Motilal Oswal initiates coverage on Molbio Diagnostics stock with Buy, sees 21% upside. Here's why

Motilal Oswal Financial Services has initiated coverage on Molbio Diagnostics with a 'Buy' rating and a target price of Rs 1,800, implying a potential upside of 21% from its current market price. The brokerage believes the diagnostics company is well placed to benefit from the expansion of decentralised molecular diagnostics, with its Truenat platform at the centre of the growth story.


Molbio has built its business around Truenat, a portable molecular testing platform that enables point-of-care testing with limited infrastructure. The platform has more than 12,500 devices across over 90 countries and offers 43 assays covering 30 diseases.


Why Truenat remains key to Molbio's growth

The biggest part of the thesis is not the sale of diagnostic devices, but the recurring revenue generated from test kits. Motilal Oswal said around 75% of Molbio's revenue comes from test kits, giving the company a consumables-led model.

"The device creates the installed base, while proprietary test kits monetize it creating a razor-blade model."

The brokerage said the same Truenat machine can support multiple diseases as the consumables change according to the test, while the company has another 34 assays in its pipeline. Lower utilisation of its devices and test kits also leaves room for growth without proportional additions to hardware.

Motilal Oswal expects Molbio's revenue to grow at a 23% CAGR over FY26-29, with operating leverage supporting a 50% CAGR in PAT during the period. The brokerage expects EBITDA margins to expand as test-kit utilisation rises.

Imaging and digital pathology add new growth engines

The growth story is also moving beyond Truenat. Through Prognosys, Molbio has entered digital imaging, including ultra-portable X-ray systems. Motilal Oswal sees a strategic fit between Prognosys and Truenat, with X-rays helping screen patients for TB and Truenat providing molecular confirmation.

The brokerage expects Prognosys revenue to grow at around 36% CAGR over FY26-29.

Molbio's expansion into digital pathology through OptraSCAN provides another growth opportunity, although the brokerage said the business remains at an early stage and profitability is not expected in FY27.

Valuation and risks

Motilal Oswal said successful diversification beyond TB, stronger international adoption and improving cash conversion could support a re-rating. However, dependence on government orders and elevated working capital remain key risks.

"We believe Molbio is well positioned to capture the opportunity in decentralized molecular diagnostics via its integrated Truenat ecosystem, combining proprietary molecular diagnostic devices with a recurring test-kit franchise."

The brokerage has assigned a 45x 12-month forward earnings multiple to arrive at its Rs 1,800 target price. It also sees a bull-case target of Rs 2,575 and a bear-case target of Rs 1,100.

With 12,500+ Truenat devices deployed across 90+ countries, 43 assays spanning 30 diseases and a USD 9.3 billion global POCT infectious-disease market growing at around 23% CAGR, Molbio has significant room for sustained growth.


Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here