Summary
Rainbow Children’s Medicare Limited - Q3 FY26 Earnings Call Summary Thursday, January 29, 2026 11:00 AM
Event Participants
Executives 4 Abrarali Dalal (Group CEO), Ramesh Kancharla (Chairman and Managing Director), Saurabh Bhandari (Head Investor Relations), Vikas Maheshwari (Group CFO)
Analysts 9 Alankar Garude, Anshul Agrawal, Bansi Desai, Dhananjai Bagrodia, Nancy Yadav, Prithvi Raj, Rahul Jeewani, Rishi Modi, Venkata Sivaram
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue | ₹445.4 crores | +12% YoY; Growth tempered by muted seasonality in mature hubs like Hyderabad and Bangalore. |
| EBITDA | ₹147.0 crores | +9% YoY; Reflects a margin of 33% for the quarter. |
| Profit After Tax (PAT) | ₹73.9 crores | +7% YoY; 9M FY26 PAT stands at ₹203.3 crores (+8.3% YoY). |
| Occupancy | 47.2% | - YoY; Impacted by lower pediatric outpatient and intensive care admissions due to lack of seasonal illnesses. |
| Deliveries | Count not specified | +16% YoY; Remains a strong growth driver for the maternal care segment. |
| ARPOB | ~₹60,000 | + YoY; Growth driven by improving case mix and higher contribution from complex quaternary procedures. |
| Cash and Equivalents | ₹579 crores | As of Dec 31, 2025; Sufficient to fund all current capex and M&A through internal accruals. |
Geographic & Segment Commentary
- Hyderabad & Bangalore Hubs: These mature clusters saw flatter performance due to a “muted” flu/viral season. Management is countering this by strengthening the full-time consultant-led model and expanding digital touchpoints to capture fragmented urban demand.
- Andhra Pradesh Cluster: Rajahmundry (100 beds) commenced operations and reached near-breakeven within months due to high brand equity. Visakhapatnam is expanding by 50 beds, and the cluster is being positioned to mirror the scale of the Hyderabad hub.
- Guwahati & Warangal: Acquired assets are operationally integrated. Guwahati contributed ₹26-27 crores in revenue for the quarter; Warangal is EBITDA positive and contributed ₹7 crores.
- IVF & Butterfly Essentials: IVF contributes ~4% of revenue (₹17-18 crores) and is non-dilutive to margins. Butterfly Essentials (retail) accounts for ~1% of revenue (₹4 crores) and is in a growth phase.
Company-Specific & Strategic Commentary
- Specialized Quaternary Care: Successfully established three pediatric liver transplant programs (Hyderabad, Chennai, Bangalore) with a 94% survival rate. Management aims to scale to 100 transplants annually to drive high-end ARPOB.
- Digital Transformation: Investing in a “digital front-door” model, including a revamped patient app, EMR ecosystem, and online consultations. Current digital maturity is rated at 30-40% vs multispecialty peers, with a goal to lead the category.
- Hub-and-Spoke Expansion: Completed major capacity addition of 780 beds over 2 years. Transitioning to an “execution phase” with a focus on operational excellence and sales/marketing leadership.
- Clinic Expansion: Planning smaller clinic formats in urban centers to mitigate patient “leakage” to local facilities caused by traffic congestion and convenience trends.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue CAGR | 17% - 18% | Targeted over a 4-year cycle despite current “aberration” in seasonality. |
| Occupancy | 55% - 60% | Target for next year driven by aggressive marketing, digital initiatives, and specialty scaling. |
| EBITDA Margin | 24% - 25% | Long-term sustainable aspiration for the consolidated group. |
| New Unit Breakeven | FY27 | Rajahmundry, Electronic City, and Hennur are expected to be EBITDA positive by next year. |
| Capex | Internal Accruals | All upcoming projects (Coimbatore, Pune, Gurgaon) to be funded via internal cash. |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonality Dependence | Muted viral seasons significantly impact occupancy and high-margin intensive care admissions. Management is diversifying into elective quaternary care (transplants) to stabilize volumes. |
| Geopolitical Risk | International patient revenue dropped from 4% to 2% due to instability in Bangladesh, Sudan, and Kenya. Recovery depends on successful entry into new stable geographies. |
| Competitive Intensity | Multi-specialty hospitals are aggressively re-entering mother-and-child segments. Rainbow faces volume “leakage” in basic pediatrics but maintains a moat in complex quaternary care. |
| Execution Delays | Administrative and approval hurdles have delayed some projects by 9-12 months. New PMC structures are being implemented to tighten execution of the Coimbatore and Pune hubs. |
Q&A Highlights
Occupancy Strategy
- Question: How will you grow occupancy from current sub-50% levels? (Dhananjai Bagrodia)
- Answer: Strengthening sales and marketing leadership under new CEO Abrarali Dalal. Targeting 55%–60% occupancy by focusing on digital acquisition and potentially selective CGHS empanelment at revised rates. (Ramesh Kancharla)
New Unit Performance
- Question: What are the breakeven timelines for the new Bangalore units? (Anshul Agrawal)
- Answer: Electronic City and Hennur are expected to incur a combined EBITDA loss of ₹12–15 crores in FY27 before turning positive. Rajahmundry is already near breakeven. (Vikas Maheshwari)
Competitive Positioning
- Question: Where do you stand on digital and marketing vs multi-specialty peers? (Alankar Garude)
- Answer: Currently at 30-40 on a scale of 100. Historically driven by word-of-mouth, but shifting to a digital-first strategy as urban parents rely more on online ratings than neighborhood referrals. (Ramesh Kancharla)
International Business
- Question: Why has international revenue been volatile? (Rahul Jeewani)
- Answer: Key markets like Bangladesh and Sudan were impacted by geopolitics. Now diversifying source countries to bring international contribution back to 4-5% from the current 2%. (Ramesh Kancharla)
Key Takeaway
Rainbow Children’s Medicare reported a steady Q3 FY26 with 12% revenue growth, though occupancy (47.2%) remained under pressure due to an exceptionally muted seasonal illness cycle in mature hubs. The company has largely concluded its heavy capacity addition phase (780 beds in 2 years) and is pivoting toward operational execution. Strategic focus is shifting to high-complexity quaternary care, such as pediatric liver transplants across three hubs, and a significant digital transformation to capture urban demand. While organic growth was tempered this quarter, the rapid ramp-up of the Rajahmundry unit and integration of Guwahati/Warangal assets provide confidence in the hub-and-spoke model. Management maintains a mid-term revenue CAGR guidance of 17-18% and expects occupancy to rebound to 55-60% next year through aggressive marketing and specialty expansion, despite competitive pressures and geopolitical headwinds in international segments.
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