Rainbow Childrens Medicare Limited — Q1 FY26 earnings call

Call held 28 Jul 2025

Management summary

Rainbow Children's Medicare delivered a resilient Q1 FY26 performance, characterized by strong bottom-line growth despite seasonally muted volumes in general pediatrics. The company is aggressively executing its expansion strategy, with 350 beds expected to be added this year across Warangal, Bengaluru, and Rajahmundry. Management remains confident in achieving 20% revenue growth for the full year, supported by a robust cash-rich balance sheet and a shift toward high-value quaternary care.

Highlights

  • Revenue grew 7% YoY to ₹353 crores, despite Q1 being a seasonally softer quarter.

  • EBITDA increased 11% YoY to ₹103.6 crores with margins expanding to 29.4%.

  • PAT registered a robust growth of 35% YoY, reaching ₹53.8 crores.

  • Overall occupancy rate for the quarter stood at 40.2%.

  • ARPOB (Average Revenue Per Occupied Bed) increased by 13% due to a richer case mix and advanced specialties.

  • Net cash position remains strong at ₹735 crores as of June 30, 2025.

  • Acquired 76% majority stake in Prashanthi Hospital, Warangal (100 beds) to expand into Tier 2 cities.

  • On track to add approximately 350 beds in FY26 through organic and inorganic routes.

Key financials

  1. Revenue ₹353 Cr +7%YoY
  2. EBITDA Margin 29.4%
  3. PAT ₹53.8 Cr +35%YoY
  4. Occupancy Rate 40.2%
  5. ARPOB 13% +13%YoY
  6. Net Cash ₹735 Cr

What they filed

Q1 FY27: revenue up 22.7%, net profit up 1.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue404 382 354 335 408 +1%394 +3%408 +15%411 +23%
EBITDA143 130 111 100 141 −1%131 +1%129 +16%115 +15%
Net profit77 67 55 52 73 −5%66 −1%59 +7%53 +2%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Mature Hospitals
    2% Revenue Growth-11% Occupancy Decline
  • IVF Business
    50% Revenue Growth3.2% Revenue Contribution

Guidance & targets

Revenue

  • Annual Revenue Growth Revenue · FY26 · High confidence 20%
    For the guidance, we continue to anticipate revenue growth in the late teens to around 20%.

    — Dr. Ramesh Kancharla, Chairman and Managing Director

Capacity

  • Bed Additions Capacity · FY26 · High confidence 350
    So, between those 250 beds and an additional 100 from recent acquisition (Warangal), we’re looking at roughly 350 beds getting added this year.

    — Dr. Ramesh Kancharla, Chairman and Managing Director

  • Gurugram Hospital Operational Timeline Capacity · by 2027 · High confidence September 2027
    We are targeting around September 2027 (in the calendar year 2027) — that's the timeline we’ve set for ourselves.

    — Dr. Ramesh Kancharla, Chairman and Managing Director

Capex

  • Pune Greenfield Capex per Bed Capex · next 2.5 years · Medium confidence ₹80 lakhs
    While we're still finalizing the exact numbers, I would expect it to be somewhere around INR 80 lakhs per bed.

    — Dr. Ramesh Kancharla, Chairman and Managing Director

Volume

  • IVF Cycles Volume · FY26 · High confidence 2,000
    We are on track to perform around 2,000 cycles by the end of the year.

    — Dr. Ramesh Kancharla, Chairman and Managing Director

Risks & concerns

  • Seasonality and Cyclicality

    medium

    Q1 is seasonally soft for pediatrics; management notes a slump in admissions every 5-6 years.

    Management acknowledged

  • Competitive Intensity in Birthing

    medium

    High competition in cities like Bengaluru and Hyderabad is impacting delivery volumes in larger hub hospitals.

    Both acknowledged

  • International Business Regulations

    low

    Tighter regulations in Bangladesh, Oman, and Sudan are impacting international patient volumes.

    Management acknowledged

Areas of evasion (1)

  • Specific percentage split between retainer and revenue-share models for doctors.

Q&A highlights

3 direct
Muted volumes in mature hospitals Direct
There hasn’t been any significant disease activity over the last 5 to 6 months... patients who are coming in are mostly visiting for vaccinations, specialty care, or nutritional advice.

Explains why occupancy dipped 11% YoY in mature units while revenue still grew due to case mix.

Asked by Anshul Agrawal, Emkay Global

Decline in delivery volumes Direct
It seems like there’s a general dip in deliveries across regions, not just specific to Rainbow... it appears to be more of a temporary, cyclical phenomenon.

Management acknowledges a 2% dip in deliveries, a key high-margin segment, attributing it to broader market trends rather than competition.

Asked by Rahul Jeewani, IIFL Securities Limited

ARPP vs ARPOB metrics Direct
Actually, ARPP is a derivative — if you multiply ARPOB by ALOS, you’ll arrive at the number... we will start publishing ARPP going forward.

Management agrees to shift reporting focus to ARPP (Average Revenue Per Patient) to better reflect operational performance given changing ALOS.

Asked by Damayanti Kerai, HSBC Securities

2 min read 5 chapters

Detailed narrative

Expansion Strategy and Hub-and-Spoke Model

Rainbow is aggressively expanding its footprint with a target to add 350 beds in FY26. This includes the integration of the 100-bed Prashanthi Hospital in Warangal, which will serve as a spoke to the Hyderabad hub. Additionally, two new hospitals in Bengaluru (Electronic City and Hennur) are on track to become operational by the end of Q2 FY26. The company is also entering the Pune market with a 150-bed asset-light greenfield project, expected to commence operations in 2.5 years.

Financial Resilience and Margin Expansion

Despite a seasonally soft quarter where inpatient volumes de-grew by 1%, Rainbow achieved a 35% growth in PAT. This was driven by effective cost discipline and a 13% increase in ARPOB, resulting from a shift toward higher-value quaternary care and pediatric specialties. EBITDA margins improved by nearly 100 bps YoY to 29.4%. The company maintains a robust net cash position of ₹735 crores, ensuring all planned capital expenditures are funded through internal accruals without debt.

Clinical Breakthroughs and Specialty Growth

Management highlighted significant clinical achievements, including a successful bone marrow transplant for a complex case from Iraq and a U.S. FDA patent granted to Dr. Nageswara Rao Koneti for the KONAR-MF Occluder cardiac device. These milestones underscore the company's focus on high-end quaternary care. Pediatric specialties and organ transplantations continue to be strong drivers of case mix enhancement, offsetting the impact of lower-value seasonal pediatric walk-ins.

Operational Challenges in Birthing and Mature Units

Mature hospitals saw a 11% YoY decline in occupancy, primarily due to a delayed pediatric season and low disease activity. Delivery volumes also de-grew by 2%, which management attributed to a general market dip and cyclical trends rather than structural issues. To counter this, Rainbow plans to step up marketing and outreach efforts to connect with the younger population and reinforce its positioning in natural birthing services.

IVF and International Business Outlook

The IVF business vertical showed impressive growth, with revenue increasing 50% YoY and now contributing 3.2% to total revenue. The company is on track to perform 2,000 cycles by the end of the year. Conversely, the international business faces headwinds due to tighter regulations in key markets like Bangladesh and Sudan. Management is actively monitoring these situations and adapting strategies to focus on other geographies to mitigate the impact.

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