Goldman Sachs has downgraded its rating for Dr Lal PathLabs to ‘sell’, leading to a 3% fall in the company’s shares to Rs 2,431 ($1 = Rs 83.26). This marks the third consecutive day of losses for the company. The investment bank cited intense competition and slower asset integration as reasons for the downgrade.

The firm has also revised its target price for Dr Lal PathLabs to Rs 2,100 from the previous closing price of Rs 2,504, suggesting a potential downside of 16%. Analysts at Goldman Sachs anticipate a structural volume decline from earlier double-digit growth estimates. They also pointed out the stretched business-to-consumer (B2C) incumbent valuations.

Over the past week, the stock has experienced a nearly 5% decline. Despite this recent downturn, in Q1FY24, Dr Lal PathLabs reported a year-on-year net profit growth of 44%, reaching Rs 83.6 crore ($11.3 million). The company also saw a revenue increase of 7.6% to Rs 541 crore ($73 million), and its EBITDA rose by 24.4% to Rs 146.2 crore ($19.8 million).

Despite these positive figures in Q1FY24, the downgrade and revised target price suggest that Goldman Sachs expects challenging times ahead for Dr Lal PathLabs due to increasing competition and slower than expected asset integration.