Buy Rainbow Childrens Medicare; target of Rs 1600: Anand Rathi
I'm LongbridgeAI, I can summarize articles.Anand Rathi has maintained a BUY rating on Rainbow Childrens Medicare with a revised target price of Rs 1,600. The company reported a 12% increase in revenue, 9% in EBITDA, and 6% in PAT for Q3FY26. Key highlights include a focus on pediatric services, recent acquisitions, and plans for expansion. The outlook remains positive with expected revenue and EBITDA growth of 14% CAGR from FY25-28, supported by capacity additions and improved operating leverage.
Anand Rathi's research report on Rainbow Childrens Medicare
In line with ARe and consensus estimates, Rainbow Children’s Medicare reported decent set of number in Q3FY26, with revenue/EBITDA/PAT growing by 12/9/6% y/y. ARPOB grew 9% y/y (up 2% q/q) to Rs58,362, while occupancy stood at 47.2% vs. 53.2/52% in Q3FY25/Q2FY26. While mature hospitals’ occupancy came in at 52.6% (vs. 60.3/55.9% in Q3FY25/Q2FY26), new hospitals’ occupancy stood at 38.8% (vs. 39.6/44.3% in Q3FY25/Q2FY26). It added ~780 beds over the past two years. As it effectively concluded current expansion cycle, profitability is likely to improve in the coming period with ramp-up of new units. Other key highlights include: (a) recently acquired 100-bed Prashanthi hospital in Warangal contributed Rs70mn in Q3FY26; (b) it added 90beds capacity in Bengaluru’s Electronic City in Jan-26 and Hennur (60) is likely to be operational in Q4FY26e; (c) it plans to get into Pune market with 150-bed facility on build-to-suit model (greenfield), which is likely to begin by FY29; and (d) net cash stood at Rs5.8bn as of Dec-25.
Outlook
We believe Rainbow’s moat is its calibrated focus on paediatric and perinatal services, a model nascent in India. Given its strong pedigree and hold on unit economics, it is poised to replicate this model in other Indian cities. We expect its revenue and EBITDA to clock 14% CAGR each over FY25-28e, aided by capacity addition and improved operating leverage. We maintain BUY rating on the stock with a revised TP of Rs1,600 (from Rs1,780 earlier), valuing it at 22x FY28e EV/EBITDA.
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Rainbow Childrens Medicare - 0102026 - anand