Rainbow Children’s Medicare Ltd. (May Subscribe)

Rainbow Children’s Medicare Limited (RCML) is a leading multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds, as of 30 September 2021.

Its core specialties are pediatrics, which includes newborn and pediatric intensive care, pediatric multi-specialty services, pediatric quaternary care (including multi-organ transplants); and obstetrics and gynecology, which includes normal and complex obstetric care, multi-disciplinary fetal care, perinatal genetic and fertility care.

Key Highlights of Rainbow Children’s Medicare Ltd.

• According to a CRISIL report, it had the highest number of hospital beds amongst comparable players in the maternity and pediatric healthcare delivery sector, as of 31 March 2021.
• RCML had the highest number of hospital beds amongst comparable players in the maternity and pediatric healthcare delivery sector, as of March 31, 2021. As of December 31, 2021, they had 641 full-time doctors and 1,947 part-time/visiting doctors. Currently, 5 of their hospitals are accredited by NABH and 3 of their hospitals are certified by EDGE.
• RCML follows a hub-and-spoke model in Hyderabad, with their Banjara Hills hospital (comprising 250 beds) being the hub and 4 spokes at 4 locations in Hyderabad, namely Secunderabad, LB Nagar, Kondapur, and Hydernagar.
• They have also increased the scale of their reach to patients through a robust digital ecosystem. In the period from April 1, 2020, to March 31, 2021, they conducted over 125,000 outpatient video consultations through their video consultation platform.
  

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Key Risks of Rainbow Children’s Medicare Ltd.

The company’s revenues are highly dependent on its hospitals in Hyderabad and Bengaluru. It is also significantly dependent on certain specialties for a majority of its revenues. Any impact on the revenues from these hospitals or specialties could materially affect its financials.

Valuation of Rainbow Children’s Medicare Ltd.

At the upper end of the price band of Rs 542, the issue is priced at a PE of around 43.5x. Considering RCML’s major thrust is towards childcare health services that are gaining momentum, we suggest investors Subscribe from a medium to long-term perspective.

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