Dr Lal Pathlabs Ltd Management Discussions

Economy

Global Economic Review

In 2025, the global economy grew at a steady but moderate pace of around 3.4%¹, supported by easing inflation, stable consumer demand and continued investment in technology and infrastructure. Growth has been pressured by rising geopolitical tensions, higher commodity prices and tighter financial conditions,withadditionaluncertaintyfromescalatingconflicts.The situation has further intensified with restrictions on access to the Strait of Hormuz, a critical global oil shipping route, increasing risks to energy supply, trade flows and overall financial stability.

Global GDP Growth

(in %)

*E - Estimated

Source: International Monetary Fund (IMF), April 2026 report

Global economic growth is expected to moderate slightly to to rise 3.1%¹ in 2026 and 3.2%¹ in 2027. Inflation from 4.1%¹ in 2025 to 4.4%¹ in 2026, before gradually easing to 3.7%¹ in 2027, according to the IMF. Emerging and developing economies, particularly those that rely on commodity imports, may face increased pressure due to higher energy prices, supply chain disruptions and ongoing global uncertainties. At the same time, risks such as geopolitical tensions, inflationary pressures and financial market volatility may continue to affect economic growth. However, continued investment in artificial intelligence and coordinated policy measures across economies helped maintain stability and encourage medium-term growth.

Indian Economic Review

The Indian economy is growing steadily, supported by strong domestic demand, continued infrastructure development, ongoing policy reforms and rising activity across manufacturing, services and the digital sector. Measures such as GST and income tax rationalisation have supported consumption, while monetary easing through rate cuts, liquidity support and targeted interventions has strengthened resilience amid global trade uncertainties and geopolitical tensions. Indias per capita income continued to rise steadily, reflecting improving economic activity and higher disposable incomes.

In early 2026, the Reserve Bank of India (RBI) maintained a stable policy stance, keeping the repo rate unchanged at 5.25%³ to manage inflation in a challenging global environment. According to the revised GDP series (Base Year 2022 23), real GDP growth rose to 7.6%² in FY 2026, up from 7.1%² in FY 2025, driven by steady private consumption, improving investment activity and sustained performance across key sectors.

Robust infrastructure development and an improving business environment are expected to create new market opportunities, while sustained demand and evolving consumer preferences are likely to support continued growth despite external uncertainties and cost pressures. Reflecting these favourable dynamics, per capita income has been on an upward trajectory and is projected to rise from $2,675⁴ in 2025 to $3,075⁴ in 2027.

Indian GDP Growth

(%)

Source: Ministry of Statistics & Programme Implementation (MoSPI), Second Advanced Estimates

Indias external position has strengthened with recent trade developments, including an interim bilateral agreement with the United States & New Zealand and a Free Trade Agreement (FTA) with the European Union (EU) & UK, both expected to enhance market access, attract investments and strengthen global supply chain linkages. At the same time, Viksit Bharats economy continues to grow steadily, supported by strong domestic demand, infrastructure development and ongoing reforms across key sectors. Rising investment in healthcare, digital health and human development is further supporting long-term growth and productivity, while improved healthcare access and stronger public health systems are helping drive more inclusive and sustainable economic development. Key initiatives such as Ayushman Bharat, the National Health Mission (NHM) and digital health programmes are driving capacity expansion and improving accessibility, especially in underserved regions. These initiatives would further strengthen Indias human capital, stimulate investment and support long-term, inclusive economic growth.

Indian Diagnostic Industry

The Indian diagnostic industry is steadily evolving, supported by rising healthcare awareness, greater focus on preventive testing and improving access to services. The country is also witnessing a gradual demographic shift, with increasing life expectancy and a slowly ageing population. Despite this progress, the market remains highly fragmented, with over 3 lakh laboratories (estimated) across the country, most of which are standalone centres or Labs inside hospital and nursing homes. The estimates for the Indian diagnostic industry vary widely due to its fragmented nature; therefore, the analysis draws on multiple sources and internal assessments.

Organised diagnostic chains account for about 15 20%⁵ of the market, indicating low consolidation, though their growing presence is helping improve standardisation, quality and operational efficiency. Government-led expansion of primary healthcare is expected to widen the testing base by bringing previously untested populations, especially in rural and semi-urban areas, into the formal diagnostic system.

Over the past five years, the leading organised players representing a sample set that accounts for nearly 10 12%⁵ of the overall industry have strengthened performance, driven by higher patient volumes and a broader test mix. As per the CareEdge report, the total number of tests conducted across the sample set of leading organised players increased from 214⁵ million in FY 2021 to 401⁵ million in FY 2025, reflecting strong growth in diagnostic volumes and increasing demand for healthcare and preventive testing services. Similarly, the number of patients served rose from 64 million in FY 2021 to 99⁵ million in FY 2025. In Indias diagnostic market, urban areas account for more than 70%⁵ of revenues, even though over 60%⁵ of the population lives in rural areas, highlighting a clear urban rural gap in access and adoption.

