Dr Lal Pathlabs

After several years of single-digit growth, the Delhi NCR region has recorded double-digit revenue growth for the second consecutive quarter. This recovery is pivotal as the region typically enjoys a better margin profile than the national average. Management attributes this to a 'process-driven' approach and the return of customers who had previously experimented with newer, aggressive competitors.

The Swasthfit bundle program continues to be a primary growth engine, with revenue increasing 27.2% YoY in Q3. This initiative has successfully pushed revenue per patient to ₹861, a 6.7% increase. While patient volume growth was more modest at 3.8%, the increase in tests per patient to 2.97 (from 2.79) demonstrates the effectiveness of the bundling strategy in capturing higher wallet share.

Dr Lal Pathlabs is aggressively shifting its infrastructure mix toward franchisee collection centers, which now contribute nearly 45% of revenue. This strategy helps reduce fixed rental costs and increases market reach. The company plans to open 15-20 new labs in FY25, focusing on Tier-2 and Tier-3 towns to tap into underserved markets while maintaining a presence in core metros.

The West region now contributes approximately 15% of total revenue, matching the East region's contribution. However, management identified the South as a key focus area where growth currently lags the national average. The company intends to pursue both organic and inorganic opportunities in clusters like Bangalore, Chennai, and Hyderabad to strengthen its Southern footprint.

Despite choosing not to implement price increases for the past nine months, the company maintained an EBITDA margin of 25.8%. Management is navigating reagent cost inflation caused by dollar appreciation by increasing the use of locally manufactured consumables, which now account for roughly 20.9% of the mix. Productivity initiatives and a focus on high-margin geographical mixes are being used to stabilize margins at current levels.