The brokerage set a target price of ₹1,650 per share, flagging an upside of nearly 25% from the current trading price of about ₹1,326 apiece.
In its note, Citi said the diagnostics sector in India has moved away from COVID-era price wars, with digital platforms curbing aggressive discounting and “predatory pricing” largely subsiding.
The brokerage firm noted that while competition from standalone labs and hospitals remains, Dr Lal PathLabs has maintained pricing discipline without broad price hikes.
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Citi expects the company to deliver 10–12% organic revenue growth, supported by gains in core markets, expansion into Tier 3 and Tier 4 cities, and a richer mix driven by speciality tests and Swasthfit offerings.
Margins are expected to remain strong, with EBITDA projected at 28–29%, aided by operating leverage, improved mix, cost control and supply chain efficiencies.
The brokerage also highlighted the company’s debt-free balance sheet and strong cash flows, which provide flexibility for both organic growth and potential acquisitions.
Citi said that following the recent correction in the stock, valuations have turned reasonable, trading below long-term averages, with a favourable risk-reward profile supported by steady earnings growth and return ratios.
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According to Bloomberg data, sentiment on the stock remains positive, with 23 of 30 analysts maintaining a ‘buy’ rating, four recommend ‘sell’ and only three giving a ‘hold’ rating to the stock.
Shares of Dr Lal Pathlabs were trading 1,327.20 as of 12.19 pm on Friday. The stock has declined more than 12% this year, while delivering 5.27% returns over the last 12 months.
