Dr. Lal PathLabs Limited

Healthcare — Diagnostics & Research · NSE

₹1,859.00−₹26.10 (−1.38%)

DalalBaazaar Score

73 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

Driven by high debt relative to equity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of Dr. Lal PathLabs Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Dr. Lal PathLabs Limited operates laboratories for carrying out pathological investigations in India and internationally.

IndustryDiagnostics & Research

SectorHealthcare

Employees5,206

Annual revenue₹2,763 Cr

How does it make money?

Turns over ₹2,763 Cr a year. Of every ₹100 of sales, about ₹18 reaches shareholders as profit, with ₹31 left at the operating level before interest, tax and depreciation. Each of its 5,206 employees supports ₹53.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹53.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, CIPLA LTD, DR. REDDY S LABORATORIES, APOLLO HOSPITALS ENTER. L. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 25.7%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 20.1% against a peer median of 14.5% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE14.5%

What is the outlook?

25 analysts covering the stock expect revenue to grow about 14.4% and earnings to grow about 17.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+14.4%

Est. earnings growth+17.9%

Analysts25

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +37% while net margin moved +54% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+37%

Margin effect+54%

DalalBaazaar Score

73/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 57.4x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 65.8x
✗ P/B of 12.38x is a steep premium to book

Quality vs. Valuation

Company Quality

83/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

35/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

57.4x

3Y Median

65.8x

40 monthly readings · mean 68.9x · range 44.9x–107.5x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 13% below its 3y median of 65.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 72% above the peer median of 33.3x.

vs. its own history

Fair

65.8x median over 40 months · -13%

vs. sector peers

Expensive

33.3x median of 4 peers · +72%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

36.2x

PEG

2.03

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 26.1% to 31.0% over 3 years.
Debt is being paid down
Total debt is down 53% over 3 years.
Return on equity is rising
ROE has improved from 14.3% to 20.1%.
Return on capital is rising
ROCE has improved from 19.9% to 25.7%.
High return on capital employed
ROCE of 25.7% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 high

🔴High leverageFinancial
Debt/Equity of 7.83x — earnings must service borrowings before shareholders see anything.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 25.7% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 26.1% to 31.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 53% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 7.83x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 72% above the peer median. That premium needs a reason that persists, or it closes.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 8% a year✓ 11.1% CAGR
Latest reported year was 19.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 29%✓ 31.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹462 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 23%✓ 25.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 2 neutral · 3 weak

Market Cap

₹31,084 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

57.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

12.38x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹32.4

Profitable

Profitable on a per-share basis

ROE

20.1%

Strong

Strong capital efficiency

ROCE

25.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

7.83x

High

High leverage

Revenue Growth (YoY)

19.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

27.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.08%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹462 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

42.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

25.5%

Good

Healthy core-business profitability

Net Margin

18.7%

Good

Strong bottom-line conversion

Current Ratio

3.48

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.16

Defensive

Steadier than the market

52W Range Position

77%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1936.3 / 1924.5

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

38.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,017 Cr	₹2,227 Cr	₹2,461 Cr	₹2,763 Cr	+11.1%
EBITDA	₹527 Cr	₹668 Cr	₹771 Cr	₹857 Cr	+17.6%
EBITDA Margin	26.1%	30.0%	31.3%	31.0%	—
PAT (Net Profit)	₹239 Cr	₹358 Cr	₹487 Cr	₹505 Cr	+28.3%
EPS	₹14.37	₹21.49	₹29.2	₹30.2	+28.1%
ROE	14.3%	19.3%	22.4%	20.1%	—
ROCE	19.9%	26.8%	28.0%	25.7%	—
Total Debt	₹419 Cr	₹247 Cr	₹157 Cr	₹199 Cr	-22.0%
Free Cash Flow	₹411 Cr	₹478 Cr	₹515 Cr	₹462 Cr	+4.0%

🟢 Revenue has grown at 11.1% a year over 3 years.

🟢 EBITDA has grown at 17.6% a year over 3 years.

🟢 EBITDA Margin has risen from 26.1% to 31.0% over 3 years (+4.9 pts).

🟢 PAT (Net Profit) has grown at 28.3% a year over 3 years.

🟢 EPS has grown at 28.1% a year over 3 years.

🟢 ROE has risen from 14.3% to 20.1% over 3 years (+5.8 pts).

🟢 ROCE has risen from 19.9% to 25.7% over 3 years (+5.8 pts).

🟢 Total Debt has shrunk at 22.0% a year over 3 years.

🟢 Free Cash Flow has grown at 4.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,146 Cr

Total Liabilities

₹605 Cr

Cash & Equivalents

₹243 Cr

Operating Cash Flow

₹636 Cr

Capex

-₹173 Cr

Shareholding (proxy)

Institutional Holding

32.7%

Insider Holding

54.7%

Corporate Actions

Next Earnings

23 Oct 2026

Dividend Rate

₹20

Ex-Dividend Date

30 Jul 2026

Analyst Consensus

Recommendations

21 Buy · 3 Hold · 2 Sell

Target Price (Mean)

₹2,013.46

+8.3% vs CMP

Target Range

₹1,180 – ₹2,380

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
CIPLA LTD	31.8x	9.8%
DR. REDDY S LABORATORIES	31.0x	8.8%
APOLLO HOSPITALS ENTER. L	54.3x	22.0%

Recent News

3 mixed3 general

Dr. Lal PathLabs (NSEI:LALPATHLAB) Stock Forecast & Analyst Predictions

Simply Wall Street, 12 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Dr. Lal PathLabs (BSE:539524) - Stock Analysis

Simply Wall Street, 14 Oct

LALPATHLAB Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Dr Lal PathLabs soars 11%, hits 52-week high on huge volumes; here's why

Business Standard, 16 Jun

Dr Lal PathLabs shares soar 8% after Q1 earnings beat estimates. What Nomura, Nuvama, other brokerages are

The Economic Times, 27 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Dr Lal PathLabs surges 9% as it forays into Dubai market with new subsidiary

Moneycontrol.com, 16 Jun

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

MiddlingRisk

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