Rainbow Children’s Medicare (RAINBOW IN) – Q2FY27 Result Update – Margins to improve – BUY
Published on 03 Nov 2026
RAINBOW’s reported inline Q2FY27 EBITDA of INR 1.7bn with growth of 14% YoY. RAINBOW has been investing in focussed marketing and sales initiatives which also include new clinical hiring; benefits of that will be more visible in coming quarters. Company has added 50% bed capacities over the past two years, effectively concluding its current expansion cycle. Overall, we see profitability to improve from FY27 with ~19% EBITDA CAGR over FY26-29E vs 13% CAGR over FY24-26 as new capacities ramp up. Company enjoys higher margins, strong FCF generation with net cash B/S, and healthy return ratios because of the asset light hub-and-spoke model, it being the only integrated multi-specialty pediatric hospital chain in India offering comprehensive services, and its full-time doctor engagement model. Strategic expansion across its core markets in South India also augurs well for its sustainable growth. Our FY27E / FY28E EBITDA stands cut by 4-6%. Maintain ‘BUY’ rating with revised TP of INR 1,650/share valuing at 23x EV/EBITDA based on Pre-IND AS Sept 2028E EBITDA.
