quarter, and higher valuations. Except for Vijaya Diagnostic Centre, which has been flat since the start of the month, other listed players have seen a decline.

Dr Lal PathLabs and Thyrocare Technologies are down 4-6 per cent, while Metropolis Healthcare has shed 18 per cent during this period.

The Q2 results of the largest player — Dr Lal PathLabs — while delivering on the margin front, lagged