Rainbow Children's Medicare Ltd (RAINBOW) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Rainbow Children's Medicare Limited Q2 FY '27 Earnings Conference Call hosted by IIFL Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jeewani. Thank you, and over to you, sir.
Rahul Jeewani (IIFL Capital): Yeah. Hi, good morning, everyone. This is Rahul from IIFL Capital. I welcome you all to the second quarter earnings conference call of Rainbow Hospitals being hosted by IIFL. From Rainbow, we have with us today Dr. Kancharla, Chairman and Managing Director; Mr. Abrarali Dalal, Group CEO; Mr. Sudarshan Patodia, Group CFO; and Mr. Saurabh Bhandari, Head of Investor Relations. Over to you, sir, for your opening comments.
Ramesh Kancharla (Rainbow Children's Medicare Ltd): Thank you, Rahul. Sir, good morning, everyone. And thank you for joining us for Rainbow Children's Medicare Limited earnings call for the quarter ended September 30th, 2026. We have delivered another quarter of robust growth with healthy numbers.
Ramesh Kancharla (Rainbow Children's Medicare Ltd): mature, emerging, as well as new hospitals in inpatient volumes, outpatient footfalls as well as deliveries in a seasonally soft soft quarter because of late monsoon. So revenue grew by 23% year-on-year to 548 crores, while EBITDA and PAT grew by 14 and 11% respectively. During the quarter, we commenced operations at a newly acquired 70-bed hospital in Nellore and 50-bed brand new hospital in Guntur. These additions strengthen our presence across coastal Andhra Pradesh extending our network from Visakhapatnam to Chennai. The government of Andhra Pradesh has allotted two acres of land parcel to build a pediatric specialty hospital in Amaravati, the new capital city of Andhra Pradesh. So, we plan to build this hospital in two in two phases with initial bed capacity of 150. Coming to the projects, our approach to the capacity expansion remains disciplined with a focus on building high-quality hospitals with a clear division of spaces for pediatric specialties and obstetrics to have a seamless operations. We have 1,050 beds in pipeline at various stages of construction right now. In Indore, we expect to commence clinical operations in Q3 and an adjacent plot, which is to be built for greenfield of 120-bed 120 beds is to commence clinical is is to is expected groundbreaking on Diwali day. A 100-bed brownfield hospital in Malad, Mumbai is an active construction phase. We're fast tracking it to start clinical operation in the Q1 FY '28. At Coimbatore, 130-bed greenfield hospital is likely to come for internal works in April '28 and is expected to be ready for operations in Q3 FY '28. Coming to NCR Gurugram hospitals, Sector Sector 56 of 100 125 beds is near to completion of the shell and is expected to complete its internal works and ready for operations in Q3 FY '28. And Sector 44, 325-bed hub hospital to be completed for clinical operations in Q1 FY '29. Spoke hospital of 100 beds in Seegehalli, Bangalore and 150-bed greenfield hospital in Pune are in early construction phase and likely to be ready in second half of FY '29. As we are going to be become the world's largest pediatric specialty hospital group with a pan-India presence, we have initiated a comprehensive clinical governance framework. This initiative call is called One Rainbow model, which includes protocolization to standardize the care and building a robust multidisciplinary teams in inclusive environment. This will ensure the seamless quality care to deliver high quality out outcomes across the group. The new HIS implementation has gone live successfully in our hub hospital, Hyderabad, with a new generation EMR is being used 100% both in OP and IP by all the stakeholders. We'd expect to complete HIS roll out in four months' time. Coming to some clinical excellence, so, Rainbow Children's Hospital successfully performs a high highly complex living related liver transplant surgery on a six-week-old baby weighing 2.9 kg at our Banjara Hills hospital, Hyderabad. This baby was diagnosed with a gestational alloimmune liver disease, a very rare condition rapidly progressed to liver failure, where the baby required an urgent liver transplantation. His mother, the baby's mother donated a small segment of the liver, which was carefully reduced to that 62 g the graft to suit the baby's size. The procedure was was significantly surgical surgically challenging and given the baby's extremely small blood vessels for anastomosis
Ramesh Kancharla (Rainbow Children's Medicare Ltd): a limited abdominal space. The post operative course was equally challenging with the multiple complications of the respiratory and intestinal obstructions. This baby sailed through very successfully and finally eventually discharged in 5 weeks time, both mother and baby very healthy with the normal liver functions and growing very well. This surgical highlights this surgically highlights the depth of our pediatric surgical transplant capabilities and the strength of our multi-disciplinary teams in delivering care in complex situations. As I look forward, I firmly believe that our established clinical model, the leadership capability, and the disciplined capacity of expansion will support our long-term growth to create value for all the stakeholders. With that, I would now like to introduce Mr. Sudarshan Chhotoroi, our Group CFO, before the Mr. Abrarali Dalal, our CEO takes an update on operational and financial performance of the quarter. Mr. Sudarshan?
