Buy Rainbow Children's Medicare; target of Rs 1725: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on Rainbow Children's Medicare

RAINBOW’s Q4FY25 consolidated EBITDA grew by 9% YoY (down 15% QoQ) to Rs1.15bn, but 5% below our estimates due to weaker occupancy. 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 and FY27E EBITDA estimates broadly remain unchanged, while PAT stands reduced by 3-5%.

Outlook

Overall, we see 22% EBITDA/26% PAT CAGR over FY25-27E with healthy RoE/RoCE of ~21%/25%. Maintain ‘Buy’ rating with TP of Rs1,725/share valuing at 27x EV/EBITDA based on pre-IndAS FY27E EBITDA.

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Rainbow Childrens Medicare - 27052025 - prabhu