Indium Diagnostics Valuation Update - March 2024

Welcome to Indium Capital’s Quarterly update on Diagnostics Valuations in India. The key highlights are summarized below.

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Indian Diagnostics Valuation Trends - Executive Summary

• The valuations of Listed Diagnostics Players (tracked via Indium Diagnostics Index - IDX) have started growing in the last 12 months after a period of correction and stabilization in 2022 & early 2023 (~30% growth in IDX in the last 12 months vs. ~26% in BSE Sensex) – see Charts 1 & 2
• Revenue is on an uptrend (Non-Covid) over the last 2 years (Q3 Revenue lower for all players due to regular business seasonality): ~14% CAGR over 2 years?– see Charts 3 & 4
• EBITDA has been volatile and only grown at ~3% CAGR over the last 2 years due to Covid Revenue drop, business seasonality, etc. – see Charts 5
• Current average EV/Revenue & EV/EBITDA multiples are at ~7x and ~26x respectively (basis TTM Revenue and EBITDA). However, there is high volatility in valuations across individual Diagnostics Players over the last 4 quarters?– see Chart 6

IDX stock-wise 5-year market cap performance (Chart 1)

IDX stock-wise 1-year market cap performance (Chart 2)

Combined Diagnostics Players' Financial Performance in the last 2 years (Chart 3, 4 & 5)

• Non-Covid Revenue is on an uptrend except for a slight fall in Q3 (owing to business seasonality): ~14% CAGR over 2 years
• However, overall Revenue has been volatile (~5% CAGR over 2 years) due to a drop-off in Covid Revenue from Q1 FY23
• EBITDA has been volatile and only grown at ~3% CAGR over 2 years due to Covid Revenue drop, business seasonality, etc.

Diagnostics Players' Multiples Trend - Last 4 quarters (Chart 6)

• While the average EV/Revenue and EV/EBITDA multiples are at ~7x and ~26x today, there is a wide variation and volatility in multiples across all players: ~30-70% deviation just in the last 4 quarters

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