Emkay Global Financial Reiterates Buy Call on Dr Lal Pathlabs, Targets Rs 1740

Dr Lal Pathlabs Delivers Strong Q4FY26 Results

Emkay Global Financial's research report highlights the outstanding performance of Dr Lal Pathlabs (DLPL) in the fourth quarter of fiscal year 2026. The company's revenue grew by 17% year-over-year, primarily driven by a significant increase in volume growth, with sample and patient volumes recording 13% and 8% growth, respectively. This strong performance can be attributed to DLPL's strategic initiatives, including the expansion of its network infrastructure, revitalization of its channel partners, and improvements in its test menu.

The core geography of Delhi NCR continued to deliver double-digit growth, while the sustained strong performance of Swasthfit, which contributed 27% to the company's revenue in fiscal year 2026, grew at a rate twice that of the company. Additionally, the improving trajectory of the Suburban business lends comfort to the management's guidance of achieving early-to-mid-teens revenue growth in fiscal year 2027. In light of this, Emkay Global Financial has increased its revenue estimates for fiscal years 2027 and 2028 by 3% each, factoring in a stable pricing environment and demonstrated execution capabilities that benefit DLPL's leadership position as consumer awareness and preference for organized diagnostics players improve.

Key Highlights

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

DLPL's strong net-cash balance sheet, industry-leading margin, and stable return ratios provide comfort on valuations. Emkay Global Financial maintains its BUY rating on DLPL with an unchanged March 2027 estimated target price of Rs1,740, based on a discounted cash flow (DCF) method. This implies a fiscal year 2028 price-to-earnings ratio (PER) of 43x, which is a 7% discount to the long-term average.