More Stories

Informist, Thursday, May 29, 2025

 

Please click here to read all liners published on this story

--Rainbow Children's CFO: Eyeing two hospital acquisitions in 3-5 months
--Rainbow Children's CFO: In talks with one hospital in northeast India
--Rainbow Children's CFO: Targeting one hospital in rural Telangana
--Rainbow Children's CFO: Open to buys, partnerships to reach new cities
--Rainbow Children's CFO: Aim to add over 200 beds via inorganic route FY26
--Rainbow Children's CFO: Aim 3,000-bed capacity by FY28 vs 1,935 beds now
--Rainbow Children's CFO: To add 250 new beds capacity organically in FY26
--Rainbow Children's CFO: Total capex seen around INR 7.5 bln till FY28
--Rainbow Children's CFO: FY26 capex seen around INR 2.5 bln
--Rainbow Children's CFO: Cash reserve as of Mar 31 at around INR 7 billion
--Rainbow Children's CFO: To fund buyouts, expansion via internal accruals
--Rainbow Children's CFO: Expect revenue to increase 16?GR next 3 years
--Rainbow Children's CFO: Expect FY26 EBITDA margin over 31%, vs 32.3% FY25

 

By Narayana Krishna

 

HYDERABAD -  Rainbow Children's Medicare Ltd., a chain of paediatric and mother-care hospitals, plans to acquire two hospitals--each with over 100 beds--in the next 3–5 months as part of its strategy to increase market penetration, Chief Financial Officer Vikas Maheshwari told Informist in an interview. The specialty hospital network is in advanced talks with one hospital in the Northeast and another in rural Telangana, he said, without disclosing the ticket size for reasons of confidentiality. The chain expects to close both deals in the next 3–5 months.

 

Hyderabad-based Rainbow Children's, which was listed on the Indian stock exchanges in May 2022, plans to expand its total bed capacity through organic as well as inorganic means. Currently focused on south India--primarily in Hyderabad, Bengaluru, and Chennai--the company aims to expand gradually into newer geographies, driven by growing demand for specialty child-care hospitals, Maheshwari said.

 

He added that increased awareness after the COVID-19 pandemic and greater penetration of insurance are boosting growth in the healthcare industry, with the paediatric and mother-care segments benefiting significantly. "As the economy becomes more formal and awareness about insurance rises, coverage is improving," Maheshwari said. "Even in group insurance policies, the entire family, including parents, is covered. For business owners too, awareness triggered by COVID has heightened interest in insurance."

 

GROWTH DRIVERS

Rainbow Children's expects to achieve a compounded annual growth rate of 16% in revenue over the next three years, the chief financial officer said. "This year we grew at 17%," he said. "If you look at our three- or five-year CAGR, we have consistently grown at 16%. There may be one or two quarters of slower growth, but overall we are confident of achieving mid- to high-teen growth."

 

Maheshwari said growth will come from three areas: "First, our matured hospitals, which are currently driving growth. Second, the addition of new facilities and more doctor engagement. And third, recently opened hospitals--those established in the last 2-5 years--will begin to mature and contribute to revenue. Our capex (capital expenditure) plan will also support this growth. The combination of these three elements should deliver mid- to high-teen growth."

 

He noted that India's healthcare sector has been transformed, with hospitals now offering advanced infrastructure of the kind that was once available only in Western countries. As of Mar. 31, insurance accounted for 50.6% of Rainbow Children's revenue, with the rest coming from payments by patients.

 

He said growing awareness of health care and rising income levels are encouraging patients to opt for specialty paediatric and mother-care hospitals, a trend that is a key growth driver for the company. Improved footfalls at existing hospitals, the addition of new ones, and planned capital expenditure will be the three pillars driving growth over the next three years, he said.

 

EXPANSION PLAN

Rainbow Children's has outlined a two– to three-year expansion plan to add 1,000 beds to its capacity, taking the total to nearly 3,000 by the financial year 2027-28 (Apr-Mar). Of these, 250 beds are expected to be added organically in FY26. Two hospitals with a combined capacity of 150 beds in Bengaluru and a 100-bed facility in Rajahmundry, Andhra Pradesh, are expected to become operational soon. In FY27, the company plans to open a 130-bed hospital in Coimbatore, Tamil Nadu.

 

As part of its strategy to gradually enter the north Indian market, the company is building two new hospitals in Gurugram, Haryana, on company-owned land. A 300-bed facility in Sector 44 and a 100-bed facility in Sector 56 are slated to be commissioned in FY28.

 

As of Mar. 31, Rainbow Children's operated 19 hospitals and five outpatient clinics across six cities, with 910 doctors. Of these, eight hospitals and two clinics are in Hyderabad, four hospitals and one clinic are in Bengaluru, and three hospitals are in Chennai. The company also has one hospital each in Vijayawada and Visakhapatnam in Andhra Pradesh, and two in Delhi.

 

CAPITAL EXPENDITURE

Rainbow Children's plans to invest around INR 7.5 billion in its expansion over the next three years, Maheshwari said. Of this, a capital expenditure of INR 2.5 billion is planned in FY26 alone.

 

He said around INR 4 billion will be allocated to the Gurugram projects, with the remaining INR 3.5 billion going to other locations. Some properties will be developed in partnership with local hospitals or by repurposing existing facilities, reducing capital expenditure requirement.

 

The company follows a hub-and-spokes model, developing smaller clinics around major city hubs to serve patients, helping to keep capital costs under control, he added.

 

As of Mar. 31, Rainbow Children's had cash and cash equivalents of INR 7.00 billion and intends to fund its capital expenditure and inorganic growth plans through internal accruals.

 

Rainbow Children's expects its earnings before interest, taxation, depreciation, and amortisation margin to remain around 31% in FY26, slightly lower than the 32.3% reported by the chain in FY25, because of operating costs associated with new hospitals. Maheshwari said the company aims to improve average revenue per operating bed in FY26, driven by better occupancy in "matured" hospitals--defined as those that have been in operation for more than five years.

 

In FY25, the company's average revenue per bed stood at INR 53,962, down 3% on year, while occupancy improved 5 percentage points to 50.5%. At 1456 IST, shares of Rainbow Children's were down 0.5% at INR 1400.10 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.