Amazon Great Indian Festival 2020 - Electronics
Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Amazon Great Indian Festival 2020 - Electronics

| More

Healthcare - Diagnostics: Multiple tailwinds likely to emerge - ICICI Securities

Posted On: 2020-09-28 09:14:41

We remain positive on diagnostic sector in India considering a growth potential of ~15% CAGR over medium term and possibility of multiple tailwinds that are likely to emerge in near to medium term. These tailwinds include faster shift of unorganised business to organised players in current environment, potential consolidation in industry through inorganic or partnership model, upside from COVID-19 related RT-PCR as well as anti-body (or anti-gen) tests and sizeable scale which would help in mitigating any realisation-related potential risks. The business for the companies have recovered at very fast pace after reaching a trough in Q1FY21 and we expect normalization Q3FY21 onwards. We believe large organised players are best positioned to benefit from their scale and strong balance sheets. Our recent interaction with company managements reinforces our view.

Multiple levers to add growth: The businesses of diagnostic companies got temporarily impacted by COVID-19 related lockdown as observed in Q1FY21. However, we expect normalisation of business Q3FY21 onwards, as we believe the business has reverted to ~80-90% of the pre-COVID levels. In our view, COVID-19 led disruption has also created multiple growth opportunities for large scale players.

- The shift of unorganised market to organised players is likely to hasten as patients would prefer visiting branded and recognised lab considering safety and hygiene, ability of large players to adapt to and invest in new standards/protocols and increasing probability of acquisition or partnership with small standalone labs.

- Large players are well positioned to garner incremental market share either through acquisition of smaller players or through partnership as smaller players may find operational difficulties due to additional costs of maintaining for implementing higher safety protocols such as social distancing and reduced volumes.

- Incremental business opportunity from COVID-19 related tests like RT-PCR and anti-body (anti-gen) tests in medium-term as these tests would become part of regular test offerings. Further, increasing awareness would lead to higher growth in preventive and wellness tests.

- Strong balance sheets of large established players would help in absorbing near term revenue/margin pressure and would also provide opportunity to capture any available strategic inorganic asset for enhancing scale.

Scale is an added advantage: Scale is an important factor for long term success in diagnostic business. Large scale helps in effective negotiation with vendors, driving operating leverage, attracting franchisees to grow business and free cash flow generation. This is also visible from the potential growth (~15% revenue CAGR) and return profile (>40% RoIC) of large players like Dr Lal Pathlabs and Metropolis.

Our view: We remain positive on the Indian diagnostic sector and believe multiple growth drivers would support the growth momentum over medium to long term. We place Dr Lal Pathlabs as our top pick within the sector. We retain ADD rating on Metropolis and HOLD on Thyrocare.

Source: Equity Bulls

Click here to send ur comments or to

Amazon Great Indian Festival 2020 - Mobiles

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Reiterate ADD on Amara Raja Batteries - Pent-up demand leads to healthy 2Q - HDFC Securities

Maintain REDUCE on Titan - Reasonable print - HDFC Securities

REDUCE on RBL Bank - Some positives, but key concerns remain - HDFC Securities

Maintain REDUCE on Marico - Saffola shines with PCNO recovery, muted margin - HDFC Securities

Maintain ADD on Dr. Reddy's Labs - Good quarter, lower SG&A cost is encouraging - HDFC Securities

Piramal Enterprises - Acquisition of stake from JV partner - Angel Broking

Maintain BUY on Axis Bank - Provision buffers strengthened (further) - HDFC Securities

AU Small Finance Bank - Q2FY21 Result - Angel Broking

L&T - Q2FY21 - Angel Broking

RBL Bank - Q2FY21 Result - Angel Broking

Axis Bank - Q2FY21 Result - Angel Broking

Marico Ltd - Q2FY21 Result Update - YES Securities

Titan Company Ltd - Q2FY21 Result Update - YES Securities

Axis Bank Limited - Q2FY21 Result Update - YES Securities

RBL Bank Limited - Q2FY21 Result Update - YES Securities

Multi Commodity Exchange of India - Operating leverage aids strong EBITDA performance - ICICI Securities

Titan Company - Faster-than-expected recovery - ICICI Securities

Marico - Strong performance across portfolio - ICICI Securities

Heritage Foods - Lower procurement prices leading to highest EBITDA margin in past decade - ICICI Securities

Axis Bank - Strong core again utilised to create provisioning buffer - ICICI Securities

Supreme Industries - Beat on all counts - ICICI Securities

GSK Pharmaceuticals - Recovery from COVID-19 impact - ICICI Securities

Hero MotoCorp - Solid demand recovery expectations priced in - ICICI Securities

Cement - Demand / prices improve further in Oct'20 - ICICI Securities

CEAT - Replacement demand drives outperformance - ICICI Securities

Dr. Reddy's Laboratories - Outperformance continues - ICICI Securities

ICICI Prudential Life Insurance - VNB trajectory in-line despite YoY dip in protection in Q2 - ICICI Securities

Bharti Airtel - Q2FY21 Result Update - ICICI Securities

Marico - Q2FY21 Result Update - ICICI Securities

Larsen & Toubro - Q2FY21 First Cut - ICICI Securities

Sanofi India - Q3CY20 Company Update - ICICI Securities

Adani Ports and SEZ - Quant Pick - ICICI Securities

Nippon Life India AMC - Q2FY21 Result Update - ICICI Securities

Tata Motors - Q2FY21 Result Update - ICICI Securities

Derivatives Strategy - Mahanagar Gas - Positional Future - ICICI Securities

Supreme Industries - Q2FY21 First Cut - ICICI Securities

Dr Reddy's Laboratories - Q2FY21 First Cut - ICICI Securities

Marico Ltd - Q2FY21 First Cut - ICICI Securities

Apcotex Industries - Q2FY21 First Cut - ICICI Securities

V-Guard Industries - Q2FY21 First Cut - ICICI Securities

Titan Company - Q2FY21 First Cut - ICICI Securities

Navin Fluorine - Q2FY21 First Cut - ICICI Securities

PI Industries - Q2FY21 First Cut - ICICI Securities

L&T - Q2FY21 Earnings First Cut: Beat on EBITDA margins - YES Securities

Bharti Airtel - Q2FY21 result - Angel Broking

Dr.Reddy's Lab - Q2FY21 - Angel Broking

BUY on Mahindra & Mahindra Financial Services - Remains an inexpensive rural play - HDFC Securities

Radico Khaitan - Q2FY21 - Angel Broking

Maintain BUY on CDSL - Firing on all cylinders - HDFC Securities

REDUCE on Nippon Life India Asset Management - Market share stabilising - HDFC Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019