Rainbow Children’s Medicare Ltd (NSE: RAINBOW) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Rahul Jeewani — Moderator
Ramesh Kancharla — Chairman and Managing Director
Vikas Maheshwari — Group Chief Financial Officer
Saurabh Bhandari — Head Investor Relations & Group Business Analyst
Analysts:
Damayanti Kerai — Analyst
Bino Pathiparampil — Analyst
Sumit Gupta — Analyst
Unidentified Participant
Ritesh Shah — Analyst
Alankar Garude — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Rainbow Children Medicare Q2 FY 2025 Earnings Conference Call, hosted by IIFL Securities Limited. [Operator Instructions]
I now hand the conference over to Mr. Rahul Jeewani from IIFL Securities Limited. Thank you and over to you, sir.
Rahul Jeewani — Moderator
Yeah, thanks Sejal. Hi, good morning everyone. I welcome you all to the second quarter earnings conference call of Rainbow Hospitals hosted by IIFL Institutional Equities. From Rainbow, we have with us today Dr. Ramesh Kancharla, Chairman and Managing Director, Mr. Vikas Maheshwari, Group CFO and Mr. Saurabh Bhandari, Head Investor Relations and Group Business Analyst.
Over to you, sir, for your opening comments.
Ramesh Kancharla — Chairman and Managing Director
Thank you, Rahul. Good morning, everyone and a warm welcome. It’s a privilege to address such a distinguished group to discuss the earnings for the second quarter and the first half of the financial year 2024-2025, reflecting on our company’s progress, vision and exciting opportunities ahead. In a rapidly evolving landscape, our commitment to innovation and excellence remains steadfast. Today, I will share insights into our recent achievements and the strategic initiatives. I believe that transparency and open dialogue are key to fostering trust and collaboration with our stakeholders.
As we reflect on the second quarter, I’m pleased to report that we have made a significant stride in several key areas. Here are the highlights of the second quarter and the first half of the year. We have strengthened our hub-and-spoke model further with the addition of the new hospitals commissioned in the past year. They have progressed impressively, reaching operational stabilization, standardization and integration into the Rainbow operating model. We believe this will not only enhance our operational effectiveness as a group, but also strengthen our position as a leader in children’s healthcare.
As expected, we have come up with a strong performance in the current quarter with a growth in all key operating metrics across the group including newly opened hospitals in Hyderabad, Bengaluru and Chennai. The progress in our IVF services has been notably promising, gaining significant traction. We are optimistic about sustaining this momentum and achieve further growth in the IVF segment in the coming quarters. We have maintained a strong emphasis on the cost management, ensuring that we optimize our expenses wherever possible. This disciplined approach has been crucial as we manage the additional cost of our newly operating hospitals, while maintaining our group’s profitability. As a result, we achieved our highest quarterly revenue, EBITDA and PAT figures along with the positive patient feedback.
We are facing some challenges in international business, particularly in some countries such as Bangladesh, Oman, Kenya and Sudan because of geopolitical situations. These countries have significantly decreased the issuance of health permits for patients pursuing medical travel. So, in response, we are actively pursuing with the health authorities of these countries and simultaneously we are also exploring opportunities in other potential markets. We have largely a retail brand named Butterfly Essentials, a specialized retail store designed to cater to the unique needs of women and children. Butterfly products aim to transform the retail experience within our hospital facilities for customers by offering a wide selection of items that prioritize organic and natural ingredients for mothers, babies and children.
In the first phase, we plan to open Butterfly Essentials stores in most of our existing facilities. I would like to bring something different now with most fascinating sequence of events in human life is in early childhood development. Any aberration would result in a long-term consequences in neurodevelopmental milestones. We are witnessing a significant increase in childhood developmental and behavioral problems. We recognized the need for a comprehensive child development center to support these children. So, we have set up an 8,000 square feet state-of-the-art comprehensive child development center adjacent to a cardiac center in Banjara Hills, Hyderabad is expected to launch on 14 November, Children’s Day aligning with our Foundation Day.
Our steadfast commitment to quality has allowed us to provide outstanding clinical and patient care. In line with this dedication, our Vishakhapatnam Rainbow Children’s Hospital has recently achieved NABH accreditation. With this, 13 of our hospitals are NABH Accredited and three have earned JCI Accreditation. Notably, we are the only Paediatric hospital chain in the country with three JCI Accredited hospitals facilities.
