Rainbow Children’s Medicare Gets Systematix 'Buy' On Coverage Initiation— Check Target Price

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Systematix Report

We initiate coverage on Rainbow Children’s Medicare Ltd. with a Buy rating and target price of Rs 1,670, based on a P/E of 40x Sep 2027E.

Rainbow is India’s only listed pediatric and maternity care chain, operating 22 hospitals and 5 clinics with ~2,235 beds across nine cities.

Over the next three years, we expect Rainbow to evolve into a pan India brand in pediatric and maternity care, as they start building their presence beyond South.

Key initiatives include a large hub hospital in Gurugram (North India) and recent acquisition of a hospital in Guwahati (presence in Northeast).

During FY20–25, the company consolidated its southern footprint, delivering robust 16%/ 20%/ 37% revenue/ Ebitda/ net earnings CAGR, with volumes compounding at 8–9% (in line with bed capacity) and average revenue per occupied bed (average revenue per occupied bed) nearly doubling, lifting return on capital employed from 17% to 20%.

Rainbow is aptly placed to benefit from the structural transition of paediatric care from general hospital wards to specialty hospitals. JAMA data underscores this trend in the US, where pediatric hospitals expanded bed capacity over the past decade while general hospitals reduced pediatric beds.

We expect Rainbow to sustain its industry-leading 34% Ebitda, albeit capped, and forecast 13%/14%/20% revenue/Ebitda/earnings per share compound annual growth rate over FY25-28E.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.