Modern Diagnostic & Research Centre IPO Review: A Healthy Bet?

Modern Diagnostic & Research Centre IPO Review| Modern Diagnostic IPO GMP| Modern Diagnostic SME IPO| Modern Diagnostic Price Band| Healthcare SME IPOs 2026

Critical Dates & Details

Event	Date / Detail
IPO Open Date	December 31, 2025
IPO Close Date	January 2, 2026
Allotment Date	January 5, 2026
Listing Date	January 7, 2026 (Tentative)
Price Band	₹85 – ₹90 per share
Lot Size	1,600 Shares
Total Issue Size	₹36.89 Crores (Fresh Issue)
Listing Exchange	BSE SME

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1. Executive Summary

The Indian diagnostic sector has been a darling of investors post-pandemic, characterized by high margins and a shift from unorganized to organized players. Entering this competitive arena via the BSE SME platform is Modern Diagnostic & Research Centre Limited (MDRC).

Opening on December 31, 2025, this IPO aims to raise ₹36.89 Crores primarily to upgrade its technological infrastructure and manage working capital. With a price band of ₹85-₹90, the company is positioning itself as a cost-effective integrated player offering both pathology and radiology services.

This “Deep Dive” review will dissect the company’s turnaround financials (moving from losses to profit), its aggressive debt levels, and whether its valuation offers a margin of safety compared to industry giants like Dr. Lal PathLabs and Metropolis.

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2. Business Model: The Integrated Advantage

Core Operations

Modern Diagnostic & Research Centre (MDRC), established in 2012 (and tracing roots back to 1985), operates as a diagnostic chain offering a “One-Stop Solution” for patient needs. Unlike many competitors that focus solely on pathology (blood tests), MDRC has a robust integrated model:

1. Pathology Services: Includes biochemistry, immunology, hematology, molecular biology, and cytogenetics.
2. Radiology Services: This is a high-moat segment including MRI (Magnetic Resonance Imaging), CT Scans, Ultrasounds, X-Rays, and DEXA scans.
3. Cardiology & Neurology: Specialized tests like ECG, TMT (Treadmill Test), EEG, and EMG.

Network & Reach

As of the RHP filing, the company operates 21 centers across 8 states. This includes 18 laboratories and 3 comprehensive diagnostic centers. Their hub-and-spoke model allows them to collect samples from smaller centers (spokes) and process them at their main reference labs (hubs), optimizing logistics costs and turnaround times (TAT).

Customer Segments

• B2C (Business to Consumer): Direct walk-ins at centers and home collection services (an increasingly vital revenue stream).
• B2B (Business to Business): Partnerships with smaller hospitals, nursing homes, and corporate clients who outsource their testing needs to MDRC.

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3. Financial Deep Dive: Turnaround or Temporary?

The financial history of Modern Diagnostic paints a picture of a company that has recently turned a corner. Analyzing the last three fiscal years is crucial to understanding the stability of this SME.

Revenue Growth

• FY 2022: ₹60.58 Cr
• FY 2023: ₹56.61 Cr (Dip in revenue)
• FY 2024: ₹68.67 Cr (Significant recovery)
• H1 FY 2025 (Sep ’24): ₹40.33 Cr

The revenue trajectory shows volatility. The dip in FY23 is concerning and likely attributed to the normalization of Covid-19 testing volumes, a common trend across the industry. However, the bounce back in FY24 and the annualized run-rate for FY25 (projecting ~₹80 Cr+) suggests organic growth is returning.

Profitability Analysis

• FY 2022: Loss of (₹1.45 Cr)
• FY 2023: Loss of (₹5.73 Cr)
• FY 2024: Profit of ₹5.79 Cr
• H1 FY 2025: Profit of ₹4.96 Cr

Critical Observation: The company was loss-making until very recently. The turnaround in FY24 is sharp. H1 FY25 margins are even more impressive, with a PAT margin of roughly 12.2% (4.96/40.33). Investors must ask: Is this margin sustainable, or is it driven by one-off cost cuts? The sudden shift to profitability just before an IPO is a classic “window dressing” risk, though the H1 FY25 data supports the bullish case.

Balance Sheet Strength

• Total Borrowings (Debt): Rose from ₹15.31 Cr in FY23 to ₹21.13 Cr in H1 FY25.
• Debt-to-Equity Ratio: Stands at approximately 1.07 to 1.74 depending on the exact post-issue calculation. This is relatively high for a service company.
• Asset Base: Total assets have grown to ₹57.79 Cr, driven by investment in medical equipment.

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4. SWOT Analysis

Strengths

1. Integrated Portfolio: Offering Radiology (MRI/CT) alongside Pathology creates a higher barrier to entry than pure-play pathology labs. Radiology equipment is capital intensive, reducing local competition.
2. Turnaround Momentum: The company has demonstrated the ability to pivot from losses to healthy profits in the last 18 months.
3. Experienced Promoters: The leadership team (Yadav family) has decades of experience in the diagnostics field.

