Rainbow Childrens Medicare Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Rainbow Children's Medicare reported a soft Q2 FY26, primarily due to a lower-than-expected incidence of seasonal illnesses and an early festive season which compressed peak admission periods. Despite the transient impact on occupancy and PAT, the company continues its aggressive expansion, having integrated new acquisitions in Guwahati and Warangal. Management remains confident in long-term growth, backed by a strong project pipeline and a transition to a professional leadership structure with the appointment of a new Group CEO.

Highlights

  • Revenue for Q2 FY26 stood at ₹444.8 crores, representing a 6.5% YoY growth.

  • EBITDA reached ₹148.8 crores, a marginal increase of 1.2% YoY, with margins at 33.5%.

  • PAT witnessed a de-growth of 4.3% YoY, coming in at ₹75.6 crores.

  • Overall occupancy rate for the quarter was 52%, impacted by low seasonal illness incidence.

  • Company added 780 beds over the last two years through organic expansion and acquisitions.

  • Net cash position remains robust at ₹555.8 crores as of September 30, 2025.

  • Management targeting a 20% revenue CAGR over the next 2.5 to 3 years.

Concerns

  • Low incidence of seasonal illnesses

Key financials

  1. Revenue ₹444.8 Cr +6.5%YoY
  2. EBITDA ₹148.8 Cr +1.2%YoY
  3. EBITDA Margin 33.5%
  4. PAT ₹75.6 Cr -4.3%YoY
  5. Occupancy Rate 52%

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
    52% Occupancy-9% IP Volume Growth
  • New Units
    41% Occupancy
  • International Business
    ₹3 Cr Monthly Revenue
  • IVF Services
    3.2% Revenue Mix40% Volume Growth

Guidance & targets

Revenue

  • Revenue CAGR Revenue · next 2.5-3 years · High confidence 20%
    With the significant bed capacity additions now behind us, we are optimistic that we should be able to deliver around 20% growth CAGR over the next two and a half to three years.

    — Vikas Maheshwari, Group CFO

Margin

  • Base EBITDA Margin Margin · Ongoing · High confidence 25%
    We always guide about, 25% is our base EBITDA, pre and early EBITDA. We'll stick to that.

    — Ramesh Kancharla, CMD

Capex

  • H2 FY26 Capex Capex · H2 FY26 · High confidence ₹100 crores
    For the second half, we expect to spend close to INR100 crores.

    — Vikas Maheshwari, Group CFO

  • Long-term Project Capex Capex · next 3 years · Medium confidence ₹600 crores
    And for our Pune and Coimbatore projects over the next three years, you should budget roughly around INR600 crores.

    — Vikas Maheshwari, Group CFO

Volume

  • IVF Revenue Growth Volume · Ongoing · Medium confidence 25%
    We would now like to sustain an impressive growth trajectory of about 25% going forward [for IVF].

    — Ramesh Kancharla, CMD

Market Share

  • International Revenue Mix Market Share · next 5 years · Low confidence 10%
    I won’t put a specific number, but I think we should aim for at least 10%.

    — Ramesh Kancharla, CMD

Risks & concerns

  • Low incidence of seasonal illnesses

    high

    Directly led to lower patient volumes in general Paediatrics and PICU, impacting Q2 occupancy by 8-9%.

    Management acknowledged

  • Construction delays in Gurugram

    medium

    Work stalled temporarily by the government due to dangerously high pollution levels.

    Management acknowledged

  • Geopolitical issues impacting International Business

    medium

    Bangladesh visa issues have significantly hampered patient flow from a key international market.

    Both acknowledged

  • Insurance transition in acquired units

    low

    Temporary impact on revenue at Pratiksha and Prashanthi hospitals as insurance empanelment had to be redone post-acquisition.

    Management acknowledged

Areas of evasion (1)

  • Specific revenue contribution from newly acquired units (Pratiksha/Prashanthi) was given as a pre-acquisition range rather than exact current quarter contribution.

Q&A highlights

3 direct
Impact of Seasonality on Mature Hospitals Direct
In years with no seasons, we see the impact clearly... occupancies are down by about 8% and revenue is down by around 10%–12%. If seasonality had been present, we would likely have delivered 16%–17% growth.

Explains the significant delta between reported growth and underlying potential, highlighting the business's sensitivity to seasonal disease cycles.

Asked by Rahul Jeewani, IIFL Capital

Pricing Strategy in Tier 2 Markets Direct
In Vizag and Rajahmundry, pricing would be about 65%–70% of Hyderabad levels... these markets are more cash-oriented, with less insurance business, so you drive more occupancy with popular pricing.

Reveals the company's strategy to trade off ARPOB for occupancy in new regional markets to build brand reputation.

Asked by Rahul Jeewani, IIFL Capital

Outstanding Receivables from Madhukar Trust Direct
The principal outstanding remains the same, Rahul—around INR 23–24 crores... Last year, we restructured their repayment schedule, offering a moratorium and revised timelines.

Provides clarity on a potential financial risk/asset quality item that analysts track closely regarding the Delhi operations.

Asked by Rahul Jeewani, IIFL Capital

2 min read 5 chapters

Detailed narrative

Seasonality Headwinds Impact Q2 Performance

The quarter was characterized by 'softness' in operational performance, with revenue growing only 6.5% to ₹444.8 crores. Management attributed this to a low incidence of seasonal illnesses, which typically drive volumes in general Paediatrics and intensive care. Additionally, an early festive season (Ganesh Chaturthi and Dussehra) compressed the typical peak period for admissions, leading to a 52% occupancy rate compared to the 65-66% seen in the previous year.

Aggressive Capacity Expansion Phase Concludes

Rainbow has added 780 beds over the past two years through a mix of greenfield expansions and strategic acquisitions. With the upcoming commencement of the Electronic City (~90 beds) and Hennur (~60 beds) facilities in Bengaluru, the company will conclude its current high-bed addition phase. This massive 47% increase in capacity from a low base forms the foundation for management's 20% CAGR revenue target over the next three years.

Strategic Entry into the Northeast Market

The acquisition of Pratiksha hospital in Guwahati marks Rainbow's strategic entry into the Northeast region. Integration is complete, and the company is already scaling specialty services like road transport for critically sick children and adding pediatric neurology and nephrology. Management plans to build Guwahati as a regional hub before exploring greenfield opportunities in smaller cities like Silchar and Shillong.

Financial Resilience and Capex Roadmap

Despite the soft quarter, the balance sheet remains robust with a net cash position of ₹555.8 crores. The company invested ₹260.6 crores in capex during Q2 and expects to spend another ₹100 crores in H2 FY26. Looking further ahead, a budget of ₹600 crores has been set for the Pune, Coimbatore, and Gurugram projects over the next three years, all of which are expected to be funded through internal accruals without debt.

Leadership Transition to Drive Next Growth Phase

A significant milestone was the appointment of Mr. Abrarali Dalal as Group CEO, effective January 20, 2026. This move signals a transition from founder-led operations to a professional management structure. Dr. Ramesh Kancharla will remain as Chairman, focusing on strategy and alignment, while the CEO independently drives operations across the now significantly expanded multi-city network.

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