India is dealing with a silent epidemic. As per a 2017 report from the Indian Council of Medical Research (ICMR), lifestyle diseases, also called Non-Communicable Diseases (NCDs), were responsible for 61.8% of total deaths in India in 2016. Other than NCDs, chronic illnesses are also a growing concern.
As per a report by The Lancet, out of around 19.97 million new cancer cases reported in 2022, 1.38 million were from India alone. The numbers have deteriorated as we battle pollution, sedentary lifestyles due to urbanisation, and high stress from work and social life, which has resulted in increased alcohol consumption.
Amid this epidemic, innovations in diagnosis are disrupting the healthcare sector. According to a report by the IMARC Group, the Indian diagnostic testing market reached USD 11.38 billion in 2024, with oncology and cardiology being the major contributors. The sector is expected to grow at a CAGR of 9.22% to reach USD 26.73 billion by 2033. Another report reveals that the total diagnostic services market is dominated by pathology services, which hold a 45% share, followed by radiology services with a 30% share.
With the increasing demand for preventive care measures across demographics, two companies poised for dominance are Dr Lal PathLabs and Thyrocare Technologies Ltd.
Two Small-Cap Diagnostic Companies Disrupting the Indian Healthcare Sector
Dr Lal PathLabs
With a customer base of over 28.8 million, more than 6,600 patient service centres, over 12,300 pickup points, and 290-plus labs, Dr Lal PathLabs has deep penetration across different tiers. Beyond domestic boundaries, the company has a presence in more than 23 countries. The company has also integrated with the Ayushman Bharat Digital Mission (ABDM), which enables it to register patients by capturing and verifying details from their ABHA (Ayushman Bharat Health Account) number.
Focusing on innovation, the company has recently become the first in the country to deploy a deep learning-based AI module to detect metastasis and micrometastasis in lymph node cancer.
The company has also recently added Illumina’s NovaSeq X to its genomics division. The system is capable of generating over 20,000 whole genomes annually to push the limits of genetic sequencing. Dr Lal PathLabs has also become the first company to introduce Amyloid Typing by Laser Capture Microdissection & Mass Spectrometry. The test is capable of detecting the organ in which misfolded and abnormal amyloid proteins are accumulated. The company has also added a range of cfDNA liquid biopsy tests.
Dr Lal Pathlabs has also outperformed its competitors when it comes to excellence. The company has received a 98% score in the College of American Pathologists (CAP) Proficiency Testing. CAP shows the test reliability and covers over 16 disciplines, such as haematology, microbiology, molecular diagnostics, and clinical chemistry. The company has also consistently received a high score in EQAS Performance Testing at 98.3% of Satellite Labs.
Dr Lal PathLabs is also contributing to Environmental, Social, and Governance (ESG) initiatives. The company has installed a 3.18 megawatt (MW) solar system across its facilities to generate green energy. It has also installed R32 refrigerant-operated inverter ACs to help conserve the ozone layer. All the labs of Dr Lal PathLabs are equipped with effluent treatment plants for wastewater treatment, and the company is also encouraging the use of electric bikes for sample collection.
Besides innovation, the company has also performed well in Q2 FY26. It posted a total revenue of ₹731 crore, up 9.1% quarter-on-quarter and 10.8% year-on-year. The net profit for the period stood at ₹152 crore, up from ₹131 crore in the same quarter of the previous financial year. Over the last ten years, the profit has grown at a CAGR of 18%.
The key positive from the financials is that Dr Lal PathLabs is almost a debt-free company. As of March 2025, its cash from operating activities stood at ₹569 crore, an increase of ₹34 crore compared to March 2024. The dividend yield also stood at 0.8%.
Dr Lal PathLabs 5-Year Financial Performance
| Particulars | FY21 | FY22 | FY23 | FY24 | FY25 |
| Sales (₹ in crores) | 1,581 | 2,087 | 2,017 | 2,227 | 2,461 |
| Operating Profit (₹ in crores) | 436 | 561 | 490 | 609 | 698 |
| Net Profit (₹ in crores) | 296 | 350 | 241 | 362 | 492 |
| EPS (₹) | 34.99 | 41.37 | 28.65 | 42.85 | 58.28 |
Dr Lal PathLabs’ share price surged by 13.5% in the last six months, 2.6% over the span of a year, and 34.7% in five years. In September 2025, promoter holding dropped slightly by 0.6%, while foreign institutional investors (FIIs) and domestic institutional investors increased their holdings by 0.2% and 0.6%, respectively.
Reasons to include Dr Lal Pathlabs are the growing demand for their SwasthFit preventive health packages and smooth home collection services that align with the rising consumer demand. Operationally, the company’s hub-and-spoke model helps in efficient sample logistics and faster turnaround times, while its digital interface supports instant booking, reporting, and CRM integration.
