Modern Diagnostics & Research Centre Ltd. IPO: Should You Apply or Not?

A quiet regional diagnostics player stepping into the public markets, Modern Diagnostic & Research Centre’s IPO is less about hype and more about whether steady execution and improving margins can translate into a scalable healthcare story.

Let's explore further:

Before the Deep Dive: What’s Working — and What Isn’t

Now that you’ve seen the snapshot, let’s unpack the full story behind these numbers and understand the business in context.

Industry Overview: Healthcare, Diagnostics & Imaging

India’s healthcare sector is in a clear expansion phase, valued at USD 216 billion in FY23 and projected to nearly double to USD 454 billion by FY28, implying a strong 16% CAGR. Diagnostics sits at the core of this growth, supported by rising preventive testing, insurance coverage, and increasing clinical dependence on early detection.

The Indian diagnostics market grew from ₹710 billion in 2020 to ₹981 billion in 2023 and is estimated to reach ₹1,055 billion in 2024, translating into a 10.4% CAGR over FY20–24. Pathology continues to anchor the industry with ~62% market share, driven by high-frequency routine and specialised blood tests that form the backbone of clinical diagnosis.

Radiology, however, is emerging as the fastest-growing segment as advanced imaging enables quicker and more accurate diagnosis, improving patient throughput and clinical outcomes. Between FY20–24, radiology is estimated to grow at an 11.5% CAGR versus 9.7% for pathology, with market revenues reaching ~₹407 billion and ~₹648 billion respectively by FY24.

The broader shift toward early diagnosis, rising chronic disease incidence, and deeper penetration of organised diagnostic chains position the diagnostics sector as one of the most structurally attractive sub-segments within Indian healthcare.

The Modern Diagnostic & Research Centre started in 2012 with a simple but focused idea: make reliable diagnostic services accessible at the neighbourhood level, not just inside large hospitals. The promoters set up a standalone diagnostic centre, at a time when most patients still depended on hospitals or scattered labs for routine testing.

In its early years, the company concentrated on building credibility by investing in essential pathology and radiology infrastructure, hiring trained technicians, and standardising reporting quality. As demand for organised diagnostics grew, MDRC expanded its service mix beyond routine tests into advanced imaging and specialised investigations, gradually evolving from a local diagnostic centre into an integrated diagnostics and research platform.

What the Company Does: Pathology & Radiology

Modern Diagnostic & Research Centre operates as an integrated diagnostics provider with a presence across both pathology and radiology. On the pathology side, it offers a wide range of routine, specialised, and preventive tests—covering biochemistry, haematology, immunology, and disease-specific panels that form the first line of clinical diagnosis. In radiology, the company provides imaging services such as X-rays, ultrasound, and advanced diagnostic scans, enabling faster and more accurate detection of medical conditions. Together, these two verticals allow MDRC to address high-volume routine testing as well as higher-value diagnostic imaging under one platform.

Business Model: Where the Money Comes From

The company follows a blended diagnostics model that combines direct patient billing with institutional partnerships, helping it balance volumes, pricing, and utilisation.

B2C (Direct-to-Patient)
This is the primary revenue engine. It includes walk-in patients and appointment-based consumers availing pathology tests, radiology scans, and preventive health check-up packages. Payments are largely out-of-pocket, with a growing share routed through insurance and TPAs. The B2C model benefits from high test frequency, repeat usage, and cross-selling between pathology and imaging, which improves per-patient realisation and equipment utilisation.

B2B (Institutional & Referral-Based)
On the B2B side, the company partners with hospitals, clinics, nursing homes, and individual doctors who outsource diagnostics instead of investing in in-house labs or imaging equipment. Revenue is generated through referral-based testing, revenue-sharing arrangements, and negotiated bulk pricing. In addition, MDRC services corporate and institutional clients for employee health check-ups and periodic screening programs. This segment provides steadier volumes, higher capacity utilisation, and better visibility, even though margins are typically lower than pure B2C.

Together, these channels create a diversified revenue mix—B2C drives margins and brand recall, while B2B adds scale, stability, and operating leverage. 

