Stock of this hospital company has zoomed 115% from its May 2022 low

Shares of Rainbow Children's Medicare hit a new high of Rs 884 on Thursday; rallied 25 per cent in five days after the company delivered robust operational and financial performance for Q2FY23.

Shares of Rainbow Children's Medicare hit a new high at Rs 884, on gaining 4.5 per cent on the BSE in Thursday’s intra-day trade. In the past five trading days, the stock of India’s leading pediatric multi‐specialty and perinatal care hospital chain has rallied 25 per cent after the company delivered robust operational and financial performance during the second quarter ended September (Q2FY23).

The stock price of Rainbow Children's Medicare has more-than-doubled or zoomed 115 per cent from its 52-week low of Rs 410, touched on May 17, 2022. The stock traded 63 per cent higher against its issue price of Rs 542 per share. The company made stock market debut on May 10, 2022. Shares had slumped 17 per cent to a low of Rs 450, Rs 92 post issue.

Rainbow Children’s Medicare is a leading chain of pediatric multi-speciality and obstetrics & gynecology hospitals in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds.

In Q2FY23, strong growth was witnessed across all key operating metrics like occupancy, outpatient & inpatient volumes, across hospitals in every geography. Consequently, the company delivered its best ever quarterly revenue, EBITDA and profit after tax (PAT) numbers.

The company’s PAT jumped 36 per cent year-on-year (YoY) at Rs 61.51 crore, on back of 18 per cent YoY growth in revenue at Rs 313 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) improved 147 bps YoY and 37 bps sequentially at 34.99 per cent.

Historically, second quarter witnesses higher occupancy, higher patient footfalls and relatively robust financial performance and the case mix is inclined towards the secondary care pediatrics.  This shift in case mix results in higher occupancy with commensurate moderation in average revenue per occupied bed (ARPOB). The ARPOB for the quarter stood at Rs 46,959, the company said.

Rainbow Children’s Medicare in its FY22 annual report said that in FY23 two spokes i.e. one at OMR Chennai and one at Financial District, Hyderabad will commence operations. The company is in the process of commencing 5 more hospitals i.e. two at National Capital Region, one at Bangalore, one at Chennai and one at Hyderabad.