Rainbow Children’s Medicare plans ₹2,200 crore expansion by FY32 | Company News

Rainbow Children’s Medicare plans to invest around ₹2,200 crore to expand its hospital network to more than 5,000 beds by FY32, with the investment to be funded entirely through internal accruals rather than fresh debt or private equity.

The Hyderabad-based hospital chain currently has a network of 2,685 beds and expects to increase this to 3,875 beds by FY30. It is also in discussions for another 1,125 beds, which could take its total capacity beyond 5,000 beds by FY32.

Speaking to Business Standard, Rainbow Children’s Medicare Chief Executive Officer Abrarali Dalal said the company would fund the expansion from internal resources.

“Whatever ₹2,000 crore or ₹2,200 crore that we need is absolutely going to happen through internal accruals,” Dalal said, adding that the company was not looking to raise fresh debt or bring in private equity investors.

Rainbow had around ₹540 crore in cash and bank balances at the end of September 2026, according to Dalal.

The company estimates an average investment of ₹70-80 lakh per bed, depending on the type of hospital and its infrastructure requirements.

Mumbai, NCR in focus

Rainbow’s investor presentation for the second quarter of FY27 outlines plans to add 1,190 beds through FY30. These include 25 beds in FY27, 385 in FY28, 630 in FY29 and 150 in FY30.

The projects include hospitals in Mumbai, Gurugram, Coimbatore, Pune, Indore, Bengaluru and Amaravati in Andhra Pradesh.

The company plans to commission a 100-bed hospital in Mumbai in the first quarter of FY28 and is already exploring further expansion in the city.

“Mumbai will surely have more hospitals,” Dalal said, adding that the company would continue evaluating opportunities once the upcoming facility becomes operational.

In Gurugram, Rainbow is developing two hospitals with a combined capacity of 450 beds — a 325-bed facility in Sector 44 and a 125-bed hospital in Sector 56. It is also exploring opportunities in Noida.

Dalal said the expansion would largely be through greenfield and brownfield projects rather than acquisitions, as there were relatively few hospital operators with a comparable combination of paediatrics, maternity and fertility services.

New hospitals weigh on margins

The expansion comes as Rainbow’s revenue growth continues to outpace earnings growth.

In the second quarter of FY27, revenue increased 23.2 per cent year-on-year to ₹548 crore, while earnings before interest, tax, depreciation and amortisation (Ebitda) rose 14.2 per cent to ₹170 crore.

Ebitda margin declined to 31 per cent from 33.5 per cent a year earlier.

Overall occupancy fell to 49.2 per cent from 52 per cent, even as inpatient discharges increased 15 per cent and outpatient consultations rose 19 per cent.

Dalal attributed part of the pressure on margins to new hospitals, which take time to reach optimal occupancy.

“A new hospital will take around 18 to 24 months to break even,” he said, adding that the gestation period varied across markets.

Hyderabad, where Rainbow has an established presence, typically sees faster patient uptake than Bengaluru, where competition is stronger.

He expects the impact of new hospitals on margins to remain around 0.5-1 percentage point.

Rainbow is targeting blended occupancy of more than 55 per cent over time, with mature hospitals operating at 55-60 per cent or higher.

The company’s FY26 annual report showed that occupancy declined to 46.3 per cent from 50.5 per cent in FY25, even as inpatient volumes grew 6.2 per cent and outpatient volumes increased 12.1 per cent.

Average revenue per occupied bed rose 11.5 per cent during the year.

Dalal said Rainbow would aim for revenue growth of 25 per cent or more in FY27 and slightly over 20 per cent in FY28.

Rainbow is also looking to expand advanced paediatric treatments, including organ transplants, bone marrow transplants, cardiac surgery and oncology.

Paediatrics accounts for around 60-65 per cent of its business, and the company is increasing its focus on higher-end services within the segment.

“We are pushing quaternary care. We are looking at a lot of transplants,” Dalal said, referring to liver, kidney and bone marrow transplants.

The proposed 325-bed Gurugram hospital will have a greater focus on paediatric oncology, including advanced diagnostic and treatment facilities.

Fertility is another growth area. Rainbow currently operates in-vitro fertilisation centres within its hospitals and two standalone fertility clinics in Bengaluru.

Dalal said more than 90 per cent of fertility patients currently come through internal referrals from the company’s obstetrics departments. Rainbow is now exploring ways to attract patients directly to its standalone clinics and expand the business.

International patients are another potential growth driver.

The company is increasing its outreach in West Asia, Africa and Commonwealth of Independent States countries, particularly for advanced paediatric procedures.

Dalal said international patient volumes had nearly doubled over the past six months, although the business still contributed a relatively small share of revenue.

The company has no immediate plans to build hospitals overseas and will instead focus on attracting international patients to its facilities in India.