Dr Lal PathLabs is looking to expand in South India by buying smaller diagnostic companies. They are focusing on businesses in Tamil Nadu, Karnataka, and Andhra Pradesh with annual revenues under ₹50 crore. In the future, they may also look for opportunities in Gujarat, according to CFO Ved Goel.
The company has about ₹1,000 crore in surplus cash and is combining acquisitions with organic growth. Dr Lal PathLabs plans to open 20 new labs in cities like Bengaluru, Hyderabad, Pune, and Goa by the end of FY25, and they aim to set up hubs in smaller towns across North and East India.
In the southern and western parts of India, the focus will be on expanding in cities like Mumbai, Pune, Bangalore, Hyderabad, and Chennai. Their subsidiary, Suburban Diagnostics, will lead the expansion in Mumbai, Pune, and Goa.
After a four-year break from acquisitions, Dr Lal PathLabs is returning to this strategy, having last bought ChanRe Diagnostic Services in Bengaluru for ₹17.5 crore in 2020.
The company has seen slower growth in South India, with southern labs contributing 6% to its total revenue in FY24, down from 6.3% the previous year.
Dr Lal PathLabs aims to increase patient volumes by 6-7% in FY25, compared to just 2.6% in FY24, serving over 27 million people last year. They do not plan to raise prices as they expand into smaller towns, instead focusing on growing by gaining market share from unorganized competitors.
The company recently shut down its Kenya operations, which had been inactive for three years, but it continues to operate in 24 other countries across Asia, Africa, and the Middle East.
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