Kavach Diagnostics Ltd.
Good business, full price — the growth is real but the multiple already assumes it continues.
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The issue
- Price band
- ₹1,240 – ₹1,305
- Lot size
- 11 shares
- Minimum
- ₹14,355
- Opens
- 02 Oct 2026
- Closes
- 07 Oct 2026
- Listing
- 10 Oct 2026 (tentative)
- Total size
- ₹2,600 crore
- Fresh issue
- ₹400 crore
- Offer for sale
- ₹2,200 crore
- Type
- Book built · Mainboard
₹2,200 crore of this issue is an offer for sale — that money goes to selling shareholders, not into the company.
What the business does
A diagnostics chain running 118 laboratories and about 2,900 collection centres, weighted to the west and south. Roughly 61% of revenue is from specialised tests rather than routine pathology, which is where the pricing power sits.
The company has grown collection centres at 19% a year for three years, largely on a franchise model that needs little of its own capital.
Three years of numbers
| ₹ crore unless stated | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue (₹ cr) | 1,476 | 1,782 | 2,104 |
| EBITDA (₹ cr) | 383 | 481 | 592 |
| EBITDA margin % | 25.9 | 27 | 28.1 |
| Net profit (₹ cr) | 191 | 248 | 318 |
| Return on capital % | 21.4 | 24.8 | 27.6 |
| Net debt / EBITDA | 0.3 | 0.1 | -0.2 |
What the fresh money is for
- ₹250 croreNew laboratories and equipment
- ₹150 croreGeneral corporate purposes
What you are paying
65x FY26 earnings at the upper band
| Comparison | Multiple | Margin |
|---|---|---|
| Listed peer A | 58x | 26.4% margin |
| Listed peer B | 49x | 23.9% margin |
| Kavach at ₹1,305 | 65x | 28.1% margin |
The best margin of the three and the highest multiple of the three. The premium is defensible on quality; it is not obviously cheap.
What could go wrong
- 85% of the issue is an offer for sale. Only ₹400 crore of ₹2,600 crore reaches the company.
- Diagnostics pricing is exposed to regulatory capping, which has been discussed for radiology and pathology more than once.
- The franchise model that drove centre growth also means less control over service quality as the network scales.
- At 65x, the multiple leaves little room if revenue growth slows from 18% to low teens.
Our view
This is a high-quality business — best-in-class margins, negative net debt, and returns on capital nearly 28%. None of that is in question.
The price is the question. At 65x FY26 earnings it carries a premium to both listed peers, and 85% of the money raised goes to existing shareholders rather than into growth. That is not a reason to avoid it, but it is a reason not to expect the listing to do the work. Neutral: we would rather own it after a quarter of trading than at the band.
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