IGI Logo

Strong quarter; growth momentum intact

RAINBOW’s reported strong Q1FY27 EBITDA with growth of 30% YoY; aided by organic growth of 24% YoY in Q1. RAINBOW has added 40% bed capacities over the past two years, effectively concluding its current expansion cycle. Overall, we see profitability to improve from FY27 with 22% EBITDA CAGR over FY26-28E vs 13% CAGR over FY24- 26 as new capacities ramp up. Company enjoys higher margins, strong FCF generation with net cash B/S, and healthy return ratios because of the asset light hub-and-spoke model, it being the only integrated multi-specialty pediatric hospital chain in India offering comprehensive services, and its full-time doctor engagement model. Strategic expansion across its core markets in South India also augurs well for its sustainable growth. Our FY27E / FY28E EBITDA stands increased by 3-4%. Maintain ‘BUY’ rating with revised TP of INR 1,900/share valuing at 28x EV/EBITDA based on pre-IndAS FY28E EBITDA.

Another strong quarter; 30% YoY EBITDA growth: RAINBOW reported EBITDA of INR1.35bn, up 30% YoY (down 7% QoQ); in line with our estimates. Margin declined by ~80 bps YoY to 28.6%; due to newly operationalised 48 beds at HRBR, Bengaluru in Q1 and continued losses from 90 bedded unit at Electronic City which was operationalised in Q4. Pre IND-AS EBITDA reported at at INR 1.1bn, up 33% YoY. OPM of 23%; flat YoY & declined by ~290bps QoQ. Adj PAT increased 13% YoY to Rs 606mn.

Healthy ARPOB; Ooccupancy declined QoQ due to new bed additions: Revenue grew 33% YoY to Rs4.7bn; vs our est of Rs4.6bn. ARPOB increased 6% YoY to Rs67.3k per day aided by better case mix and reduction in ALOS to 2.60 days from 2.66 days in Q1FY26. Average occupancy increased by ~100bps YoY but decreased by ~410 bps QoQ to 41.2%. In Q1, Rainbow operationalized 48 beds at HRBR in Bengaluru. Occupancy of mature units increased by 240bps YoY to 45%, while that of new units increased by 330bps YoY to 34.4%. Visakhapatnam and Hebbal units are now categorized as matured hospital from this financial year. IP volumes were up by 28% YoY; OP volumes improved 25% YoY while deliveries improved by 23% YoY.

Please refer disclaimer at https://www.plindia.com/disclaimer/

SEBI Registration No. INH000000271