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:

Maintain ADD on L&T Infotech - Growth progression continues - HDFC Securities

Cipla Ltd - Launch of generic Nintedanib - Angel Broking

Britannia Industries Ltd - Q2 FY21 Result Update - YES Securities

Hindustan Unilever Ltd - Q2 FY21 Result Update - YES Securities

CCL Products Ltd - Q2 FY21 Result Update - YES Securities

Specialty chemicals - Price trend in Aug-20 - ICICI Securities

Hindustan Unilever - Willingness (necessity?) to sacrifice gross margins to drive growth - ICICI Securities

Britannia Industries - In-home consumption tailwind starts to taper-off - ICICI Securities

Balkrishna Industries - Quarter ends on a strong note - ICICI Securities

Refining & marketing - Diesel cracks: Light at the end of the tunnel? - ICICI Securities

Mahindra CIE Automotive - Resilient margin performance - ICICI Securities

Kajaria Ceramics - Q2FY21 Result Update - ICICI Securities

Hindustan Unilever - Q2FY21 Result Update - ICICI Securities

Castrol India - Initiating Coverage - Compelling Valuation & Counting on Dividend Support - Reliance Research

Reliance Research - R Long Short - Mahindra & Mahindra Financial Services : Directional Long

Kajaria Ceramics - Q2FY21 First Cut - ICICI Securities

Quant Pick - Larsen & Toubro - ICICI Securities

Hindustan Unilever - Q2FY21 First Cut - ICICI Securities

Hindustan Zinc - Q2FY21 First Cut - ICICI Securities

Dhanuka Agritech - Buy back - Angel Broking

Equitas SFB IPO - Day 1 Subscription - Angel Broking

Dr. Reddy's lab relaunch of OTC product - Angel Broking

Hindustan Unilever Ltd - Q2FY21 Results - Angel Broking

Hindustan Unilever Ltd - Q2FY21 Results - YES Securities

Maintain BUY on ACC - Strong cost controls cushion earnings - HDFC Securities

Equitas Small Finance Bank (ESFB) - Subscribe - YES Securities

Granules India - Q2FY2021 results - Angel Broking

Sunteck Realty - Acquisition of 50 acres - Angel Broking

Maintain BUY on Oberoi Realty - Sharp recovery - HDFC Securities

L&T bidding for rail corridor - Angel Broking

Maintain REDUCE on L&T Technology Services - Recovery priced in - HDFC Securities

India IT Services - Thematic - Rising 5G Adoption to Industrialize Digital Services & Connectivity - Reliance Securities

L&T Technology Services - Q2FY21 Result - Angel Broking

L&T Technology Services - 'Multiple' headwinds - ICICI Securities

HDFC Life Insurance Company - Recovery well on track post Covid-19 dip - ICICI Securities

ACC - Strong execution - third time in a row - ICICI Securities

Tata Communications - Keeping faith on sales funnel for revenue growth - ICICI Securities

Hatsun Agro Products - Healthy revenues; strong margins - ICICI Securities

Amber Enterprises Ltd - Business Update Call - YES Securities

Key Takeaways from Q2FY21 earnings call of Shoppers Stop - YES Securities

CSB Bank Q2 FY21 - Not Rated - YES Securities

Britannia Industries 2QFY21 results - YES Securities

HDFC Life Insurance - Q2FY21 Results - YES Securities

ACC Ltd - Q3CY20 Results - YES Securities

IPO Review - Equitas Small Finance Bank - ICICI Securities

Rallis India - Q2FY21 First Cut - ICICI Securities

ACC Ltd - Q3CY20 First Cut - ICICI Securities

Equitas Small Finance Bank Limited - Strongly developing from a microfinance to small bank... - Geojit

Britannia Industries - Q2FY21 Results - Angel Broking

Rallis India - Q2FY21 Results - Angel Broking

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

disclaimer copyright © 2005 - 2019