Indias Diagnostic Service Market Snapshot

(%)

According to the IMARC Group, North and East India are expected to drive future diagnostic demand, supported by strong population growth, rising healthcare awareness and improving diagnostic penetration. North India leads with a highest share in 2025, driven by organised diagnostic chains and robust infrastructure in Delhi-NCR, along with large population bases across Uttar Pradesh, Punjab, Haryana and Rajasthan. Overall, these evolving demographic trends are reshaping healthcare demand, consumption patterns and long-term economic growth in India. The rising prevalence of lifestyle-related chronic diseases such as diabetes, cardiovascular conditions and cancer is driving the need for regular diagnostic monitoring, resulting in sustained demand. Government initiatives aimed at expanding healthcare access, including universal health coverage and the development of digital health infrastructure, are further improving accessibility and supporting the shift toward organised diagnostics.

Outlook

The Indian diagnostic industry is expected to witness steady growth in FY2027, supported by rising awareness of preventive healthcare, increasing incidence of lifestyle diseases, an ageing population and Indias growing population base of over 1.46 billion⁶. Improving income levels, stronger payment capacity, expanding health insurance coverage and better access to healthcare services are expected to drive higher demand for quality diagnostic testing. While the industry remains fragmented, the sector is expected to sustain a medium-term growth rate of around 8 10%, driven primarily by increasing testing volumes and the gradual shift towards preventive and continuous healthcare management. Continued adoption of digital technologies, AI and integrated health records is expected to improve operational efficiency, diagnostic accuracy and patient experience, while rising investor interest and merger and acquisition activity are likely to support consolidation within the organised segment. The North and East region remains a key strength for Dr. Lal PathLabs, contributing approximately 77% of the business and offering significant long-term growth potential.

Growth drivers of the Indian diagnostic industry

Increasing Prevalence of Chronic and Lifestyle-Related Diseases: The rising incidence of non-communicable diseases (NCDs) in India such as diabetes, cardiovascular disorders, cancer and respiratory conditions is driving growing demand for diagnostic services for early detection, monitoring and treatment. Factors like urbanisation, lifestyle changes and stress are contributing to chronic diseases, even amongst the younger populations. Diagnostic laboratories play a key role in screening, accurate diagnosis, treatment monitoring and preventive care. Additionally, Indias ageing population increases the need for regular diagnostic surveillance, creating opportunities for laboratories to expand specialised testing and chronic disease management solutions.

Expansion into Tier-2, Tier-3 and Rural Markets: A large share of Indias population resides in rural and semi-urban areas, while diagnostic revenues remain concentrated in major cities, reflecting a significant untapped opportunity. As healthcare awareness improves and access to medical services expands, demand for reliable diagnostic testing is steadily increasing in smaller towns. In response, organised diagnostic chains are strengthening their footprint across Tier-2, Tier-3 and Tier-4 markets through collection centres, partnerships and hub-and-spoke models.

Rising Focus on Preventive Healthcare: Growing awareness of preventive healthcare is becoming a key driver of growth for the diagnostic industry. More individuals are proactively opting for regular health check-ups, wellness packages and early screening tests to monitor and manage lifestyle-related conditions. Revenue from bundled packages catering to the wellness and preventive services has grown strongly over the past four years, with annual growth exceeding 25%⁵ through FY 2025. Its contribution to total revenue has also increased significantly, rising from around 6 12%⁵ in FY 2021 to nearly 12 25%⁵ in FY 2025. Growing awareness of preventive healthcare, along with the launch of specialised packages, is expected to make this segment an important driver of future growth. This shift toward preventive and proactive healthcare, further supported by corporate wellness initiatives and digital health platforms, is driving increased demand for diagnostic services, particularly across urban and semi-urban markets.

Supportive Government Initiatives:Government-led healthcare initiatives and increased public spending are improving access to medical services and supporting growth in Indias diagnostic and personal care sectors. Programmes aimed at strengthening healthcare infrastructure, expanding coverage and improving service delivery, along with digital health and teleconsultation initiatives, are making healthcare more accessible and efficient. A robust care ecosystem for geriatric (elderly care) and allied services will be developed, with National Skills Qualifications Framework (NSQF) aligned training to upskill multiskilled caregivers in areas such as wellness, yoga and medical devices, targeting 1.5 lakh7 caregivers in FY 2027. The Union Budget for FY 2027 further supports this momentum with higher allocations to healthcare, increased focus on medical education, research and digital health and continued emphasis on preventive care. These developments, coupled with rising health awareness, are expected to drive greater demand for diagnostic services and personal care products, supported by a growing focus on wellness, hygiene and overall well-being.

Genomics Driving Precision Oncology: Genomic testing is emerging as a key growth driver for the Indian diagnostic industry. By analysing DNA to identify genetic mutations, it supports accurate disease diagnosis, cancer treatment planning, prediction of drug response, prenatal screening and better-informed preventive care. Leading diagnostic players are increasingly investing in this space, developing advanced laboratories and technology platforms to deliver faster and more precise results.

