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We anticipate 1QFY27 to be a strong quarter for our healthcare coverage companies, driven by the continued ramp-up of newly operationalized hospital units, along with a stable pricing environment and accelerated adoption of preventive testing in diagnostics. For our hospital coverage, we model a healthy 15% yoy volume pickup (OBD), driving overall revenue growth of 18%. We expect KIMS/Rainbow/Park to deliver strong topline growth of 30%/23%/19% yoy. However, EBITDA margins for these companies are likely to contract by ~225/75/235bps yoy, as they absorb initial gestation losses from new units in Thane, Bengaluru (KIMS), Agra, and Panchkula (Park). Within diagnostics, growth momentum should accelerate following a strong 4Q, supported by a stable pricing environment and increasing adoption of preventive testing. Among peers, we expect Vijaya to lead in topline growth (+18% yoy), with EBITDA margin expanding by ~300bps yoy

Hospitals: Healthy ramp-up of new units; margin expansion to follow in FY27

We expect our hospital coverage universe to report a strong quarter, with revenue/EBITDA growing 18%/21% yoy, aided by narrowing losses at newly commissioned units, driving sequential profitability improvement (KIMS, Medanta, Max HC). For Park, we expect strong topline momentum (+19% yoy), while consolidated EBITDA margin is likely to contract by ~235bps yoy due to losses from new units (expected EBITDA loss of ~Rs80mn in 1Q). KIMS should see yet another quarter of healthy momentum as new clusters ramp up as expected, with losses narrowing (Rs290mn vs Rs450mn in 4QFY26). We expect a similar trajectory for Medanta, with the Noida unit drag reducing and margins improving sequentially by ~160bps. For Rainbow, we expect margin performance to lag topline growth given initial losses at new Bengaluru units and elevated employee costs following senior management additions, leading to a 77bps yoy contraction in reported margin

Diagnostics: Tailwinds galore

We expect yet another upbeat quarter for diagnostics players, on the back of a stable pricing environment and rising awareness of preventive testing, benefiting incumbents. Driven by ramp-up across both non-core and core regions, we expect Vijaya to clock 18% yoy revenue growth, with EBITDA margin expanding by +290bps yoy. Focus on spoke additions during FY27-29 should further aid margins, in our view. For Metropolis, we expect 15% yoy revenue growth in 1QFY27 (~16%, per the company’s business update), with margins expanding by 175bps yoy. We expect DLPL to post another strong quarter, with 13% yoy revenue growth, primarily driven by volumes (+10% yoy)

Change in stock recommendations and TP

We downgrade Rainbow to ADD from Buy, as we expect revenue growth to trail our coverage universe over FY27-29E, while the ramp-up of new facilities is likely to weigh on margins through FY26-29E (~375bps). We cut our FY27/28 EBITDA estimates by 6/4% and keep our TP unchanged at Rs1,550. Further, we raise our TP for Max/Medanta/KIMS/DLPL by ~11/11/9/9% to Rs1,250/1,500/900/1,900 driven by higher assigned multiples (2-8%) and rolling forward our estimates to Jun-28 (refer to Exhibit 2).

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