RAINBOW’s Q1FY26 consolidated EBITDA grew by 11% YoY (down 10% QoQ) to Rs1.04bn, in line with our estimates. 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 fulltime doctor engagement model. Strategic expansion across its core markets in South India also augurs well for its sustainable growth. Our FY26E and FY27E estimates broadly remain unchanged.
OutlookOverall, we see 20% EBITDA/25% PAT CAGR over FY25-27E with healthy RoE/RoCE of ~20%/24%. Maintain ‘BUY’ rating with TP of Rs1,725/share valuing at 27x EV/EBITDA based on pre-IndAS FY27E EBITDA.
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