Opportunities and Threats

Opportunities

Digitalisation and Technology Adoption: Technology adoption is reshaping the diagnostic industry by making services faster, more efficient and patient-friendly. The growing use of digital platforms, artificial intelligence and automation is streamlining laboratory operations and reducing turnaround times, while home sample collection services are improving accessibility and convenience for patients. Continued investments in advanced technologies and the development of specialised laboratories are expected to further accelerate growth in this segment and strengthen the overall diagnostic ecosystem.

Untapped Potential in Health Coverage:Indias health insurance ecosystem continued to expand in FY25, supported by wider coverage under government schemes such as Ayushman Bharat PM-JAY and steady growth in private health insurance adoption. The inclusion of additional senior citizens, coupled with rising health awareness and increasing healthcare spending, is improving access to medical services across the country. For the diagnostics industry, expanding insurance coverage is expected to support higher utilisation of preventive healthcare, screening programmes growth potential and creating a long-term and diagnostic testing, while the still-low penetration of health insurance presents a significant

Shift Toward Outpatient and Home-Based Diagnostics: The increasing global demand for convenient, affordable and faster healthcare services is driving growth in the outpatient care market. As a result, the market is projected to expand from USD

448 billion in 2025 to USD 678 billion by 2035, driven by rising demand for accessible and efficient healthcare India, the home diagnostic testing market is also expanding, valued at USD 2239 million in 2025 and expected to reach USD 3339 million by 2034, with a 5%9 CAGR. For the diagnostics industry, this trend is creating strong growth opportunities by increasing demand for outpatient and home-based testing, improving patient access and supporting the sectors expansion into decentralised, patient-centric care models.

Increase in Life Expectancy: Indias rapidly expanding population aged 60 and above is expected to increase from

10¹⁰ crore in 2011 to 23¹⁰ crore by 2036, with their share in the total population rising from 9%¹⁰ to 15%¹⁰, according to the National Commission on Population. This growing elderly population is expected to significantlydrive demand for diagnostic services nationwide. The higher prevalence of age-related and chronic conditions, such as cardiovascular diseases and rheumatoid arthritis, increases the need for regular testing, disease monitoring and preventive health screenings. This demographic shift is creating a sustained growth opportunity for the diagnostics industry, driven by rising patient volumes, greater adoption of specialised tests and increased utilisation of advanced diagnostic technologies.

Growth in Advanced and Specialised Testing: Demand for advanced diagnostic services, including genomics, molecular diagnostics, oncology testing and specialised pathology, is growing rapidly. These high-value segments are creating greater growth opportunities for organised players while also contributing to improved operational efficiency and stronger overall performance.

Expanding Health Insurance Coverage: Increasing health insurance penetration, supported by private insurers and particularly government-backed schemes, is improving access to diagnostic services across India. Reduced out-of-pocket expenditure is encouraging greater adoption of preventive healthcare and diagnostic testing. Despite ongoing progress, insurance penetration remains relatively low, presenting significant driver for the diagnostics industry. long-term growth opportunity.

Industry Consolidation and Organised Sector Growth: Indias diagnostics sector is undergoing steady consolidation, with organised, technology-driven players gaining market share as demand for quality, standardised services rise. Patients are increasingly shifting towards reliable, accurate clinical diagnostics, accelerating this transition away from . In fragmented, unorganised providers. Backed by investments in digital capabilities, network expansion and enhanced testing infrastructure, these players are well-positioned to benefit from this ongoing shift.

International Expansion Opportunity for Indian Diagnostics:

Indian diagnostic companies are well-positioned to expand internationally, leveraging their expertise in cost-efficient, high-volume testing and strong quality standards. Significant opportunities exist in underpenetrated markets across Asia, Africa and part of Middle East, where organised diagnostics infrastructure is still evolving. Their scalable operating models, competitive pricing and growing digital capabilities such as telemedicineandremotereporting-enable entry and operations. Supported by rising global demand for preventive healthcare and early disease detection, as well as strategic partnerships in new geographies, Indian players have a strong opportunity to build a global presence and drive sustainable, long-term growth.

Threats

Intense Competition: The Indian diagnostics industry faces rising competitive intensity from organised laboratories, unorganised regional players, online platforms and digital health aggregators. Aggressive pricing strategies, discounted packages and bundled offerings from new entrants are exerting downward pressure on prices and reducing realisations in routine diagnostics. In addition, the entry of pharma companies, hospital chains and corporate healthcare players into the diagnostics space is further intensifying competition and increasing market fragmentation.

Regulatory Changes: The diagnostic industry operates under a more stringent regulatory environment, requiring laboratories to strengthen their quality systems, documentation and compliance processes. While evolving regulations supported better patient safety and service standards, they also increased compliance costs and operational responsibilities for diagnostic service providers.

