Molbio Diagnostics
IPO Size: Rs. 940 cr
- Fresh Issue of Rs. 200 cr for Rs. 178 cr capex – Rs. 105 cr for R&D and Rs. 72 cr for automation at existing plants
- Offer for Sale (OFS) of Rs. 740 cr by Motilal PE (12.7% to drop to 11.5%), promoter (47% to drop to 43%), other individual investors (32% combined holding to reduce to 27% post IPO)
Price band: Rs. 768-807 per share
M cap: Rs. 9,300 cr, implying 10% dilution
IPO Date: Mon 10th Aug to Wed 12th Aug 2026, Listing Mon 17th Aug 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Goa-headquartered Diagnostics OEM
Molbio Diagnostics is a 26-year-old original equipment manufacturer (OEM) having developed Truenat, a patented battery-operated device for quick decentralised diagnosis of infectious and non-communicable diseases. Company has 6 manufacturing facilities in Goa, Bengaluru, Pune and Visakhapatnam, which are utilised for nearly half their capacity of 5,400 devices and 39 million test kits per annum.
Tied to Tuberculosis (TB) Testing
Company’s key customer are governments, private hospitals, diagnostics laboratories – with 15% of Rs. 1,500 cr topline derived from sale of device and 72% from recurring test kit. Truenat offers molecular testing for 30 diseases including tuberculosis (TB), HIV, hepatitis B & C, HPV, with 68% of revenue coming from TB test kits alone.
Molbio is been a beneficiary of Indian Government’s TB Mukt Bharat program, which has contributed to impressive volume growth, even as realisation of devices and testing kits is down 10% and 7% respectively since FY23. Sale of testing kits rose sharply in past 4 fiscals, with FY26 volume up 43% YoY to 17.6 million, at realization of Rs. 589 per kit and Rs. 8 lakh per device in FY26.
Healthy but Declining Margin, along with Stretched Working Capital
FY26 revenue grew Rs. 42% YoY to Rs. 1,446 cr, but EBITDA rose at a lower pace, of 23% YoY to Rs. 320 cr, implying an EBITDA margin contracting 340 bps YoY to 22.1%. While 22% EBITDA margin is healthy, it has contracted from 28% in FY24. FY26 PAT growth was slower than EBITDA, rising 18% YoY to Rs. 164 cr, translating into a net margin of 11.3% and an EPS of Rs. 14.8, on equity of Rs. 11.28 cr (face value Rs. 1 each).
Nearly 80% revenue is generated from Indian government (Central and State) leading to poor working capital management, with over 3 months of outstanding debtors and holding over 3+ months of inventory. No wonder, company’s RoE is in mid-teens, despite double-digit net margin.
Fully Priced
M cap of Rs. 9,300 cr leads to a PE multiple of 55x, on FY26 EPS of Rs. 14.8. On FY27E EPS of Rs.17, the current year PE multiple of 47.5x makes it fully valued, for RoE of 15%, huge dependance on Indian Government’s TB program and very high working capital needs of the business.
Medical device maker Poly Medicure, with Rs. 1,900 cr topline, stronger net margin of 17%, more diversified product and market geography, is ruling at a PE multiple of 50x with a mcap of Rs. 18,000 cr.
Thus, Molbio’s single digit net margin and key dependance on India’s TB testing make the IPO fully priced, even on relative basis. Comparison with diagnostic changes like Dr Lal, Metropolis, Vijaya, Krsna etc. is inappropriate as they are service business while Molbio is a manufacturer.
