Shares of diagnostic companies Dr Lal Pathlabs and Metropolis Healthcare declined on Tuesday even as analysts recently suggested it is a good time to bet on stocks in this space as COVID-19 cases are gradually rising.
Shares of diagnostic companies Dr Lal Pathlabs and Metropolis Healthcare declined on Tuesday even as analysts suggested it is a good time to bet on stocks in this space as COVID-19 cases are gradually rising.
Dr Lal Pathlabs stock dipped 2.5 percent during the day and was trading 1.3 percent lower at Rs 2,035 on BSE at 3:10 pm. Metropolis shares, meanwhile, gave more than 3.7 percent in intraday trade and were down 3.4 percent to Rs 1,447.15.
|Stock||Correction in 2022 (%)||Correction in 1 year (%)|
|Dr Lal PathLabs||47.23||36.64|
The downward movement in the Metropolis Healthcare stock came even as the firm clarified that its promoters have no intention to exit the business amid rumours that the Shah family (CEO Ameera Shah and her family) was looking to sell its controlling stake. It, however, did not rule out a minority stake sale.
“Metropolis Healthcare Limited continuously explores various strategic options/investment opportunities. On account of which, MHL keeps receiving inbound interest from Financial Institutions and Companies part of the Healthcare eco-system for a potential minority stake purchase in MHL,” it told the exchanges.
Meanwhile, Hemang Jani, Retail Equity Strategist at Motilal Oswal Financial Services had last week told CNBC-TV18, that he views the recent correction in diagnostic companies as a good opportunity for long-term investors.
"You had COVID and even otherwise, due to lifestyle changes, there is going to be a fair bit of growth that one can really look at for the next few years. However, in the interim, because of the kind of valuations that some of these companies have got due to the IPO boom, etc., we are going through a process of adjustment of that price increase that we had seen," he said.
Purvi Shah, DVP (Fundamental Research)-Pharma Analyst at Kotak securities, meanwhile pointed out that diagnostic valuations are not cheap despite the sharp correction, with the pricing of Dr Lal, Metropolis and SRL 2-4 times higher than that of their cheapest organised alternatives across cities be it specialised or even semi-specialised tests.
His remarks came at a time when daily COVID-19 cases in India have begun to pick up again. On Tuesday, the country logged 6,594 fresh cases taking the total tally to 4,32,36,695, according to the Union Health Ministry. The daily positivity rate was recorded at 2.05 percent, while the weekly positivity rate was recorded at 2.32 percent.
Geojit Finacial Services last week recommended accumulating Dr Lal Pathlabs stock for a target of Rs 3,058 apiece as the brokerage is positive on the company's strong recovery in its non-COVID business, which it believes to be more sustainable. Edelweiss, had a 'buy' call on Metropolis Healthcare with a target price of Rs 3,400.