Now, delving into the numbers for Q2 financial year FY 2025, our revenue registered a growth of 25.5% amounting to INR417.5 crores. Simultaneously, our EBITDA increased by 25.1%, reaching INR147.1 crores, while PAT registered a growth of 25.1% to INR79 crores. I’m happy to share that all these growth numbers of 25% realigns with our Silver Jubilee Year. Our overall occupancy rate for the quarter was 59.9% with the mature hospitals achieving 68.6% occupancy and the new hospitals including the recently commissioned hospitals in Hyderabad, Bangalore and Chennai recording a 43.2% occupancy rate.
Coming to the update on upcoming projects, the project work of our regional hub hospital in Rajahmundry Hospital, 100 beds is progressing quite well and is poised to commence operations by March of 2025. The spoke hospital in Hennur, Bengaluru which is a 60-bed hospital is expected to be delayed due to the conflicts between the landlord and the builder. However, all these issues have been sorted and now the hospital looks to be commissioned by end of H1 FY 2026.
The project work for our regional hub hospital Coimbatore of 130-bed hospital has just started and is expected to be completed in 24 months’ time. On Gurgaon projects, we have submitted the drawings to HSVP for building sanction approvals for sectors 44 and 56. We are waiting for the approvals from HSVP to start the project work. We signed a lease agreement for a 90-bed Brownfield Spoke Hospital, a rapidly growing population in Electronic City, Bangalore City. This building is in the final stages of construction. We shall commence the interiors very soon and we expect this hospital to commence operations by Q3 FY 2026. With this, it will be the sixth hospital of Rainbow Group in Bangalore City.
Beyond our growth plans, I would like to highlight some of our significant achievements that underscore our dedication to pediatric and perinatal healthcare excellence. During the last six months, we have treated a lot of sick children in pediatric intensive care and as well as pediatric subspecialty children. I would like to discuss a couple of such cases. A 21-month old child was diagnosed with a spinal muscular atrophy, it’s called SMA. It’s a rare genetic condition and which carries a significant developmental delay. It delays motor milestones, especially. The treatment to this genetic condition includes administering ZOLGENSMA. It’s an expensive gene therapy drug, which costs up to INR14.5 crore. So, this child was very fortunate to have financial support from a large Indian public sector company and its employees to raise a full amount to support this child. Our pediatric neurology team at Rainbow Children’s Hospital, Secunderabad, led by Dr. Ramesh Konanki, one of the top experts in the country with a large experience in treating spinal muscular atrophy. This child received gene therapy under special clinical circumstances. The follow-up of this child following therapy indicates the child is gradually improving motor skills and approaching independent walking.
In another case, there is a two-month-old child who has been having breathing difficulties since birth, a 2D echocardiogram revealed a right ventricular outflow obstruction, a mass which is adjacent to the pulmonary walls causing the obstruction. This baby required an open-heart surgery at two months, discovered a large mass occupying almost 90% of the right lower heart, which is one of the chambers, right chambers and obstructing the outflow of the blood flow. The cardiac surgical team could meticulously extract and removed the entire mass and the baby made a full recovery in a weekdays’ time. The histopathology of the mass demonstrated is rhabdomyoma. Rhabdomyomain children is fairly benign and we expect this child to lead a normal life. These cases emphasize the importance of a multi-disciplinary approach for tertiary and quaternary care for children to achieve better outcomes.
As we celebrate synergy via Rainbow in providing world-class children’s care in India, I extend my heartfelt gratitude to our doctors, nurses, managerial team and the entire Rainbow family, along with our valued stakeholders and young parents who have contributed to this incredible journey.
With that, I will now pass the mic to Group CFO, Mr. Vikas Maheshwari, to take you through the financial update. Thank you once again for joining us today. We look forward to your questions and insights as we move forward with us.
Vikas Maheshwari — Group Chief Financial Officer
Thank you, sir. A very good morning to all of you and thank you for attending this investor’s conference. I’m pleased to brief you on the financial performance and the key developments of Rainbow Hospitals for the second quarter and first half of financial year FY 2025. Our operating revenue for the quarter stood at INR417.5 crores, reflecting a growth of 25.5% when compared to the corresponding quarter of the previous financial year. For H1, our revenue stood at INR747.6 crores, reflecting a growth of 20.6% when compared to the H1 of the previous financial year.
Our EBITDA for the second quarter amounted to INR147.1 crore, marking a 25.1% growth compared to the same period last year. For the H1, our EBITDA stood at INR240.8 crores, reflecting a growth of 17.3% when compared to H1 of the previous financial year. Our EBITDA margin for the current quarter is 35.2%, while for H1 our EBITDA margin stands at 32.2%. The profit after tax for the quarter is at INR79 crores, marking a growth of 25.1% in comparison to the corresponding quarter of the last financial year. For H1, our PAT stood at INR118.7 crore, reflecting a growth of 13.5% when compared to H1 of the previous financial year.
