Buy Rainbow Childrens Medicare; target of Rs 1685: Choice Institutional Equities

Choice Institutional Equities's report on Rainbow Childrens Medicare

Strategic network expansion through the hub-and-spoke model, deeper penetration into new markets and a sharper focus on tertiary and quaternary care are set to strengthen the growth trajectory. Additionally, the ongoing scale-up of the IVF vertical is expected to further propel strong and sustainable long-term growth. View and Valuation: We anticipate growth to be driven by strong momentum in IVF services, higher ARPOB and expansion into new geographies through organic and inorganic growth. We forecast Revenue/EBITDA/PAT to expand at a CAGR of 19.6%/22.0%/32.1% over FY25–FY28E.

Outlook

Valuing the stock at an EV/EBITDA multiple of 22x on the average of FY27 and FY28E, we maintain our target price of INR 1,685 and upgrade our rating to BUY (from ADD).