Revenue Bifurcation

The company has scaled volumes steadily, with the number of tests increasing from ~1.88 crore in FY23 to ~3.24 crore in FY25, alongside a consistent rise in patient count to ~13.7 lakh. This points to sustained demand and improving reach rather than one-off growth.

The revenue mix has shifted meaningfully toward B2B, which now accounts for ~60% as of June 2025, up from ~47% in FY23, indicating stronger institutional partnerships and better asset utilisation.

Pathology remains the core revenue driver at ~76–81% of revenue, while radiology continues to play a complementary, higher-value role. Overall, FY25 growth of ~10% reflects stable, execution-led expansion.

The company’s revenue is clearly Haryana-led, which contributes ~66% of revenue in the period ended June 2025 and ~68–76% over FY23–FY25, making it the single biggest driver of volumes and cash flows. This indicates deep penetration and strong institutional and patient relationships within the state rather than a scattered footprint.

Beyond Haryana, revenue is spread across Rajasthan, Uttar Pradesh, Jammu & Kashmir, West Bengal, Punjab, Assam, and Madhya Pradesh, each contributing low-to-mid single digits. Rajasthan and Uttar Pradesh consistently emerge as the next meaningful contributors, while other states add incremental scale without dominating the mix.

The business follows a hub-led regional model, with strong concentration in one primary state with selective presence across multiple others. This keeps operations focused and utilisation high, but also implies that future growth and risk diversification will depend on how effectively the company scales non-Haryana markets over time.

The financials show a clear turnaround and scale-up story. Revenues have grown steadily alongside a sharp improvement in profitability, with EBITDA margins expanding from losses in FY23 to over 23% in FY25 as operating leverage and capacity utilisation kicked in. Higher tests per patient point to better cross-selling and a more integrated diagnostics offering.

That said, the decline in average revenue per test suggests an increasing tilt toward B2B and volume-led growth, which can cap pricing power over time. While margins are currently moving in the right direction, sustaining them will depend on maintaining a healthy mix of higher-value radiology and specialised pathology alongside institutional volumes.

Peer Analysis

Modern Diagnostic & Research Centre sits in the mid-range among listed diagnostics peers, with revenues broadly comparable to Star Imaging but significantly smaller than Chandan Healthcare. Valuation-wise, it trades at a lower P/E than Chandan, reflecting its regional scale and shorter public track record, while being priced at a premium to Star Imaging.

On profitability, MDRC’s EBITDA and PAT margins are healthier than Chandan’s, indicating better operating efficiency at its current scale. However, Star Imaging remains the margin leader, suggesting higher pricing power or a more specialised service mix. Overall, MDRC appears reasonably valued for a regional diagnostics player, with upside linked to sustaining margins while scaling revenues.

Management + Promoters 

The company is promoted by Mr. Devendra Singh Yadav, along with Mrs. Deepali Yadav, Mrs. Asha Yadav, and Mr. Jitendra Singh, who have been associated with the business since its incorporation in 2012. The promoter group brings over a decade of hands-on experience in running diagnostic operations, spanning pathology, radiology, centre management, and doctor-led referral networks. This long operating history has helped the company scale volumes, improve utilisation, and execute a visible profitability turnaround in recent years.

Promoter shareholding stands at 99.99% pre-IPO, which will dilute to 72.85% post-IPO. Even after dilution, promoters retain a strong controlling stake, ensuring continuity in strategy and execution, while the public shareholding adds an extra layer of governance and market discipline as the company enters its next phase of growth.

Looking through LMVT:

Leadership: Promoters bring over a decade of operating experience and have delivered a clear margin turnaround, though execution remains heavily promoter-driven.

Moat: Built on regional relationships and efficient operations, the moat is functional but soft and largely replicable in a fragmented diagnostics market.

Valuation: At ~11x earnings, valuation appears reasonable versus peers, but sustaining margins will depend on service mix as B2B volumes increase.

Tailwinds: Structural growth in diagnostics, driven by preventive care and higher test intensity, supports steady demand.

Bottom line: A focused regional diagnostics player with improving financials, but without a strong moat, returns hinge on disciplined execution and expansion beyond its core markets.