Profitable Stocks to Trade in December, 2017 - Dr Lal Pathlavs

Dr Lal PathlavsPvt Ltd. Late Dr. Major S.K. Lal, commenced the business of providing pathology services and maintaining a blood bank in the year 1949 through sole proprietorship M/s Central Clinical Laboratory and M/s Blood Bank Transfusion Centre. The business of diagnostic and related healthcare tests and services now continues to be provided by the Company Dr Lal PathlavsPvtLtdThe Company was incorporated as Dr. Lal PathLabs Private Limited, a private limited company under the Companies Act, 1956, with a certificate of incorporation granted by the RoC on February 14, 1995 at Delhi. The business of the partnership firm Central Clinical Laboratory is now undertaken by the Company, while Central Clinical Laboratory does not undertake any business operations. The Company was converted into a public company pursuant to a special resolution of the shareholders of our Company at an EGM held on August 7, 2015. Consequently, the name of the Company was changed to Dr. Lal PathLabs Limited and a fresh certificate of incorporation pursuant to the change of name was granted by the RoC on August 19, 2015 
  • Over 3000 individuals work at the Dr Lal PathLabs in India with over 55 percent of the staff in laboratory functions 
  • Qualified team of 147 Pathologists, 8 Radiologists, 13 Microbiologists , 5 Biochemists and 11 specialists with doctorate degrees 
  • There is a growing pool of young leadership from top institutions like AFMC, IIMs, IITs , XLRI, SP JAIN amongst others 
  • Dr Lal PathLabshonoured with Frost and Sullivan 4th Annual India Healthcare Excellence Award, 'Diagnostic Service Provider Company of the Year 2012 
  • Dr Lal PathLabs recognized by IBM - amongst top 50 brands in India for Marketing & IT •Satellite laboratories at Punjabi Bagh& NOIDA & Clinical Trials Laboratory, Gurgaon receive NABL accreditation as per ISO 15189 (2007 
  • Six Laboratories of Dr Lal PathLabs namely Main Laboratory, Reference Laboratory, Satellite laboratories at Gurgaon, SDA, PreetVihar and Mumbai successfully upgrade the NABL Quality Standard from ISO 

Growth is a substantial asset for the company, as anticipated by dedicated analysts. Within the next three years, growth is estimated to reach 56% by 2020.The group's activity appears highly profitable thanks to its outperforming net margins.Thanks to a sound financial situation, the firm has significant leeway for investment.Predictions on business development from analysts polled by Thomson-Reuters are tight. This results from either a good visibility into core activities or accurate earnings releases.Analysts have a positive opinion on this stock. Average consensus recommends overweighting or purchasing the stock.The difference between current prices and the average target price is rather important and implies a significant appreciation potential for the stock. Beta of the stock for one month range is 0.089. 
  • Company is virtually debt free. 
  • Promoter's stake has increased. 
  • Company has a good return on equity (ROE) track record: 3 Years ROE 30.63% 
  • Net sales have increased from 241.80 cr to 269.30 cr in last quarter 
  • PBDIT have increased from 63.50 cr to 74.90 cr last quarter 
  • Net profit has increased from 43.10 to 50.20 cr last quarter 
  • Company P/E is 47.25 which is less than industry P/E of 52.47 which indicates that company is undervalued. 

Technical Analysis 
Dr. Lalpath Lab shows very strong positive trend in the last 4 weeks. It recovered nearly 25 percent from its bottom. The stock formed hammer pattern on monthly chart and also gave confirmation as it formed strong bullish candle in November month. It formed low of 775 and high of 908 finally settled at 889 on the last working day of November. From the last 8 trading sessions the stock is in tight consolidation range and ready for break out now. 
  • If we draw a trend line from the highs of June 2011 then the stock has given break out of this long term trend line on weekly chart 
  • If we draw a trend line from the lows of January 2017, then the stock managed to sustain above it and it works as a strong support now. 
  • 900 is the strong psychological as well as monthly resistance , weekly closing above 900 will confirms the uptrend. 
  • 900 should be breached by heavy volume to generate short term momentum in the stock 

Buy Lalpath Lab above 900 for the target of 990 and 1040 with the stop loss below 815. Less Risky trader can maintain stop loss below 855 

Supports and Resistance (Monthly) 
  • Resistance 1- 955 Supports 1- 815 
  • Resistance 2- 1040 Support 2- 750 
  • Resistance 3- 1150 Support 3- 690 

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