Dr Lal PathLabs IPO – Your Wellness Barometer
More often than we desire, we are forced to face the needle and give our blood for testing. It’s never a pleasant experience to go to a pathology lab and face the needle. Wouldn’t it be wonderful if this entire experience was made a tad pleasant and a little more customer friendly? One company thought so and went on to completely change the customer experience. No brownie points for guessing that this company has been extremely successful and profitable. More importantly, this company is present in a segment where opportunity is very large and strong growth can continue for many years. Below are the reasons why Dr. Lal Path Lab makes a formidable business:
Investment Arguments
- Strong Delivery Model to ensure Quality Diagnostic Services:
Through their network of one National Reference Laboratory, 163 clinical laboratories, 1,340 patient service centers and 5,000 pick-up points, Dr. Lal PathLabs is able to offer its services to more than 10 million customers across the country. Its state of the art laboratories are able to conduct more than 3,368 types of test, practically capable of performing all kinds of tests that are prescribed by doctors in India.
- Redefined Customer Experience helps in creating a Strong Brand:
Well furnished patient service centers, well trained staff, convenient & timely delivery of reports is the critical differentiator from other labs. It helps in winning the customer trust and creating a strong brand image. This is especially important because customers are the key decision makers as to which laboratory would they like to go to.
- Scope for Long Term Growth and Profitability:
Multiple trends are in favor of branded laboratories like Dr. Lal PathLab – increasing propensity of doctors to diagnose before prescribing, rising awareness among middle class and demand for quality service is resulting in a shift from unorganized sector to organized sector. These trends will continue to play out over next ten years.
GreenEdge Wealth Services’ View
At the upper end of price band, the company is valued at 40x FY16 earnings, which is definitely not cheap. However, given the strong visibility in terms of growth and the fact that this is going to be the only listed player in diagnostics space, there is a case for 20% upside in the near term.
Issue Details
| Issue Open Date | 8th Dec, 2015 |
| Issue Close Date | 10th Dec, 2015 |
| Issue Price (Rs.) | 540 to 550 |
| Market Lot | 20 shares |
| Discount | Rs. 15 discount for retail investors |