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

Molbio Diagnostics, a molecular diagnostics company founded in 2000, is set to launch an IPO to raise capital for expansion. The company plans to issue ₹200 crore through a fresh issue and ₹740 crore via an offer for sale, reducing its promoter group's stake to 43% from 46.6%. Molbio operates six manufacturing facilities across India and serves clients in over 90 countries, with nearly 74% of its revenue coming from the sale of test kits, with a significant portion attributed to Tuberculosis diagnostics.

The company's success is heavily concentrated among its top clients, which account for over half of its revenue. Given this high customer concentration, the IPO may appeal to investors with a high-risk tolerance, looking for long-term growth potential. Molbio's Truenat platform, a portable diagnostics system for resource-limited settings, offers accurate test results within an hour and provides molecular testing solutions for over 30 diseases through 43 diagnostic assays.

Financially, Molbio has shown impressive growth, with revenue from operations increasing by 31.5% annually to ₹1,445.7 crore and net profit growing by 40.2% annually to ₹164.1 crore between FY24 and FY26. Ebitda also rose by 33.2% to ₹328.2 crore during the same period, with an Ebitda margin of 22.6% in FY26. Despite having no direct listed peers in India, Molbio's valuation suggests a price-earnings (P/E) multiple of up to 57, placing it within the range of 54 to 81 observed in other healthcare diagnostics and medical device companies.