Shares of Dr Lal Path Labs jumped more than 7% in Monday morning trading after the company announced its June quarter results, which beat market expectations. The stock rose as high as 7.55% and was trading 5.53% higher at Rs 1,856.50 at 10:19 am. Nomura kept its ‘Buy’ rating and raised the target price to Rs 2,085 from Rs 1,860, citing a 1Q beat driven by higher realization gains.
The company reported a 28.02% year‑on‑year increase in consolidated net profit, reaching Rs 169.5 crore for the April‑June quarter of FY27, up from Rs 132.4 crore a year earlier. Revenue from operations grew 19.10% to Rs 797.7 crore, compared with Rs 669.8 crore in the same period last year. Nomura noted that revenue, EBITDA and PAT were 4.5%, 12.9% and 13.3% ahead of its estimates.
Nomura highlighted that the beat was largely due to higher-than‑expected realizations. Three factors contributed: price hikes in the CGHS and ECHS schemes (2‑3% impact), a favorable test mix with more specialized testing, and a favourable geographic mix with higher contribution from markets with better realization. Management expects the benefits from CGHS and ECHS price hikes to continue over the next 2‑3 quarters.
Operationally, sample volume grew 10.7% year‑on‑year, and realization per test rose 7.6%, the highest quarterly growth in five years. Patient volume increased 8% year‑on‑year, while realization per patient was up 10%.
Nomura pointed out that the Swasthfit segment contributed 27% of sales in 1QFY27, stable compared with 1QFY26. The segment grew 20% year‑on‑year, matching overall company growth, while revenue outside Swasthfit grew 19%.
Management has raised its revenue guidance to the mid‑teens, indicating accelerated growth due to stronger realization. It keeps its EBITDA margin guidance at 27‑28% as it plans to reinvest in capacity building. Nomura models FY27 revenue growth at 16.6% and an EBITDA margin of 28.9%.
The brokerage also noted the company’s expansion plans, including adding 12‑15 labs in FY27, investing in high‑end tests, radiology, and exploring international markets, with inorganic growth on the table.
Following the results, Nomura revised its FY27‑29 earnings estimates upward by 6% to reflect the strong first‑quarter performance.
Dr Lal Path Labs is currently trading at 43 times the September‑27 forward EPS estimate. The broker believes the improving revenue trajectory will lift the multiple, and expects the stock to trade at the upper end of its pre‑COVID range of 40‑45 times one‑year‑forward EPS.