Expect financial year 2023-24 margins at 25 percent, High end testing aiding revenue per patient: Dr. Lal PathLabs

"Expect financial year 2023-24 margins at 25 percent" Om Manchanda, Dr. Lal PathLabs said in an interaction with CNBC-TV18 on Friday. The diagnostics and related healthcare tests provider declared its fourth quarter results on Thursday and the stock is trading 1 percent higher on the exchanges on Friday at 10:30 am.

The company's consolidated net profit declined 7.5 percent to Rs 56.7 crore in the fourth quarter ended March 31, 2022 — much lower than CNBC-TV18's poll of Rs 65.7 crore. This is the sixth consecutive fall in quarterly profit as a continued slide in income from COVID-related testing outpaced growth in its core business. Revenue from operations, however, rose to Rs 491 crore in the fourth quarter as against Rs 485.5 crore in the year-ago period, Dr Lal Pathlabs said in a statement.

Dr. Lal PathLabs is the first among its peers to report results and will set the tone for an intensely competitive industry that made large gains during the pandemic.

Dr. Lal PathLabs management while interacting with CNBC-TV18 on Friday added that the competitive intensity has reduced and witnessed a flat pattern between third and fourth quarters of 2022-23 for non-COVID revenue.

Manchanda further says that revenue per patient has been aided  by bundled packages and mix changes. "The high end testing has aided the revenue per patient ratio for the company". It is also confident of sustaining growth seen in the past, while volume growth is expected at 8 to 9 percent.

The company further adds that screening packages are gaining ground. It recently launched a reference lab In Mumbai. The diagnostics and related healthcare tests provider expects to clock 25 percent margins in FY compared with 23.5 clocked in fourth quarter of financial year 2022-23.

In the recently hosted conference call for analysts, the company said its gross margins expanded 190bps year on year due to a change in test mix and price hikes taken in February 2023. Furthermore, specialized tests have scaled up significantly and are expanding to newer geographies including tier 2-3 towns. The industry growth is normalizing to 10 to 11 percent and the quality of assets available for inorganic growth has declined.