Modern Diagnostic IPO Review: Best SME IPO in healthcare sector 2025

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18 hours ago

Table of Contents

Modern Diagnostic & Research Centre Ltd. is coming with a pure, fresh-issue SME IPO of 4,099,200 equity shares, aggregating up to about ₹36.89 crore on the BSE SME platform. The price band has been fixed at ₹85–₹90 per share with a face value of ₹10.

Key offer details:

IPO type:
The offer is classified as a BSE SME and is a 100% fresh issue without any OFS.
Issue size:
The issue size is approximately ₹36.89 crore, which will be raised through the sale of 40.99 lakh shares.
Price band:
The price band is ₹85–₹90 per equity share, with a face value of ₹10.
IPO opening date:
31 December 2025.
IPO closing date:
2 January 2026.
Tentative listing date:
January 7, 2026, on BSE SME.

For retail investors, the minimum lot size is large because the stock is an SME issue, making it suitable only for investors with higher risk appetites and adequate capital.

Modern Diagnostic IPO: Price Band, Lot Size, Allotment & Listing

Lot size:
1,600 shares per lot.
Minimum investment (retail):
- At ₹85:
  approx. ₹272,000 for 1,600 shares.
- At ₹90:
  approx. ₹288,000 for 1,600 shares.
Some sources also mention 3,200 shares (2 lots) as a practical minimum application size for retail, amounting to ₹2.72–₹2.88 lakh depending on the cut-off price.

Important dates for investors:

Bidding window:
31 December 2025–2 January 2026.
Basis of allotment:
expected around 5 January 2026.
Refund initiation & credit to demat:
one day after allotment (tentative).
Listing date on BSE SME:
7 January 2026 (tentative).

High‑net-worth investors (HNI/S‑HNI) need to apply for a minimum of 3 lots (4,800 shares), translating to an investment of approximately ₹4.08–₹4.32 lakh depending on the final price.

Modern Diagnostic IPO: Business Overview & Growth Drivers

Modern Diagnostic & Research Centre operates a chain of diagnostic centres providing pathology, imaging, and advanced radiology services such as MRI and CT scans, along with molecular diagnostics and home sample collection. The company runs about 21 facilities across 8 states, following a hub-and-spoke and asset‑light model to improve operating leverage and margins.

Key business features:

Service mix:
- Pathology and routine lab tests
- Radiology (3T MRI, CT scan, ultrasound, and X-ray)
- Molecular diagnostics and specialised tests
- The services include home collection and digital reporting.
Geographical presence:
Focus on North India and Tier‑II/Tier‑III cities with 21 facilities across 8 states, allowing strong regional brand recall.
Business model:
The business model involves a combination of owned centers and asset-light spoke centers, which feed volumes into central labs, thereby supporting scalability and margin expansion.

Demand for organised diagnostics in India is growing due to rising income, lifestyle diseases, preventive health checkups, and increasing health insurance coverage. This structural trend supports Modern Diagnostic’s expansion plan and provides a long runway for revenue and profit growth.

Modern Diagnostic IPO: Financial Performance & Margins

Revenue:
- FY2023:
  around ₹56.61 crore.
- FY2024:
  around ₹68.67 crore.
- FY2025:
  about ₹78.80 crore, implying ~15% year‑on‑year growth.
Profit after tax (PAT):
- FY2023:
  loss of around ₹5.73 crore.
- FY2024:
  PAT is about ₹5.79 crore.
- FY2025:
  The projected PAT for FY2025 is around ₹8.97 crore, representing a ~55% increase compared to the previous year.

Profitability and return ratios are strong for an SME healthcare issuer:

EBITDA margin:
approximately 23–24% in FY2025.
PAT margin:
around 11–13% in FY2025.
ROE:
about 55.21% as per FY2025 numbers.
ROCE:
around 36.18%.
Debt‑equity ratio:
The debt-equity ratio is about 1.07, indicating that the company has some leverage, which is not excessive for a growing services business.

The company has moved from losses in FY2023 to healthy profitability in FY2024–25, driven by higher volume, a better service mix, and operating leverage. This improvement is a key positive, but it also raises questions about the sustainability of margins post-IPO expansion.

Modern Diagnostic IPO: Use of IPO Proceeds & Strategy

A substantial portion of the fresh issue proceeds is expected to be deployed for funding expansion of diagnostic centres, purchase of advanced equipment, the repayment or prepayment of certain borrowings, and general corporate purposes. By reducing debt and investing in high‑margin tests and imaging equipment, Modern Diagnostic aims to strengthen balance sheet quality and enhance return ratios.

Planned strategic priorities:

Increasing coverage in Tier‑II and Tier‑III cities where organised diagnostics penetration is still low.
Scaling high‑value imaging and molecular diagnostics to improve average revenue per test.
Leveraging technology (digital reports, online booking, home collection) to retain and cross-sell to existing patients.

Modern Diagnostic IPO: Valuation, GMP & Listing Gain View:

Valuation Snapshot:

Various analysis platforms indicate:

FY2025 EPS:
around ₹8.15 (basic).
Net Asset Value (NAV):
about ₹18.84 per share.
ROE:
about 43–55% depending on the specific financial set considered.

At the upper price of ₹90, the price-to-book (P/BV) is around 4.7–4.8 times, which is on the higher side but partly justified by strong ROE and margin profile. The exact P/E multiple will depend on the final reported FY2025 earnings and the post-issue equity, but it seems to be in line with or slightly higher than that of some listed diagnostic peers when considering SME risk and smaller scale.

Modern Diagnostic IPO: Modern Diagnostic IPO GMP Today

Grey market premium (GMP) data for the issue is still evolving around the opening window, and early indications have been patchy, with some platforms yet to show a firm quote or indicating “–” in their tables. As GMP is unofficial, unregulated, and highly volatile, it should only be used as a sentiment indicator and never the primary reason to invest in the Modern Diagnostic IPO.

Factors that can support positive listing performance:

Strong ROE and margin profile compared to many SME issuers in other sectors.
Structural growth in diagnostics and preventive healthcare in India.
Turnaround from losses to consistent profitability over the last two years.

Factors that can cap listing gains:

A large minimum investment ticket size limits retail depth.
SMEs listed on the BSE typically have relatively lower liquidity compared to mainboard IPOs.
Execution risk in rapidly expanding a regional diagnostics network in a competitive market.

Modern Diagnostic IPO: Strengths, Risks & Should You Apply?

Key Strengths

High‑growth healthcare segment:
Diagnostics is an asset‑light, high‑margin business with secular growth and relatively steady demand, even in economic downturns.
Strong profitability metrics:
The company achieved a Return on Equity (ROE) of over 50%, EBITDA margins exceeding 23%, and a Profit After Tax (PAT) margin in double digits for the fiscal year 2025.
Turnaround story:
The company turned from losses in FY2023 to sustained profits in FY2024–25, indicating operational improvement and better cost control.
Integrated service suite:
Offering pathology, radiology, imaging, and molecular diagnostics under one roof strengthens patient stickiness and doctor referrals.

Modern Diagnostic IPO: Key Risks

SME liquidity risk:
BSE SME stocks often have lower volumes, wider spreads, and sharper price swings post‑listing, which may not suit conservative investors.
Concentration & competition:
Regional concentration and competition from large organized players and aggressive local labs may pressure pricing and margins over time.
High minimum application size:
Ticket sizes above ₹2.7 lakh per application restrict access to only higher-capacity retail/HNI investors, which can affect subscription profiles.
Regulatory & compliance risk:
Diagnostics is subject to healthcare regulations, accreditation norms, and periodic policy changes that can affect operations and costs.