LALPATHLAB - Investment Analysis: Buy Signal or Bull Trap?
Last Updated Time : 20 Dec 25, 07:05 am
Back to Investment ListInvestment Rating: 3.5
| Stock Code | LALPATHLAB | Market Cap | 23,354 Cr. | Current Price | 1,394 ₹ | High / Low | 1,771 ₹ |
| Stock P/E | 44.2 | Book Value | 140 ₹ | Dividend Yield | 0.86 % | ROCE | 30.6 % |
| ROE | 24.7 % | Face Value | 10.0 ₹ | DMA 50 | 1,522 ₹ | DMA 200 | 1,510 ₹ |
| Chg in FII Hold | 0.17 % | Chg in DII Hold | 0.60 % | PAT Qtr | 146 Cr. | PAT Prev Qtr | 129 Cr. |
| RSI | 26.2 | MACD | -40.6 | Volume | 2,42,734 | Avg Vol 1Wk | 1,98,810 |
| Low price | 1,147 ₹ | High price | 1,771 ₹ | PEG Ratio | 3.35 | Debt to equity | 0.06 |
| 52w Index | 39.6 % | Qtr Profit Var | 13.1 % | EPS | 31.6 ₹ | Industry PE | 30.9 |
📊 Analysis: LALPATHLAB demonstrates strong fundamentals with ROE at 24.7% and ROCE at 30.6%, both supportive of long-term compounding. Debt-to-equity at 0.06 reflects a nearly debt-free balance sheet. EPS at 31.6 ₹ and quarterly PAT growth (+13.1%) highlight profitability momentum. However, valuation is stretched with P/E at 44.2 compared to industry average of 30.9, and PEG ratio at 3.35 signals weak growth-adjusted valuation. Dividend yield at 0.86% provides modest shareholder returns. Technicals show RSI at 26.2 (oversold), MACD negative (-40.6), and price below both 50 DMA (1,522 ₹) and 200 DMA (1,510 ₹), indicating bearish sentiment and potential correction.
💡 Entry Zone: Ideal entry would be in the 1,200–1,300 ₹ range, closer to valuation comfort and support levels. Current price (1,394 ₹) is slightly above fair entry zone, making patience advisable for better risk-reward.
📈 Exit Strategy: If already holding, maintain positions for medium-term (18–24 months) given strong ROE/ROCE and low debt. Consider partial profit booking near 1,600–1,650 ₹ resistance if valuations stretch further. Long-term holding is viable only if earnings growth sustains and PEG ratio moderates.
Positive
- 📌 Strong ROE (24.7%) and ROCE (30.6%) support compounding potential
- 📌 Debt-to-equity at 0.06 indicates robust balance sheet
- 📌 EPS at 31.6 ₹ reflects solid profitability
- 📌 Quarterly PAT growth (+13.1%) highlights operational strength
Limitation
- ⚠️ Valuation premium: P/E 44.2 vs industry 30.9
- ⚠️ PEG ratio at 3.35 highlights poor growth-adjusted valuation
- ⚠️ Dividend yield at 0.86% is modest
- ⚠️ RSI at 26.2 indicates oversold momentum but bearish trend persists
Company Negative News
- ❌ FII holding decreased (-0.17%)
- ❌ Price trading below DMA levels signals weak sentiment
Company Positive News
- ✅ DII holding increased (+0.60%)
- ✅ PAT improved from 129 Cr. to 146 Cr. (+13.1%)
Industry
- 🏦 Industry PE at 30.9, sector moderately valued
- 🏦 Diagnostics sector benefiting from rising healthcare demand and preventive testing trends
Conclusion
🔎 LALPATHLAB is moderately attractive for long-term investment with strong ROE/ROCE, debt-free balance sheet, and consistent profitability. Entry near 1,200–1,300 ₹ offers margin of safety. Existing holders can maintain positions for 18–24 months, targeting exits near 1,600–1,650 ₹ unless valuations stretch further. Long-term compounding potential depends on sustained earnings growth and moderation of valuation premium.
Would you like me to extend this into a peer benchmarking overlay comparing LALPATHLAB against diagnostics peers like Metropolis, Dr. Lal’s competitors, and Thyrocare to highlight relative valuation comfort zones?
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