Can Molbio Diagnostics IPO deliver long-term growth for high risk investors?

ET Intelligence Group: Molbio Diagnostics, a molecular diagnostics manufacturer, plans to raise ₹200 crore through a fresh issue for capital expenditure. It will also raise ₹740 crore through an offer for sale. The promoter group’s stake will fall to 43% after the IPO from 46.6%. The company operates six manufacturing facilities across India and serves customers in over 90 countries, including government health programmes, diagnostic laboratories, hospitals, and international healthcare organisations. Its top clients contribute over half of the revenue, signalling customer concentration. Given these factors, investors with high-risk appetite may consider the IPO for long-term.

Business

Incorporated in 2000, Molbio is engaged in research, development and manufacturing of diagnostic solutions for infectious and non-communicable diseases. Government and international aid agencies account for over four-fifth of its revenue.

It has developed ‘Truenat’ platform, a portable diagnostics system designed for resource-limited settings, offering accurate test results within an hour. It offers molecular testing solutions for over 30 diseases through 43 diagnostic assays and provides radiology, digital pathology, and breast health screening solutions through its subsidiaries and strategic collaborations.

Nearly 74% of the revenue comes from sale of test kits, out of which 70% comes from diagnostic test kits for Tuberculosis.
Read more: Molbio Diagnostics collects Rs 281 cr from anchor investors ahead of IPO
Financials
Revenue from operations rose 31.5% annually to ₹1,445.7 crore and net profit grew 40.2% annually to ₹164.1 crore between FY24 and FY26. Operating profit before interest, tax, depreciation and amortisation (Ebitda) rose 33.2% to ₹328.2 crore during the period. Ebitda margin grew to 22.6% in FY26 from 22% in FY24. In FY26, on a year-on-year basis, revenue jumped 41.7%, Ebitda rose 27.9% while net profit grew 18.4%.

Valuation

Considering the post-IPO equity and net profit for FY26, the company demands a price-earnings (P/E) multiple of upto 57. While it has no directly comparable listed peer in India, other healthcare diagnostics and medical device companies, including Poly Medicure, Dr. Lal PathLabs, Metropolis Healthcare, and Vijaya Diagnostic Centre, trade at P/E multiples between 54 and 81.