In terms of the operational performance, both outpatient and inpatient volume increased by 20% and 22% respectively, when compared to the corresponding period of the last financial year. Deliveries grew by 12% compared to the corresponding period of the last year. Our payor mix continued to remain robust and balanced with 52.8% of the revenue coming from the insurance and the balance 47.2% coming from the cash patients. For the H1, the payer mix stands at 47.7% cash patients and 52.3% as insurance patients. Furthermore, I would like to inform you that our international business now constitutes approximately 2% of our total business for the second quarter. As highlighted earlier by our CMD, we are facing some challenges in the international business and working on this simultaneously.
I am pleased to inform that our company’s balance sheet remains very, very robust with a net cash position of approximately INR580 crores as of September 30th of this year and will support our ongoing capital expenditure plan. Given our current cash and anticipated internal accruals in the coming years, we remain very confident in our ability to complete all the capital expenditures through internal accruals without any debt financing. During the quarter, the company has invested approximately INR23.4 crores in the capital expenditures.
With these insights, I conclude my financial update. I now invite questions and suggestions from the participants. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Damayanti from HSBC. Please go ahead.
Damayanti Kerai
Hi, good morning and thank you for the opportunity. Sir, my first question is on your plan for child development center. So can you talk a bit more about this new initiative in terms of what kind of demand you are seeing in the market? Say, out of 1,000 children, how many might require this sort of treatment? So any color on this new initiative will be very helpful.
Ramesh Kancharla
So, Damayanti this as a kind of in the modern society, in a growing modern society, the — one of the significant things which we have been seeing is that the behavioral and developmental problems. Developmental problems as a result of — we have various other neurological, other [Indecipherable] problems, early childhood infections, that’s one significant for the group. Other significant group is the behavioral spectrum where there is attention deficit disorders, autism, autism spectrum, so early childhood psychological problems. So these are all the things constitutes very large proportion. For example, autism itself is about 1 in 80 and the recent report says it’s come down almost 1 in 60. So there’s a large number of children who actually requires this fairly long-term therapy. So this requires definitely a specific approach. At the moment, we do see a very large number.
For example, for your information, we have about six pediatric neurologists in Hyderabad City under Rainbow Group and all of them see at least about 20% of them are behavioral in development problems. So this definitely requires not only Rainbow Group, the country definitely requires to address this problem very seriously because of increasing numbers year-on-year. So what we see is that this — they are coming now to our hospitals, but this children requires a specialized environment, specialized therapies and specialized doctors and a whole team of our kind of developmental team, including with education psychologists and physiotherapists, occupational therapies and developmental clinicians, there is a whole lot of team is required. We always have about almost 80% of the team. I think we’re segregating — collecting all of them together in one place and trying to kind of deliver excellence into this children. The behavioral problems for — in children results serious problems to mother, so they’re really looking out for these kind of necessities.
Damayanti Kerai
Okay. So you mentioned you have already say 80% of doctors and other medical people who are available in this segment, but it will be in a different unit altogether dedicated for this particular center?
Ramesh Kancharla
Exactly, exactly.
Damayanti Kerai
And doctor, did you mention all the neurologists — top neurologists in your hospitals almost 20% of patients which they receive save some or other such issue? Did I hear that correctly?
Ramesh Kancharla
Yeah, in the outpatient department, 20% of the volumes are coming in some sort of a neuro developmental problems or behavioral problems. So this — obviously, this is a different segment of the neurodevelopmental from the mainstream neurology, this requires a very specific focus and special attention and a team of people are more important rather than one single individual. And also, there are a lot of therapies are coming up now for these children and it’s kind of go in a sessions for example, behavioral modification for attention deficit disorder is very different and how you approach autistic child is very different. This is something which is the need of the hour for the country.
Damayanti Kerai
Sure. And again, I think similarly, I want to hear some more update on your new initiative Butterfly Essential. So I understand your hospital already have pharmacies, right, which are like supplying these baby and mother-related products. So why like this new initiative, which is coming up, when you already have pharmacies? And then just wanted to check here, products will be on a private level or it will be a multi-brand store sort of facility in the hospital?
Ramesh Kancharla
Okay. So as a pharmacy, you can only address to the small segment. So in terms of the visibility also, the mothers and children or for the babies, they would expect pharmacy to provide so much of a range of product range, what is required for the pregnant women, as well as babies and children. So what kind of — we are trying to address is that address to the specialized vertical because if I say that now how many people are actually trying to buy outside compared to the hospital is very less number because people’s perception of the pharmacy is very different from a retail store.