Increasing point-of-care testing (POCT): The diagnostic industry is seeing the gradual entry of new players introducing Point-of-Care Testing (POCT) technology across clinics, pharmacies and home-care settings. However, adoption remains in its early stages, with limited traction so far, as central laboratories continue to dominate routine and specialised diagnostic testing and remain the preferred channel in the broader market.

Company Overview

Dr. Lal PathLabs (hereinafter referred to as "Dr. Lal PathLabs" or "The Company") was founded in 1949 and has become a leading player in Indias diagnostics and healthcare sector. The Company, widely recognised for pioneering innovative diagnostic tests and cutting-edge technologies, continuously drives improvements in medical standards.

The Company operates a strong Pan-India network of 312 clinical laboratories, including the National Reference Lab in Delhi and regional reference labs in Kolkata, Bangalore and Mumbai. Dr. Lal PathLabs supports its extensive network with more than 7,700 Patient Service Centres and ~ 14,000 Pickup Points, ensuring wide accessibility to diagnostic services across the country. Dr. Lal PathLabs has established dedicated specialty verticals, including Genevolve for genomics, L-CoRD (Dr. Lal PathLabs Centre of Excellence for Reproductive Diagnostics) for reproductive diagnostics and L-ACE (Dr. Lal PathLabs Autoimmune Centre for Excellence) for autoimmune disorders, while further enhancing the Swasthfit platform to deliver comprehensive preventive healthcare solutions. With a comprehensive test menu of over 4,800 pathology and radiology tests and panels, the organisation continues to expand access to high-quality diagnostic services.

Following its IPO in 2015, Dr. Lal PathLabs introduced the SwasthFit bundled preventive health check programme as part of its efforts to expand into preventive healthcare. Over the years, the Company has continued to strengthen its diagnostic capabilities by adding advanced services, including Comprehensive Genomic Profiling Testing for Haematological Malignancies. More recently, in 2025, it further enhanced its specialised, precision-diagnostic portfolio by introducing various tests such as Amyloid Typing Solutions, Anti AT1R Antibody, Mutated Citrullinated Vimentin (MCV) Antibody, Alzheimers Disease Biomarker Panel, Lymphnode AI Metadetect etc reflecting its focus on advanced, personalised healthcare.

Dr. Lal PathLabs is actively integrating Artificial Intelligence-based algorithms across multiple diagnostic areas, including Histopathology and Haematology, to enhance the efficiency, accuracy and reproducibility of diagnostic results. Dr. Lal PathLabs maintains high-quality standards through 53 National Accreditation Board for Testing and Calibration Laboratories (NABL)-accredited labs and 2 College of American Pathologists (CAP)-accredited labs.

Operational Highlights

Key Achievements in FY 2026

The Company has approximately 141 million patient visits over the past five years, reflecting its strong nationwide presence and growing demand for its services. Dr. Lal PathLabs also strengthened its diagnostic portfolio with the introduction of more than 136 new tests, including over 13 "First in India" offerings, thereby enhancing its capabilities in advanced and complex testing. In addition, the Companys technical team contributed to scientific advancement through more than 40 scientific papers in various national & international journals, including an award-winning study on the use of machine learning to rapidly diagnose acute leukaemia. A significant highlight during the year was the hosting of Medllumina 2026, a first-of-its-kind international medical conference by Dr. Lal PathLabs. The event brought together clinicians and global thought leaders to deliberate on the "New Era of Diagnostics", with a specific focus on high-complexity domains.

Key Growth Drivers

• Expanding Presence in High-Growth and Underpenetrated Markets: Dr. Lal PathLabs is strengthening its presence across high-growth markets while consolidating its leadership position in North India, which continues to remain a key growth driver for the Company. The Company is adopting a cluster-based expansion strategy, scaling its network in key metropolitan and adjacent markets, while enhancing diagnostic infrastructure through reference laboratories in major cities. It is also increasing penetration in Tier-3 and Tier-4 markets through a franchise-led model, improving access to diagnostic services across semi-urban and rural areas to support long-term growth.

• Strengthening Leadership in Core Markets: The Company remains focused on maintaining its leadership position in its core markets, particularly in North India. Dr. Lal PathLabs aims to leverage its strong brand equity to deepen market penetration and strengthen customer relationships. The Company is also identifying opportunities to create additional value through cross-selling and up-selling advanced diagnostic services to its existing customer base.

• Strengthening High-End and Specialised Testing Portfolio:

Dr. Lal PathLabs continues to strengthen its high-value diagnostic portfolio by expanding super-speciality and integrated testing solutions. The Company has established dedicated specialty verticals, including Genevolve for genomics, L-CoRD (Dr. Lal PathLabs Centre of Excellence for Reproductive Diagnostics) for reproductive diagnostics and L-ACE (Dr Lal PathLabs Autoimmune Centre for Excellence) for autoimmune disorders, while further enhancing the Swasthfit platform to deliver comprehensive preventive healthcare solutions.

