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MOLBIO DIAGNOSTICS LIMITED

Molbio Diagnostics Limited - Related Party Transactions

Introduction

Based on the RHP (Red Herring Prospectus) dated August 3, 2026, and subsequent filings, here are the “Related Party Transactions” (RPT) details of Molbio Diagnostics Limited.

Business Model Operations

Business Model: Molbio operates as an innovative point-of-care (POC) diagnostics company. Its model is based on the 'Truenat' platform, which uses a "razor and blade" strategy: selling workstations (devices) that then generate recurring revenue from the sale of proprietary test kits.


Advances from Customers: Yes, the Company receives advances. As of March 31, 2026, contract liabilities included ₹77.55 million in advances from customers.


Comparable Peers: The Company states there are no directly comparable listed companies in India or globally. However, it identifies Poly Medicure Limited, Dr. Lal Pathlabs Limited, Metropolis Healthcare Limited, and Vijaya Diagnostics Centre Limited as its nearest listed peers for reference.


Raw Materials: Key materials include enzymes, primers, probes, electronic components, substrates, and chips.


Sourcing of Raw Materials: Materials are sourced both domestically and internationally. Imports accounted for 42.01% of total raw material and component consumption in Fiscal 2026, up from 33.94% in Fiscal 2025.


Price Volatility: There is inherent risk in price volatility; the Company typically procures materials through individual purchase orders rather than long-term fixed-price contracts, making it susceptible to market fluctuations.


Key Raw Material Vendors: Major suppliers include Elin Electronics Limited, Stanley Engineered Fastening India Private Limited, Danlaw Technologies India Limited, and Cyient Dlm Limited.


Factors Affecting Business: Key factors include the volume of test kits sold, government spending on public healthcare programs (which accounts for over 80% of revenue), R&D success, and the ability to maintain high-capacity utilization.


Competitive & Regulatory Landscape: The industry is highly regulated under the Medical Devices Rules, 2017, and the Drugs and Cosmetics Act, 1940. It is characterized by rapid technological changes and competition from both global molecular diagnostic firms and local pathology service providers.


Total Addressable Market (TAM): The global POC testing (POCT) market was valued at USD 29.3 billion in 2025 and is projected to reach USD 67.1 billion by 2030.


Growth Plans & Government Intervention: The Company plans to expand its test menu, increase geographic presence, and set up a Center of Excellence using IPO proceeds. There is high government intervention as 84.56% of Fiscal 2026 revenue came from sales to Indian central/state governments and international aid agencies.


Management Commentary on Industry Trends: Management views the transition from traditional smear tests for TB to molecular diagnostics as a global structural shift that presents a significant recurring revenue opportunity.

Financial Performance Health

Balance Sheet Health: The Company’s total assets grew from ₹12,210.56 million in 2024 to ₹21,484.24 million in 2026. However, total liabilities also increased significantly to ₹8,396.48 million in 2026, primarily due to new borrowings. The Gearing Ratio was 6.63% in Fiscal 2026.


Operating Cashflows: Net cash flows from operating activities were ₹503.85 million in Fiscal 2026, a significant drop from ₹2,871.03 million in Fiscal 2025, primarily due to a large increase in trade receivables.


Customer Concentration: The Company has high concentration; the top 10 customers accounted for 83.26% of revenue from finished goods in Fiscal 2026.


Domestic vs. Exports: In Fiscal 2026, India contributed 90.38% (₹13,066.43 million) of revenue, while Exports (Outside India) contributed 9.62% (₹1,390.44 million).


Total Debt (Last 3 Years): Total outstanding borrowings as of March 31 were: ₹4,126.38 million (2026), ₹1,231.63 million (2025), and ₹1,745.77 million (2024).


Capital Expenditure (Last 3 Years): CapEx incurred was ₹630.85 million (2026), ₹857.48 million (2025), and ₹143.63 million (2024).


Return on Capital (ROCE): ROCE was 17.55% (2026), 20.98% (2025), and 15.80% (2024).


Asset Turnover (Last 3 Years): Based on Revenue / Total Assets: 0.67x (2026), 0.70x (2025), and 0.69x (2024).


Sales, EBITDA, and PAT Trends: All three metrics are consistently increasing. Sales grew from ₹8,365.61 million to ₹14,456.87 million; EBITDA grew from ₹1,850.93 million to ₹3,282.43 million; and PAT grew from ₹835.42 million to ₹1,641.40 million.


Margins: EBITDA margins were 22.56% (2026), 24.97% (2025), and 22.02% (2024). Net profit margins were 11.28% (2026), 13.48% (2025), and 9.94% (2024).


Breakdown of Increase: Growth is driven by volume increases in 'Truenat' test kits, which rose from 8.80 million units in 2024 to 17.56 million units in 2026, as the installed base of devices expanded.


Free Cash Flow and EBITDA Conversion Table (₹ million)


Analysis: The conversion % is not consistently increasing; it spiked in 2025 due to a major receivable collection but dropped sharply in 2026 as receivables grew again.

Risks Management Outlook

Debtors Age Analysis: As of March 31, 2026, ₹3,216.08 million of undisputed trade receivables were outstanding for less than 6 months, while ₹186.71 million were outstanding for more than 3 years.


Legal Cases: There are 11 tax proceedings against the Company involving ₹507.81 million and 1 tax proceeding against Promoters involving ₹46.03 million.


Key Risks: Major risks include high dependence on a single product (TB kits), heavy concentration on government customers, and the risk that R&D investments may not yield commercially viable products.


Red Flags:

  1. Auditor Disclaimer (2024): Statutory auditors issued a disclaimer of opinion on internal financial controls in Fiscal 2024.
  2. Fraud Incidents: A former employee of Bigtec misappropriated ₹6.09 million, and the Company suffered external cyber fraud of ₹4.43 million.
  3. Statutory Dues: There have been serious delays in remitting provident fund and ESIC dues, some exceeding six months.
  4. Asset Records: CARO observations noted that PPE records were maintained for groups of assets rather than individual items.

Disclaimer

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