So we are trying to create that niche of that — niche area where retail specifically focused there’s a lot of medically aligned retail which we could improve, which we can give it with not only a kind of a vertical revenue, it gives a lot of comfort to the patients and also accessibility to the products because we take certain degree of ownership in choosing the products and also as a hospital and we display a lot of responsibility in terms of the product range and those things. We try to align more towards kind of what patients require, what babies require, right from soaps to shampoos to everything else. We can cure it better and offer them a kind of a wider range of the products within the hospital, so they don’t have to step out and go to other shop.
Damayanti Kerai
Sure. That’s clear. And my last question is on the IVF services, which you initiated a quarter back or so. So you mentioned you have seen good momentum. So can you put some number like how things are picking up on that vertical?
Ramesh Kancharla
So as I mentioned in the previous call also, we are looking at our IVF growth in very organic growth in the B2C and very unlikely that our B2B growth will come because we’re being a mainstream obstetric service delivery. So I think within our group, word of mouth on the B2C is going to be a dominant play for us to build our IVF. So I think so far whatever we have seen is now, we were doing the IVF in that three centers earlier what from H1 comparison to the last year and we see about 50% growth. So that’s significant and also the revenue also, we have seen about 40% growth, right?
Vikas Maheshwari
Yeah, 73% growth.
Ramesh Kancharla
73% growth. So I think it’s early feat. We are actually quite happy and also the results are very encouraging. Even the doctors also within the hospitals are very, very optimistic about our — number one, our service delivery for these patients; number 2 is that overall happiness quotient of what on doctors and patients.
Damayanti Kerai
Sure, Doctor. Thank you very much for your response. Thank you.
Ramesh Kancharla
Thank you. Thanks, Damayanti.
Operator
Thank you. [Operator Instructions] The next question is from the line of Bino from Elara Capital. Please go ahead.
Bino Pathiparampil
Hi, good morning. Just wanted to understand the ramp-up in the newly opened centers over the last few months. Last year, we have opened a couple of centers, what is the occupancy level there? And are we profitable there already or what is the path to profitability?
Ramesh Kancharla
I think we opened about end of the last quarter of the financial year and they’re actually tracking fairly well — Hyderabad center is doing very well because it is our native, in — other centers actually have a good traction, both night periods and low periods. I think we are very close to kind of a breakeven. Of course, this is a business season now, [Technical Issues] but as we look at the overall trajectory, very encouraging. It’s a pretty good going.
Bino Pathiparampil
Okay. So we are almost profitability during the next couple of quarters from probably they should breakeven and then onwards extremely improve at a right assessment?
Ramesh Kancharla
Yeah.
Bino Pathiparampil
Okay. Got it. Thank you.
Operator
Thank you. The next question is from the line of Sumit Gupta from Centrum Broking. Please go ahead.
Sumit Gupta
Hi, good morning. Am I audible?
Operator
Yes.
Ramesh Kancharla
Yeah, please. Yeah, Sumit Bai, yeah.
Sumit Gupta
Thank you for the opportunity. So just — sorry, I joined the call a bit late, so sorry for the repeat question if it may. So sir, for the matured hospital, the revenue growth is stupendous, I understand because of the occupancy, but what is driving that majorly? I understand 2Q is relatively strong, but still just want to understand more on the fundamental aspect of…
Ramesh Kancharla
Vikas?
Vikas Maheshwari
Yeah, Sumit. So the matured hospital, obviously, as the busy season comes which is quarter second for most of the hospitals, including adults and pediatrics, it becomes busy. And as the mature hospitals they have already existing patients who have already experienced with us. They have a history of more than 5 years in the locality, so any issues comes with the pediatrics mother they keep coming to our hospitals. So that is driving our growth. So you have seen both IP and OP volume growth in case of our mature hospitals. So it is a regular organic growth, which I will say, which all our mature hospitals are showing.
Sumit Gupta
Understood. And so what kind of margins are there for matured and new?
Vikas Maheshwari
So we don’t disclose the margin based on the maturity. Overall, at the company, we show as a margins, but obviously, matured hospitals will have a better EBITDA margins than the new ones because every year, we are adding the capacity and mature capital will have always some impact of the new hospital, which is getting opened. So obviously, the mature hospital will always have a better output, which is the industry phenomena, right?
Sumit Gupta
Right. So like this is superb, 35% kind of margins and in 2Q, obviously, do this kind of margin affect? So in the second half also, we can expect around 32%, 33% kind of margin?
