Shares of Molbio Diagnostics Ltd. rose 3% on Monday, October 5, after Motilal Oswal initiated coverage with a "Buy" rating. The firm set a target price of ₹1,800, but sees a 70% upside in its bull case. The stock already doubled from its IPO price within 21 days of listing.

Motilal Oswal expects Molbio's revenue to grow at a 23% compounded annual growth rate (CAGR) over financial year 2026-29, driven by higher utilisation of its Truenat platform, expansion of its assay menu and growth in its digital pathology and imaging businesses.

By Gareema Bangad

Shares of Molbio Diagnostics Ltd. rose as much as 3% on Monday, October 5, as brokerage firm Motilal Oswal Financial Services initiated coverage on the recently listed diagnostics company with a "Buy" rating and a target price of ₹1,800.

The target implies a 19% upside from last Thursday's closing price of ₹1,513.10, as per their base case scenario.

However, the brokerage sees significantly higher potential in its bull-case scenario, with a target price of ₹2,575, implying an upside of about 70% from Friday's close. The scenario assumes faster sales growth, sharper margin expansion and a higher valuation multiple than its base case.

Molbio Diagnostics made its stock market debut on August 17, with shares listing at ₹980 on both the NSE and BSE, a 21.44% premium to the IPO price of ₹807. The issue comprised a ₹200-crore fresh issue and an offer for sale of 91.66 lakh shares. The stock, at the post-listing high of ₹1,686, had already doubled from its issue price within 21 days of listing.

Motilal Oswal expects Molbio's revenue to grow at a 23% compounded annual growth rate (CAGR) over financial year 2026-29, driven by higher utilisation of its TrueNat platform, expansion of its assay menu and growth in its digital pathology and imaging businesses.

The brokerage expects earnings before interest, tax, depreciation and amortisation (EBITDA) and profit after tax (PAT) to grow at 38% and 50% CAGR, respectively, over the same period.

Bull case target at ₹2,575

In its bull-case scenario, Motilal Oswal sees Molbio's target price rising to ₹2,575, assuming total sales grow at a 26% CAGR over FY26-29, along with 1,465 basis points of margin expansion and a 58% CAGR in earnings.

The brokerage applies a 50-times 12-month forward price-to-earnings multiple in this scenario, compared with 45 times in its base case.

In the base case, Motilal Oswal has assigned a 45-times 12-month forward price-to-earnings multiple, a 20% premium to its sector multiple of 36 times, citing Molbio's differentiated research-and-development-led business model and earnings growth potential.

It expects revenue to rise to around ₹2,700 crore by FY29, from ₹1,445.7 crore in FY26. EBITDA is projected to reach ₹840 crore, while PAT is estimated at ₹570 crore by FY29.

TrueNat remains key growth driver

TrueNat remains central to the Molbio thesis, Motilal Oswal wrote in its note. The portable, battery-operated molecular diagnostics platform contributed around 90% of FY26 revenue, and Motilal Oswal expects its revenue to grow at around 16% CAGR over FY26-29, supported by further device placements and higher utilisation of the existing installed base through additional indications.

The brokerage also expects the company's shift towards recurring test-kit sales to support growth. Truenat test kits accounted for around 72% of consolidated revenue in FY26, with the segment having grown at a 39% CAGR during FY24-26.

HPV, digital pathology to widen growth opportunity

Beyond tuberculosis (TB), Motilal Oswal sees HPV testing as an important opportunity to increase utilisation of the TrueNat installed base.

The brokerage also expects Molbio's expansion into digital pathology through OptraSCAN and imaging through Prognosys to broaden its addressable market. OptraSCAN's US commercialisation is a key opportunity, although the business is still at an early stage of commercialisation, according to the note.

However, Motilal Oswal has also identified dependence on government orders and elevated working capital as key risks to its thesis.

Analyst view and stock performance

All three analysts who cover the stock have a "buy" rating on it.

Motilal Oswal's target is the highest among the brokerages, with Jefferies at ₹1,600 and IIFL at ₹1,550.

Shares of Molbio Diagnostics are fluctuating between gains and losses on Monday, having recovered from the day's low to gain as much as 3% to make an intraday high of ₹1,558.3. The stock then gave up all of those gains to now trade 0.7% lower at ₹1,503.

Ahead of today's session, the stock had gained three days in a row, having gained 24% during this stretch.