Gradual volume growth, valuations to cap returns for diagnostic majors

Easing of pressure from predatory pricing and steady network expansion is boosting growth for diagnostics companies, say Abdulkader Puranwala and Nisha Shetty of ICICI Securities

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They expect a 13-14 per cent annual sales growth over FY2024-27 for the two companies on the back of improved volumes.

Ram Prasad Sahu
3 min read Last Updated : Aug 27 2024 | 8:06 PM IST

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Riding on the back of network expansion and steady pricing, organised diagnostic players delivered a 14 per cent sales growth in the June quarter. Strong operating leverage in the business drove a 151 basis points year-on-year (157 basis points on a sequential basis) expansion in margins to 28.7 per cent for the sector.

Easing of pressure from predatory pricing and steady network expansion is boosting growth for diagnostics companies, say Abdulkader Puranwala and Nisha Shetty of ICICI Securities.

Post the June quarter results, some brokerages have upgraded their earnings estimates for the larger players and this has reflected on the