The Company is advancing its capabilities in oncology, genomics and complex infectious disease diagnostics. Dr. Lal PathLabs is investing in advanced laboratories and partnering with global technology leaders to build state-of-the-art testing facilities, strengthening its position as a leader in specialised diagnostic services.

• Launch of Personalised Preventive Healthcare Platform – Sovaaka: The Company launched Sovaaka, a personalised preventive healthcare platform, marking a strategic entry into science-based disease prevention. Sovaaka enables the Company to enter the premium preventive healthcare segment by offering personalised wellness solutions supported by advanced diagnostics, Artificial Intelligence-enabled imaging and curated health programmes. Built on the philosophy of "science behind wellness", the platform provides deeper health insights and comprehensive care. This initiative strengthens the Companys presence in the preventive healthcare space and helps capture the growing demand for personalised, wellness-focused diagnostic services.

• Leveraging Digital and Technology Capabilities: The Company is focused on building a technology-driven and patient-centric healthcare ecosystem by strengthening its digital capabilities, adopting Artificial Intelligence (AI) solutions and developing scalable infrastructure. These efforts are improving patient engagement and operational efficiency through unified digital platforms, real-time services and AI-powered automation, thereby enhancing conversions and reducing manual intervention. The Company is also investing in next-generation Information Technology (IT) infrastructure and hybrid cloud architecture to enable faster, secure and AI-ready operations, while driving growth through AI-powered hyperlocal Search Engine Optimisation (SEO) and a unified omnichannel engagement platform to deliver a seamless patient experience.

Consolidated Financial Performance

Region-wise Revenue Breakup

Particulars	FY 2026	FY 2025
Delhi NCR	31	31
Uttar Pradesh & Uttarakhand	19	19
Rest of North India	13	13
East India	15	14
West	14	15
South	6	6
Others	2	2
Total	100	100

The Companys regional revenue/operational mix remained broadly stable between FY 2026 and FY 2025, with only marginal shifts across geographies. Delhi NCR region remained the largest contributor at 31% in both FY 2026 and FY 2025, followed by Uttar Pradesh & Uttarakhand at 19% each year, reflecting consistent strength in North India. On the operational front, the Company successfully executed its annual expansion plan, adding 14 new laboratories (net) and over 1,100 collection centres during FY 2026.

The rest of North India also remained unchanged at 13%, while South and Others maintained stable shares of 6% and 2%, respectively, across both years. The East India region showed a slight increase to 15% in FY 2026 from 14% in FY 2025, whereas West India witnessed a marginal decline to 14% from 15% over the same period. Overall, the Companys geographic distribution highlights a largely steady presence across regions with only minor rebalancing between the East and West markets.

Financial Performance Review

Particulars	FY 2026	FY 2025	YoY (%)
Revenue	27,629	24,614	12.2%
EBITDA*	7,825	6,956	12.5%
PBT*	6,992	6,247	11.9%
PAT	5,098	4,922	3.6%

(*) Excluding one-time impact of Labour Code

The Company reported 12.2% revenue growth in FY 2026, a 44% return on capital employed^, declared a 280% dividend for FY 2026 and holds a stable AA+ credit rating, reflecting its operational strength and leadership in one of Indias fastest-growing healthcare segments.

(^) Excluding cash & investments (#) Adjusted for Bonus Issue

Revenue

The Company reported consolidated revenue of 27,629 million in FY 2026, up from 24,614 million in FY 2025, reflecting a 12.2% year-on-year growth.

Costs

The Companys key cost components include reagent and chemical expenses, personnel costs, fees to collection centres, logistics, information technology and infrastructure. Dr. Lal PathLabs continues to focus on effective cost management as a key priority to maintain operational efficiency and support sustainable growth.

EBITDA

The Company reported Operating Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) of 7,825 million (excluding one-time impact of Rs.301 million pursuant to Labour Code) for the reporting year, up from 6,956 million in FY 2025, reflecting 12.5% growth.

PBT and PAT

The Company reported Profit before Tax (PBT) of 6,992 million (excluding one-time impact of Rs.301 million pursuant to Labour Code) in FY 2026, up from 6,247 million in FY 2025, reflecting a 11.9% growth. Dr. Lal PathLabs reported Profit after Tax (PAT) of 5,098 million in FY 2026, as against 4,922 million in FY 2025, registering a growth of 3.6% .

Cash and bank

The Company reported cash and cash equivalents of 15,262 million in the reporting year, compared to 12,295 million in FY 2025.

Revenue Metrics Overview

Particulars	FY 2026	FY 2025
Patients (Mn)	30	29
Samples (Mn)	95	86
Revenue per patient ( )	912	855
Test per patient (units)	3.1	3.0

In FY 2026, the Company has 30 million patient visits, compared to 29 million in FY 2025. The total number of samples processed was 95 million, up from 86 million in the previous year. Revenue per patient increased to 912, compared with 855 in FY 2025. These figures reflect the Companys continued growth and expanding reach in its healthcare services.

