After deliberately slowing its inorganic ambitions for nearly three years to absorb its biggest acquisition, Dr Lal PathLabs is once again scanning the market for deals — this time with a clear focus on plugging gaps in South India.
The country’s largest diagnostics chain acquired Mumbai-based Suburban Diagnostics in August 2021 in a Rs 925-crore transaction, a deal that significantly strengthened its presence in western India but also demanded management bandwidth. “We have not done acquisitions recently because the Suburban integration itself took significant bandwidth. That is now largely stabilised,” Ved Goel, group chief financial officer and chief executive officer, international business, at Dr Lal PathLabs, told Business Standard.
With integration largely behind it, the company believes the stage is set for selective acquisitions. However, Goel is clear that Dr Lal will not chase deals merely to boost topline. “I do not want to do M&A just to add turnover. Any acquisition must fit strategically. If a space will take too long to scale organically, then M&A makes sense — as it did for the Mumbai market,” he said.
South India remains the most obvious white space. Unlike the north, the southern market is fragmented across multiple states with distinct competitive dynamics. “South is definitely a gap area for us. It is not one homogeneous market — Tamil Nadu, Kerala, Telangana, Karnataka are all very different,” Goel said. While Dr Lal has built strong clusters in Kerala and has a sizeable presence in Bengaluru — where it is possibly the second-largest player — it lacks a single platform that can deliver meaningful scale across the region. Future acquisitions, if any, are likely to be smaller, targeted and geography-specific.
This renewed inorganic interest comes even as Dr Lal sharpens execution in its core markets. Delhi NCR, long considered a mature geography, has emerged as a surprise growth engine. “After many years, Delhi NCR has started growing in double digits,” Goel said. The revival has been driven by fresh investments — new labs and collection centres, faster turnaround times, and a technology-led revamp of older infrastructure. Routine reports are now delivered within two to six hours, significantly improving customer experience. “This has driven growth in an established market,” he added.
Operationally, the company has also benefited from improving realisations despite muted patient growth in the December quarter. Tests per patient rose about 5 per cent year-on-year as customers increasingly opted for wellness and preventive packages rather than standalone tests. A richer mix of specialised and high-end testing — particularly in oncology and genomics — and geographic diversification also aided margins.
Radiology, meanwhile, is emerging as a measured growth lever. Dr Lal began its imaging pilot nearly two years ago with a single centre and now operates three, with another in the pipeline, largely focused on Delhi. Expansion is calibrated. “Radiology is not super fast. The challenge is not capex, it is finding radiologists,” Goel said, pointing to talent scarcity and regulatory constraints. Analysts see radiology as a steady, margin-accretive option rather than a rapid scale-up opportunity.
BNP Paribas analysts, in a recent note, said Dr Lal’s December-quarter performance underscored the benefits of its volume-led strategy. While patient growth lagged industry expectations, realisations surprised positively due to better test mix and higher tests per patient rather than price hikes. They also flagged Delhi NCR’s double-digit rebound as evidence that infrastructure investments are beginning to pay off, even on a large base.
Industry-wide, diagnostics growth is stabilising rather than slowing, driven by preventive healthcare, rising chronic diseases and expanding hospital infrastructure into tier-2 cities. Goel believes 9–10 per cent growth is now the baseline, with organised players like Dr Lal well placed to consolidate share as they absorb inflation better than unorganised labs.
For Dr Lal, that combination of operational momentum and renewed balance-sheet capacity is now reopening the acquisition playbook — carefully, and with the South firmly in focus.