Sudarshan Patodia (Rainbow Children's Medicare Ltd): Yeah. Thank you, sir. Good morning, everyone, and thank you for joining us today. In my close to two decades of experience, I have worked in the FMCG, retail and healthcare industries. I have led finance and strategy roles, driving core finance, business and strategic finance and capital markets focused on long-term value creation for all stakeholders. I'm excited to be a part of the Rainbow team which is India's leading pediatric and perinatal healthcare chain. Rainbow has now embarked upon a rapid scale up journey by enhancing its pan-India presence and tapping multiple levers of growth anchored on clinical excellence. I look forward to working with the Rainbow teams to further strengthen its market standing and deliver desired organizational outcomes. Thank you, once again. I would now like to hand over the mic to Mr. Abrar for an update on the quarter.
Abrarali Dalal (Rainbow Children's Medicare Ltd): Thank you, Sudarshan. Good morning, everyone. Firstly, I want to congratulate the entire staff of Rainbow, both clinical and non-clinical, for their unwavering support in delivering a revenue growth of 23% year-on-year during the quarter ended FY September 2027, which comes on the back of two solid performances in the last two trailing quarters. Team Rainbow is all set to end FY '27 on a very high note. Over the last three quarters, we have been focusing on and driving the following broad levers that we have been talking about building during our earlier calls: people, technology, best-in-class clinical outcomes, and growth initiatives like onboarding new clinical talent, focusing on community connect, and digitization. We have augmented organization structure keeping in mind the growth we are driving. We have created structures to manage our facilities in hyperlocal and zonal structures to increase the speed of execution. Our managerial bandwidth at the corporate office is complete with the onboarding of the new CFO. Once again, keeping in mind our journey to 5,000-plus beds, from the current 2,600 odd, we are transforming to a new HIS which has already been rolled out in a flagship hospital at Banjara Hills, Hyderabad, and we have upgraded to SAP S/4HANA. This is to ensure we are in tune with the latest technology and building a tech architecture that is scalable and able to serve us as we increase our capacity multifold. Over the last two quarters, we have had many doctors join our growth journey. Many are in discussions with us. This reinforces the might of Rainbow's medical infrastructure, ethical clinical processes, and the sheer strength of the brand which attracts top consultants to associate with us. We have strengthened our outreach to the community by increasing hyperlocal activities, including the introduction of a loyalty card called Shield, which not only draws new patients by offering certain perks, but also offers Rainbow an opportunity to capture the lifetime value of the patient's journey, starting from the first OPD appointment right up to the delivery, and subsequently to the vaccination and any treatment that the child might require going further. Digital initiatives are playing an increasingly important role in our patient engagement strategy. We are expanding our digital presence across the spectrum of our services, supported by focused marketing initiatives and social media outreach. Our new CRM software has further strengthened our patient conversion mechanisms in the hospitals, driving higher outpatient and inpatient volumes, as is evident from our reported numbers. We are gearing up to launch a new website and a new