Significant changes in Key Financial Ratios

Particulars	FY 2026	FY 2025	% Variance	Reason for Variance
Debtors turnover (times)	27.8	29.7	-6.5	-
Inventory turnover (times)	13.4	13.1	2.0	-
Interest coverage ratio (times)	30.3	29.0	4.6	-
Current ratio (times)	3.5	3.4	2.6	-
Debt equity ratio (times)	0.08	0.07	9.5	-
EBITDA Margin (%) *	28.3	28.3	-	-
Net profit Margin (%)	18.4	20.0	-7.7	-

(*) Excluding one-time impact of Labour Code

The debtors turnover ratio improved to 27.8 times in FY 2026, from 29.7 times in FY 2025, a 6.5% decrease. Similarly, the inventory turnover ratio stood at 13.4 times, changed from the previous year at 13.1, reflecting a marginal 2% growth.

The Companys interest coverage ratio was 30.3 times in FY 2026, up from 29 times in FY 2025, representing a 4.6% improvement. The current ratio stood at 3.5 times, compared with 3.4 times in the previous year, indicating that the Companys liquidity position remained strong. With a debt-to-equity ratio of 0.08 in FY 2026 and 0.07 in FY 2025, the Company continued to demonstrate a strong balance sheet, supported by a conservative capital structure and sound financial discipline.

EBITDA margin stood at 28.3% in FY 2026, same as FY 2025. The net profit margin was reported at 18.4%, down from 20% in the previous year with 7.7% decline.

Human Resource (HR)

Dr. Lal PathLabs believes that its skilled and experienced professionals play a crucial role in driving long-term growth. The Company had a workforce of over 6,200 employees at the group level in FY 2026 and remained committed to promoting a positive, safe and engaging workplace environment. Dr. Lal PathLabs also focused on learning and development initiatives to help employees enhance their skills, improve capabilities and stay aligned with evolving industry requirements.

The Company promoted a safe and equitable workplace by strengthening inclusive hiring initiatives through the Screening and Management of At-Risk Individuals for Targeted and Preventive Health Action (SAMATVA) programme and onboarding persons with disabilities with tailored support. Dr. Lal PathLabs conducted sensitisation sessions to enhance awareness and support an inclusive work environment.

Dr. Lal PathLabs continued to prioritise learning and development by offering structured programmes across behavioural, technical, compliance, leadership and induction areas. The Company strengthened employee onboarding through initiatives such as Aarambh and Parichay, helping new employees integrate smoothly and perform effectively in their roles. Dr. Lal PathLabs enhanced leadership capabilities through programmes such as LEAP (Leadership Enhancement and Assessment Programme) and the Frontline Leadership Impact Programme (FLIP). The Company also focused on improving technical and functional skills through the Employee Development for Growth and Excellence (EDGE) and Holistic Upskilling for New Age Roles (HUNAR) programs. Dr. Lal PathLabs further supported practical learning through Medical Next (MedNxt) and Project Nurturing Excellence and Enhancing Development (PROJECT NEEV), helping employees build role-specific competencies across the organisation.

The Company also strengthened employee engagement and well-being initiatives during the year. Dr. Lal PathLabs introduced Recognising Inspirational & Stellar Efforts (RISE) to recognise and celebrate employee contributions. The Company organised Employee Experience Clubs and health check-up camps to support employee health and engagement. Dr. Lal PathLabs launched the 1-to-1 Help Employee Assistance Programme to provide support for emotional and mental well-being. The Company also improved the employee experience through digital HR initiatives, such as implementing a unified Human Resource Information System (HRIS), adopting paperless onboarding and utilising AI-enabled engagement tools, thereby supporting a more connected, inclusive workplace.

Quality and Innovation

The Companys quality framework is driven primarily by a robust Internal Quality Management System. The system ensures strict adherence to quality processes throughout the entire testing phase from sample collection to processing and reporting. Implementation of Standardised operating procedures across all labs and the network and multi-level checks further supports accuracy, consistency and reliability across the diagnostic value chain. Further, the proprietary Real-time Internal Quality Control Monitoring process has a strong focus on patient safety. During FY 2026, the Company launched 136 new tests, including 13 first-time introductions in India, reflecting its continued focus on innovation and advanced diagnostic capabilities.

While the Company remains compliant with global standards and benchmarks such as the National Accreditation Board for Testing and Calibration Laboratories (NABL) and the College of American Pathologists (CAP), its core strength lies in its internally governed, robust quality architecture. This is complemented by a strong technology-led innovation focus, including early adoption of automation and AI-enabled diagnostics. These initiatives have enhanced precision, turnaround time and scalability, while digital platforms have improved transparency and patient convenience. Together, these internal systems and innovations create a tightly controlled, technology-driven ecosystem that strengthens diagnostic integrity and builds long-term patient trust.

Research & Development

Dr. Lal PathLabs continued to strengthen its research and innovation capabilities during FY 2026 with a focus on its commitment to sustainable advancing diagnostic science and improving patient outcomes. The Company undertook more than 35 internal research projects across its national and regional laboratories, including genomics, pathology, microbiology and preventive healthcare. These projects are being carried out under approved ethical and scientific research frameworks.