Weaknesses

1. Geographic Concentration: Despite presence in 8 states, a significant portion of revenue likely comes from their primary clusters (Delhi/NCR region).
2. High Debt: A Debt/Equity ratio over 1.5x (pre-IPO) is aggressive. A portion of IPO proceeds (₹4.5 Cr) is earmarked for repayment, but significant debt will remain.
3. History of Losses: The track record of profitability is short (only ~18 months).

Opportunities

1. Preventive Healthcare: Post-pandemic, the “wellness package” market is booming. MDRC can leverage its radiology capabilities to offer full-body checkups (including scans) which pure pathology players cannot offer in-house.
2. Tier-2/3 Expansion: Moving deeper into semi-urban areas where diagnostic penetration is low.

Threats

1. Pricing Wars: Online aggregators (like Tata 1mg, Pharmeasy) have commoditized basic blood tests, putting immense pressure on margins.
2. Regulatory Caps: Government intervention on pricing for essential tests remains a looming regulatory risk.
3. Obsolescence: Diagnostic equipment (MRI/CT) requires frequent, expensive upgrades.

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5. Peer Comparison & Valuation

Valuing an SME IPO requires comparing it to listed mainboard peers, adjusting for size and liquidity risks.

Comparable Peers:

• Dr. Lal PathLabs: P/E ~70x (Premium valuation due to scale/brand).
• Metropolis Healthcare: P/E ~55x.
• Krsnaa Diagnostics: P/E ~40x (Closest business model peer due to radiology focus).

Modern Diagnostic Valuation:

• EPS (FY24): ~₹5.27
• EPS (FY25 Annualized): ~₹12.00 (based on H1 EPS of ₹6.56, conservative estimate).
• P/E at Upper Band (₹90):
  • Based on FY24 EPS: 17.0x
  • Based on FY25 Annualized EPS: ~7.5x – 9x

Verdict: On an FY25 forward basis, a P/E of roughly 8-9x is extremely attractive compared to industry peers trading at 40x-70x. Even factoring in the “SME Discount” and liquidity risk, the pricing leaves significant money on the table for investors, assuming the H1 FY25 profit run-rate is genuine and sustainable.

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6. Grey Market Premium (GMP) Trends

Note: GMP is unregulated and speculative.

As of late December 2025, the Modern Diagnostic IPO GMP is reporting muted to flat activity.

• Current GMP: ₹0 – ₹5 (Est.)
• Estimated Listing Price: ₹90 – ₹95
• Listing Gain: ~0% – 5%

Analysis: The lack of aggressive GMP suggests the market is cautious about the company’s past losses and high debt. This is not a “listing pop” play but rather a fundamental value play.

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7. Conclusion: The “Deep Dive” Verdict

Modern Diagnostic & Research Centre presents a high-risk, high-reward proposition.

The Bull Case: You are buying a rapidly growing integrated diagnostic chain at a forward P/E of under 10x, in a sector where peers trade at 50x. If they maintain the FY25 margin profile, the stock could double in a year based on earnings growth alone.

The Bear Case: The company has a history of losses. If the recent profit surge is merely pre-IPO engineering or a temporary spike, and the debt burden becomes unmanageable, the stock could languish.

Recommendation:

• For Listing Gains: Avoid. The GMP does not indicate a strong debut.
• For Long Term: Subscribe with Caution. This is suitable only for high-risk investors who believe in the FY25 turnaround story. The valuation is cheap enough to buffer some downside risks.

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FAQ Section

1. Is Modern Diagnostic IPO a fresh issue or Offer for Sale (OFS)?

The IPO is entirely a Fresh Issue of 40.99 Lakh shares. There is no Offer for Sale, meaning all funds raised go into the company for growth and debt reduction.

2. What is the minimum investment for Retail investors?

The minimum lot size is 1,600 shares. At the upper price band of ₹90, the minimum investment is ₹1,44,000.

3. Where will Modern Diagnostic list?

It will list on the BSE SME platform. It is not a mainboard IPO.

4. What is the debt status of the company?

The company has total borrowings of approx. ₹21.13 Cr (as of Sep 2024). They plan to use ₹4.50 Cr from IPO proceeds to reduce this debt.

5. How do I check the allotment status?

The registrar is MUFG Intime India Pvt. Ltd. You can check the allotment status on their website or the BSE website on January 5, 2026.

Days	Anchor	QIB	NII	BNII(>10L)	SNII(<10L)	Retail	Total
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Subscription and GMP consider only of Open to Close

GMP Trend:

Days	GMP
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