Diagnostics firms outpace market as investors bet on imaging-led growth

India’s diagnostics sector is even outpacing the buoyant stock market in terms of returns. The Indium Diagnostics Index (IDX), a benchmark that tracks six listed players, has surged roughly 63% over the past two years, trouncing the 24% gain in the BSE Sensex. And, over the past 12 months, even as the broader market slipped 3%, the index rose 7%.

Revenues and operating profits for the listed cohort—including Dr Lal PathLabs, Metropolis Healthcare, Thyrocare Technologies, Vijaya Diagnostic Centre, Krsnaa Diagnostics, and Suraksha Diagnostics—have been compounding at 11% and 12% annually, respectively, since 2023.

Two playbooks

The IDX report shows clear fault lines in how companies are positioning themselves.

Efficiency-first incumbents—Dr Lal PathLabs and Metropolis—have opted for steady expansion, maintaining high levels of capital efficiency. Dr Lal, in particular, generates the most revenue per unit of capital employed across the sector.

Growth-first challengers—Vijaya and Suraksha—derive nearly 40–50% of their revenues from imaging services such as radiology and advanced scans, compared with the pathology-heavy mix of older rivals.

Krsnaa has leaned even more heavily into imaging, with about half its revenue coming from that segment, even though government contracts stretch its receivables cycle.

Vijaya has established itself as the most profitable operator by margin, while Thyrocare leads on EBITDA (earnings before interest, taxes, depreciation, and amortisation) growth. The contrast suggests that no single model dominates; some firms win by scaling efficiently, others by expanding into capital-intensive segments with higher ticket sizes.

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Imaging is the new growth engine

The tilt toward radiology marks a significant structural shift. For decades, the industry was defined by high-volume, low-cost pathology testing. Imaging, by contrast, is more capital-intensive but allows for greater differentiation and pricing power.

Investors appear to be interested in both strategies. As of September 2025, diagnostics stocks outperform both operational profit and topline numbers of their companies, trading at an average of 28X of EBITDA growth and nine times the revenue growth, according to the IDX report. These are rich multiples even by healthcare standards, but the steadier trajectory of the last three quarters suggests the market is treating diagnostics as a durable growth story.

Private equity and strategic investors are also paying hefty premiums in transactions, nudging the players to secure assets. That dynamic has further reinforced confidence in public markets, where share prices have tracked steadily higher since April.

The divergence points to two emerging playbooks. Established players like Dr Lal and Metropolis Healthcare are sticking to an asset-light, efficiency-driven model, while newer entrants are betting on capital-intensive imaging services to power faster growth. The market is paying up for both approaches, convinced that India’s appetite for healthcare diagnostics will keep rising.