Thyrocare Technologies Ltd.
While still expanding its reach in smaller cities, Thyrocare Technologies currently has processing labs in 37 major cities across India and also has a global presence with branches in Tanzania. The company has the capability of processing over 1 lakh samples and has successfully processed more than 17 crore samples to date.
The key strength of the company is its network of over 10,000 active franchises, reflecting a 20% year-on-year growth. At present, it has a customer base of over 50 lakh patients, showing a 12% annual growth. Of the total samples collected by Thyrocare, 96% were processed at NABL-accredited labs.
To compete with Dr Lal PathLabs and other notable names in the industry, such as Agilus Diagnostics, the company has emphasised quality. The result? In Q2 FY26, complaints decreased by 67% year-over-year to 3.8 complaints per million tests.
To scale its operations, the company is continuously exploring partnerships with online diagnostic aggregators, healthcare platforms, insurance companies, and corporates for employee wellness programmes.
In the past, to expand its reach in Andhra Pradesh, Uttar Pradesh, Odisha, and Telangana, the company acquired the diagnostic and pathological services of the Vimta Lab. Another acquisition was Polo Labs, which has helped the company boost its presence in Northern India.
In Q2 FY26, the company reported revenue of ₹217 crores, up from ₹193 crores in the June quarter and ₹177 crores in Q2 FY25. The net profit for the period stood at ₹48 crores, representing a 26.3% quarter-on-quarter increase and an 84.61% year-on-year rise. Similar to Dr Lal PathLabs, Thyrocare has also managed to reduce its debt and is almost debt-free as of September 2025. Another positive not to overlook is that the company has maintained a healthy dividend payout of 135% and has reduced its working capital requirements from 17.1 days to 12.8 days.
Thyrocare Technologies 5-Year Financial Performance
| Particulars | FY21 | FY22 | FY23 | FY24 | FY25 |
| Sales (₹ in crores) | 495 | 589 | 527 | 572 | 687 |
| Operating Profit (₹ in crores) | 171 | 236 | 123 | 140 | 190 |
| Net Profit (₹ in crores) | 113 | 176 | 64 | 69 | 91 |
| EPS (₹) | 21.4 | 33.3 | 12.2 | 13.4 | 17.3 |
Thyrocare Technologies’ share price has increased by 59.13% over the past six months, while its one-year and five-year returns were 46.79% and 20.35%, respectively, indicating growing interest among traders and investors in recent times. FIIs have also increased their holdings in Thyrocare by 1.62% to 4.85% in the September quarter of FY26. However, the drawback is that 85.8% of the total promoter holdings are pledged.
Although the company’s sales growth in the past five years is down by 9.62%, and the return on equity stands at 13.9% over the last three years, the reason to include this company is its strong B2B network, deep automation-led diagnostic model, and access to a broader healthcare ecosystem post 66.1% stake acquisition by PharmEasy.
Dr Lal PathLabs vs Thyrocare Technologies vs Peers
A quick snapshot of the valuation of key names in the diagnostic sector..
| Company | Price-to-Earnings (P/B) Ratio | Book Value (₹ in crores) | Price-to-Book (P/B) Ratio |
| Dr Lal PathLabs | 49.2 | 260 | 12.1 |
| Thyrocare Technologies | 58.0 | 101 | 13.9 |
| Vijaya Diagnostics | 67.3 | 77.5 | 12.8 |
| Metropolis Healthcare | 67.1 | 257 | 7.67 |
| Krsnaa Diagnostics | 29.9 | 277 | 2.81 |
| Industry Median | 36.0 | NA | 7.08 |
Dr Lal PathLabs and Thyrocare Technologies are trading at premium valuations compared to industry median. Given the financials, this indicates investors’ confidence and brand value. However, Krsnaa Diagnostics, with the lowest PE and P/B ratios, appears relatively undervalued, suggesting possible re-rating. Among peers, Vijaya Diagnostics commands the highest P/E but also indicates limited margin of safety.
Key Takeaways for Investors
While the Indian diagnostic sector is poised for growth, companies in this segment are not without risks. Among the lakhs of diagnostic labs, many remain unaccredited. Pricing is also a key concern, as companies face margin compression risks due to government hospitals and free check-up campaigns, especially in Tier 3 cities. Additionally, high walk-in volumes in small cities are a reason for concern. The sector also faces cybersecurity risks related to patients’ information.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Rishabh Sinha is a seasoned financial content creator with over 10 years of experience in BFSI domain. His portfolio spans over 20 of India’s most trusted financial brands. Rishabh brings depth, structure, and a reader-first approach to every piece he crafts.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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