Prime Stock recommendation: A diagnostic stock for the long term
A highly unorganized sector with a huge addressable opportunity and consolidation potential. Play it with this diagnostic stock!
More like this
Nifty IT Stocks Rally: A price bounce or a sector turnaround?
PrimeInvestor Research Team
August 4, 2026
Read More »
Technical outlook: Promise in Consumer Durables, the grind continues in Nifty50
B Krishnakumar
August 3, 2026
Read More »
7 thoughts on “Prime Stock recommendation: A diagnostic stock for the long term”
Hi Pavithra,
Excellent analysis. Wanted to know your thoughts on Vijaya Diagnostics. Would DLPL be able to make significant penetration in South India , especially in the states of Telangana and Andhra, where Vijaya Diagnostics has an established presence and brand recall? Would holding a basket of these diagnostic center stocks make sense?
Hello and thank you for your comment. Yes you have a very good point and given the direction the sector as a whole is taking, in theory holding a basket of stocks of diagnostics players does seem like a good idea though a deeper analysis of Vijaya Diagnostics would be warranted before doing this.
While DLPL is the largest player by market cap and revenue, it does not necessarily have to translate into dominating in every single geography, and most certainly some geographies will be harder to crack than others with customers being loyal to diagnostic centers and patients going where their doctors want them to.
Here is where we are counting on DLPL’s balance sheet strength and execution history to be able to make meaningful acquisitions especially in these harder to crack geographies.
Hope this answers your query.
In B2C, there have no brand appeal to ask for a higher price. B2B is too price sensitive. Consolidation is story telling. They have no moat whatsoever. Too high a PE and Price to BV ( 12+!!) for brick and mortar commodity business. Hardly any regulatory hurdles. In small towns, especially, it is your ability to generate high volumes by roping in local doctors that matters. Dr.Mohan’s Diabetes in Chennai is big but struggles in new geographies that it expands to. You should do a ground check of DrLal’s new geographies ….see if they are having enough customers or not. Talking of 800cr cash in the kitty when we are paying for 20K crore m.cap!! ROCE and margins notwithstanding, how can one justify this kind of P/BV and PE.
Isn’t it expensive? Valuation is looked at only in terms of history and peer comparison?
Hello Sir,
Thanks for your query. As explained in the valuation segment, yes the stock is expensive which is why we have cautioned that short term stock performance could be muted.
In our opinion, DLPL’s sector leadership, robust cash flows, ROCE and ability to lead consolidation (in an industry that is ripe for consolidation) will lead to healthy growth and compounding in the long term.
This is why one must have a long-term time horizon to invest in this stock at present valuations.
Hope this answers your query.
Thanks
Hello Pavithra
Thank you for the analysis. Given substantial difference in PE band, I think we can rule out PE re rating in the stock but it is still a possibility in Krsnna. What is working against this stock to not recommend it in your perspective.
Hello Sir,
The reason is the volatility arising from Krsnaa’s reliance on the B2G model.
Thanks,
Comments are closed.