The Company also expanded collaborations with leading academic institutions, research centres and healthcare organisations to support translational research and the development of advanced diagnostic solutions. Key initiatives included research programs in genetics, microbiome studies, immunology, renal pathology and liver disease diagnostics, as wellasthedevelopmentof learning-based models to improve diagnostic interpretation and clinical decision-making.

In addition, Dr. Lal PathLabs continued to work closely with health-tech startups and innovation partners to explore emerging diagnostic technologies and digital healthcare solutions. Through these initiatives, the Company aims to strengthen its capabilities in specialised diagnostics, enhance operational efficiency and support the delivery of accurate, accessible and technology-driven healthcare services across India.

Environment, Social and Governance

Dr. Lal PathLabs continued to strengthen its Environmental, Social and Governance (ESG) framework by implementing multiple sustainability and operational improvement initiatives during FY 2026. The Company has 3.22 MW solar power system across its operations to increase the use of renewable energy and reduce dependence on conventional power sources. This transition towards clean energy contributed to a reduction of approximately 1.6 million Kgs of CO2 emissions, reflectingthe

Companys commitment to lowering its carbon footprint and supporting climate change mitigation efforts.

Dr. Lal PathLabs further adopted biodegradable bags for sample collection to minimise plastic waste and encourage sustainable packaging practices. In addition, the Company installed inverter air conditioners using R32 refrigerant, which has a lower environmental impact, supports ozone layer conservation and improves energy efficiency while reducing overall power consumption. Dr. Lal PathLabs ensured that all laboratories are equipped with Effluent Treatment Plants (ETPs) to facilitate proper wastewater treatment, enabling responsible disposal of laboratory waste and ensuring compliance with environmental norms and regulatory requirements.

Dr. Lal PathLabs also undertook the descaling of the diesel generator set radiators to reduce emissions. The Company furtherenhancedequipmentefficiency through this initiative while also contributing to a cleaner, healthier environment. Dr. Lal PathLabscontinuedto growth, environmental responsibility and operational excellence through these efforts. Dr. Lal PathLabs enhanced its social responsibility initiatives by conducting 56,710 hours of training focused on skill development, compliance, safety and professional growth. The Company supported workforce development and enhanced organisational capabilities through these initiatives.

Data Privacy

Data Privacy and Protection

Dr. Lal PathLabs considers the privacy and protection of patient and organisational data as a critical aspect of its operations. The Company has established a comprehensive information security framework to ensure the confidentiality, integrity and secure handling of sensitive data across its systems. Robust data protection controls have been implemented to prevent unauthorised access, data leakage and misuse of critical information. In addition, structured data classification, encryption and access management mechanisms help ensure that sensitive data is appropriately categorised, secured and accessible only to authorised personnel, thereby strengthening enterprise-wide data governance.

Threat Detection and System Security

Dr. Lal PathLabs has implemented next-generation cyber technologies such as SASE (Secure Access Service Edge), EDR (Endpoint Detection & Response) and Cloud Native SIEM/SOAR platforms to enhance AI-driven threat analytics and automated incident response capabilities against evolving cyber threats. Advanced monitoring systems continuously assess vulnerabilities, suspicious activities and external threats across the IT environment, enabling proactive risk identificationand timely mitigation to maintain the resilience and security of digital infrastructure.

Software Security

Dr. Lal PathLabs conducts periodic review of application and cloud security, including Vulnerability Assessment and Penetration Testing of IT applications, systems and cloud infrastructure. The Company also conducts periodic secure code reviews, architecture assessments and configuration reviews of mission-critical systems to strengthen software security and operational resilience.

Security Operations and Incident Management

Dr. Lal PathLabs operates a centralised security operations framework that enables round-the-clock monitoring of systems and networks. This framework facilitates timely detection, assessment and response to cybersecurity incidents. Defined incident management and recovery protocols further support business continuity and help minimise operational disruption arising from potential security events.

Employee Awareness and Training

Dr. Lal PathLabs conducts regular training programmes to strengthen employee awareness of information security practices. These programmes focus on secure data handling, threat identification and adherence to internal protocols, encouraging a culture of accountability and vigilance across the organisation.

Company Outlook

Dr. Lal PathLabs is positioned with sustained growth visibility, supported by a deepening diagnostic ecosystem, an expanding digital-enabled network and a strong balance sheet. The Company expects steady revenue growth, driven primarily by higher test volumes, improved patient throughput and an increasing contribution from premium and preventive diagnostics. As the expanded infrastructure base continues to mature, newer labs and collection centres are expected to contribute more meaningfully to revenue growth. Tier 3 and emerging markets are expected to evolve into stronger demand drivers, supported by rising adoption of preventive health screening and wellness-led diagnostics. Established regions such as Delhi NCR are expected to continue delivering steady, high-quality growth, while western markets are expected to gradually stabilise and strengthen as integration benefits from recent acquisitions flow through. Going forward, the Company may continue to evaluate selective inorganic opportunities, including mergers and acquisitions, as a strategic lever to establish presence, accelerate scale-up and improve market penetration in regions with relatively lower brand salience. The Company may also explore opportunities for international expansion in identified geographies to diversify growth avenues, strengthen its diagnostic capabilities and extend its reach across adjacent markets. The Company is expected to further accelerate its transition towards precision diagnostics, preventive healthcare and AI-enabled wellness platforms, enabling earlier disease detection and more personalised health insights. These evolving capabilities are expected to play an increasing role in strengthening patient engagement and improving lifetime value per customer.

