Shares of diagnostic company Dr Lal Path Labs and Metropolis Healthcare came under pressure on Wednesday, and markets fell even after trading green. Stocks have reached their 52-week lows on the BSE on an intraday basis.
Separately, shares of Dr Lal Path Labs fell more than 7.5 per cent to Rs 2019, while shares of Metropolis fell more than 9 per cent to Rs 1,755 per share on the BSE Intraday. Both stocks have been witnessing bearish rally since Monday, as they have fallen 13 percent in three days.
The stock’s weakness for the last three days came largely on the assumption that Tata was disrupted by 1mg in the diagnostic segment. On a pilot basis in Bangalore, the company has introduced important tests like Thyroid Profile, Liver Function, Lipid Profile, and Diabetes Screening at Rs 100 per test.
Varun Dubey, a senior research analyst at G Business, said earlier this week that a big hit of about 40-50 percent on the profits of diagnostic companies like Metropolis Healthcare and Dr. Lal Path Labs is probably expected in Tata B2C disruption strategy. Sector
Yes Securities has downgraded estimates of the growth of Dr. Lal Path Labs in FY23 amid increasing competition intensity and management’s preference for not going after cash-driven competition.
Suburban revenue is also expected to share similar cuts with lower revenue than last non-coveted full-year sales, YES Securities said, meaningfully lowering FY23 / 24 estimates. It offered an ad rating on the stock with a target price of Rs 2,900 per share, indicating a 33 per cent rise.
Metropolis management’s comments point to near-term turmoil, which has made FY23 a normal year for Metropolis, Sherkhan said. “Competitiveness has increased as new players enter the diagnostic space, the test mix is shifting in favor of non-coveted tests, and slower-than-expected picks will play near-term dampeners in government business.”
Over the past six months, the stock price has risen sharply by about 43% due to these near-term concerns; However, as the leverage for long-term growth remains intact, Sharekhan maintains a positive outlook on the stock.