Abrarali Dalal (Rainbow Children's Medicare Ltd): app in the next few months to corroborate with the rolling out of our new HIS. This new website and the new app will provide the most advanced and best in class experience to the users. The whole idea is to provide a more integrated patient journey, right from booking an appointment to having reports and diagnosis at the click of a button. Owing to all the initiatives mentioned, our mature hospitals have driven occupancies north of 50% and robust revenue and EBITDA growth despite experiencing a soft monsoon and lesser seasonal diseases. Our new hospitals at Rajahmundry, AP and Mahadevapura at Bengaluru have progressed well. Both have achieved operational break-even. HRBR and Electronic City, the other new hospitals at Bengaluru are fast nearing the break-even milestone. All these hospitals are now fully integrated into the Rainbow operating model. The commencement of operations at Nellore and Guntur adds to a growing network in Andhra Pradesh. At the same time, we remain focused on the execution of upcoming projects in Mumbai, Coimbatore, Indore, Gurugram, Pune, and and Sarjapur in Bangalore. As we expand our focus is on ensuring the new facilities are integrated effectively into the Rainbow operating model, supported by established clinical protocols, operating systems, and management processes. Our priorities for the coming quarters remain clear. We will continue to drive patient volumes, improve conversion, strengthen capacity utilization, and accelerate the operational maturity of our new hospitals. We remain all focused on delivering sustainable growth to strong execution. Thank you. Let me now brief you on the financial performance and the key developments of Rainbow Hospitals for the second quarter and the first half of FY26-27. Our operating revenue for the quarter stood at 548 crores, reflecting a growth of 23.2% compared to the corresponding quarter of the previous financial year. For H1, our revenues stood at 1,018 crore, reflecting a growth of 27.6% compared to H1 of the previous financial year. Our EBITDA for the second quarter amounted to rupees 170 crores, marking a growth of 14.2% compared to the last year same period. For H1, our EBITDA stood at 304.6 crores, reflecting a growth of 20.6% compared to H1 of the previous financial year. The EBITDA margins for the current quarter stood at 31%, while for H1, the EBITDA margin was 29.9%. Profit after tax for the quarter stood at 83.9 crores, reflecting a growth of 10.9% compared to the corresponding quarter of the previous financial year. For H1, our PAT stood at rupees 146.4 crores, reflecting a growth of 13.1% compared to H1 of the previous financial year. In terms of operational performance, patient consultations witnessed a growth of 19% compared to the quarter, compared to the corresponding period last year. Deliveries grew by 20%, while inpatient discharges registered a growth of 15%. For H1, outpatient consultations, deliveries, and inpatient discharges grew by 21, 22, and 21% respectively, compared to compared to the corresponding period of the previous financial year. Our payer mix continued to remain robust and balanced, with 63.3% of the revenue coming from cash patients and 36.7% from insurance during Q2 FY27. For H1 FY27, the payer mix stood at 64.2% cash and 35.8% insurance. I'm pleased to inform you that the company's balance sheet remains robust, with cash equivalents, fixed deposits, and mutual fund investments aggregating to rupees 542.8 crores as of September 30, 2026. This provides us with adequate financial flexibility to support our ongoing expansion and capital expenditures. During the quarter, the company incurred a capital expenditure of 81.9 crores towards development, expansion of its hospital network, and enhancement of existing facilities. With that, I would like to now throw open the house for questions. Thank you.
Moderator: Thank you very much. Anyone who wishes to ask a question may press * and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: The first question is from the line of Prithviraj from Unifi Capital. Please go ahead.
Prithviraj (Unifi Capital): Yeah. Hi. I have a question on your margins. Given that from now on every year you will keep adding more number of new beds and that too in the new cities, it may take more time for you to reach break-even. So, how should we look at consol margin profile going forward? Will there be a pressure every year because you keep adding new beds, or you think you can maintain a stable margin?
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