Risks and Concerns

Risk Category	Risk description	Mitigation strategy
Economic risk	Economic risk refers to the potential for financial loss arising from changes in market conditions, interest rates, inflation, currency movements and broader macroeconomic factors. Dr. Lal PathLabs remains exposed to such risks, as fluctuations in key economic parameters and inflation levels may affect operational efficiency. In addition, changes in government policies could also influence the Companys overall business performance.	Dr. Lal PathLabs continuously monitors economic factors to manage potential disruptions and protect its growth trajectory. The Company also retains the flexibility to pass on a portion of inflationary cost increases to customers, helping to mitigate the impact on profit margins
Competition risk Technology risk	Competition risk arises from the presence of multiple players in the diagnostics industry, which may affect market share, pricing power and profitability. Dr. Lal PathLabs operates in a largely unorganised market, where low entry barriers for small laboratories enable new players to enter easily and offer competitive pricing, which may challenge the Companys market position and growth. Technology risk refers to the potential challenges and disruptions arising from rapidly evolving technologies and system failures, which may impact operational efficiency and overall business performance.	Dr. Lal PathLabs prioritizes expanding its presence to sustain a leading position in the industry. Additionally, to capitalize on growth and expansion opportunities, it consistently invests in maintaining high-quality standards and delivering strong performance. Dr. Lal PathLabs focuses on adopting advanced technologies to maintain resilient and competitive operations in a rapidly evolving environment. The Company leverages technology to enhance operational efficiency and deliver faster, more accurate diagnostic results, while continuous innovation supports the management and mitigation of technology-related risks.
Cyber Risk	Cyber risk refers to the potential threats arising from cyber-attacks, data breaches, or unauthorized access to digital systems, which could compromise data security and affect business continuity and reputation.	Dr. Lal PathLabs remains focused on strengthening its digital infrastructure to safeguard against cyber threats. With increasing reliance on digital systems and data-driven processes, the Company prioritises data protection, system security and preventive measures to mitigate risks related to cyberattacks, data breaches and unauthorized access.
People risk	People risk refers to the potential impact on the organization arising from talent gaps, employee turnover, skill shortages, or ineffective workforce management, which can affect productivity, operational efficiency and overall business performance.	Dr. Lal PathLabs focuses on retaining skilled professionals whose expertise is essential for addressing challenges and supporting sustainable growth. The Company promotes talent retention through competitive benefits, and a supportive work environment, while transparent practices and a collaborative culture further strengthen workforce stability.
Operational risk	Operational risk refers to potential losses or disruptions arising from inadequate processes, systems, or internal controls that may affect operational efficiency and continuity. Dr. Lal PathLabs faces such risks where lapses in testing procedures or human errors may adversely impact operations.	Dr. Lal PathLabs mitigates operational risks by standardising procedures and ensuring regular equipment maintenance. The presence of qualified staff and adoption of advanced technologies further strengthen the Companys ability to effectively manage operational risks.

Internal Control Systems and Their Adequacy

Dr. Lal PathLabs has implemented a robust internal controls framework. The Companys framework covers well-documented policies and procedures across both financial and operational areas. Dr. Lal PathLabs ensures accurate accounting records and provides confidence in the reliability of financial reporting The Company enables effective operational monitoring and safeguards assets against unauthorised use or loss. Dr. Lal PathLabs ensures adherence to all applicableregulations. influence the Companys

Auditors

During the 28^th Annual General Meeting held on June 30, 2022, the Members of the Company confirmed the reappointment of Deloitte Haskins & Sells as Statutory Auditors for a term of five years. Deloitte Haskins & Sells is a firmregistered with the Institute of Chartered Accountants of India under Registration No. 117366W/W 100018.

Cautionary Statement

The statements contained in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be regarded as "forward-looking statements" within the meaning of applicable . securities laws and regulations. These statements involve inherent uncertainties and actual results may differ materially from those expressed or implied. Several factors could performance, including global and domestic demand and supply conditions,pricesoffinished goods, availability and cost of input materials, cyclical demand and pricing in key markets, changes in government regulations and tax regimes and broader economic developments in India and other relevant geographies. Additionally, factors such as litigation and labour negotiations may also affect operations. The Company undertakes no obligation to publicly update, revise, or modify any forward-looking statements based on subsequent events, information, or developments.