Rainbow Children’s Medicare (RAINBOW IN) – Q2FY26 Result Update – Growth to improve as new capacities ramp up – BUY
Published on 15 Nov 2025
RAINBOW’s Q2FY26 was weak quarter with EBITDA grew by mere 1% YoY to Rs1.5bn. RAINBOW 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 FY26E / FY27E EBITDA stands reduced by ~10% as we factor in lower occupancy. Overall, we see profitability to improve from FY27 with 19% EBITDA CAGR over FY26-28E vs 10% CAGR over FY24-26E as new capacities ramp up. Maintain ‘BUY’ rating with revised TP of Rs1,600/share valuing at 27x EV/EBITDA based on pre-IndAS Sept 2027E EBITDA.
