Dr Lal PathLabs sheds 3% after Goldman Sachs downgrades stock to ‘sell’

Shares of Dr Lal PathLabs tanked nearly 3 percent to Rs 2,431 on October 19, extending losses for the third day in a row after Goldman Sachs downgraded the company to ‘sell’, citing intense competition and slower integration of the newly acquired assets.

The global brokerage firm has also revised its target price to Rs 2,100, implying a downside potential of 16 percent from the October 18 closing price of Rs 2,504.

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Analysts forecast a structural decline in volumes to high single digits from the previous estimate of a double-digit volume growth. The firm has also said that the valuations of the B2C incumbent are stretched.

In the first quarter, the diagnostic company reported a consolidated net profit of Rs 83.6 crore, registering a growth of 44 percent on-year. Its consolidated revenue in Q1FY24 increased 7.6 percent to Rs 541 crore from Rs 502.7 crore, YoY.

At the operating level, earnings before interest, taxes, depreciation and amortisation (EBITDA) during the first quarter of FY24 surged 24.4 percent to Rs 146.2 crore from Rs 117.5 crore in the year-ago quarter.

In the last five days, the stock has nosedived almost 5 percent.

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