Vikas Maheshwari
So what we have guided, Sumit, is that over a longer period, we will be able to sustain this margin whatever we have shown in H1. So because of little bit seasonality, right? In the quarter first, the margins will be always little bit impacted because in the hospital, there is a operating leverage which kicks in. But the business is generally the quarter one is the weakest quarter for us and the quarter second is the strongest quarter. So if you look at the H1 figures, whatever the EBITDA margins we are showing which is, again, post IndAS numbers, we should be able to suspend those numbers, plus/minus 1%, depending upon what type of capacity we are adding based on that we should be able to maintain that EBITDA margin.
Sumit Gupta
Okay. And just sir, lastly, on the EBITDA per bed. So what kind of EBITDA per bed do you target? So as of now, so this quarter, it was a decline of nearly 9% to 10% on Y-o-Y basis. So just on a annualized basis or for let’s say, over the next 2 to 3 years, what kind of EBITDA per bed we can target?
Vikas Maheshwari
See, if we are keeping the EBITDA margin same, Sumit, I think for per bed EBITDA will also not change. What we have to factor in is that whatever the H1 number has come, we have to take it as a realistic basis and then project that accordingly.
Sumit Gupta
Understood. Thank you.
Vikas Maheshwari
Thank you, Sumit.
Operator
Thank you. [Operator Instructions] The next question is from the line of Karan Gupta from Invest Portfolio Management. Please go ahead.
Unidentified Participant
Hi, good morning.
Ramesh Kancharla
Good morning.
Vikas Maheshwari
Good morning.
Unidentified Participant
Yeah, yeah. Sir, my first question on the ARPU side is, continuously from the last quarter…
Vikas Maheshwari
Karan, there is a lot of disturbance from the voice, if you can just be very closer to your handset, please?
Unidentified Participant
It is audible now?
Vikas Maheshwari
Same, little bit, much, okay, we can continue if we can’t…
Unidentified Participant
Yeah, yeah. Yeah. Sir, my first question is ARPU side is this quarter is obviously on the decline side? And the second question on the Butterfly retail stores, what kind of are [Technical Issues].
Operator
Mr. Karan, I would request you to please use your handset. Mr. Karan, we are not able to hear you.
Unidentified Participant
Hello? Now it is audible?
Operator
Yes, sir.
Ramesh Kancharla
Yeah, yeah, you are better now.
Unidentified Participant
Yeah, yeah. Yeah. So my first one is on the ARPOB side [Technical Issues] this quarter. And the second one on the Butterfly side, what’s your [Technical Issues].
Operator
Ladies and gentlemen, we have lost the connection of the current participant. We will move on to the next participant. The next question is from the line of Rahul Jeewani from IIFL Securities Limited. Please go ahead.
Rahul Jeewani
Yeah. Hi, sir. Sir, in Bangalore now with, let’s say, the Hennur and Electronic city expansions coming up next year, we will have almost close to 600 beds in Bangalore and Hyderabad capacity right now is around 950 beds. So what kind of a potential do you see in the Bangalore market over the next five to six year period? So can we get to, let’s say, the kind of capacities which we have in Hyderabad and maybe potentially overtake in terms of the capacities, which Bangalore could have versus, let’s say, Hyderabad four to five years down the line?
Ramesh Kancharla
I think with the — see, the Hyderabad story is about 25 years, the Bangalore is only about 8, 9 years, Rahul. So what we are trying to do in Bangalore, in Hyderabad, we’ve come to the stage, we only do when there’s a demand. So we do it only for demand in Hyderabad. In Bangalore, we are looking at opportunistically because the — Bangalore is a lot more micromarket-driven. So we are, at the moment our four hospitals in the four key areas. And what we are trying to do is two more, one in Hennur and one in Electronic City. With that, I think we kind of have a fairly good kind of spread in the Bangalore City.
However, I think we’ll have to see that how these hospitals are going to go next 2, 3, 4 years time and we’ll get into the kind of doing the more centers as the demand arises anywhere. For example, the central cities, something area, there some areas that they have, but I think we don’t want to go rush in and do something as a kind of expansion, scale up expansion. And right now, once these two are done, I think my focus is going to be a strongly kind of a build these profitability of the centers and also to build a hub more strongly and then see look at the demand, whatever the demand then becomes easier for me doing bed for demand is less stressful, right? So this is how our approach is going to be for Bangalore.
Rahul Jeewani
Sure, sir. So wherever you see demand, let’s say, in Hyderabad and Bangalore, you would be keen to add incremental capacities in these markets?
Ramesh Kancharla
Exactly, yeah.
Rahul Jeewani
Sure, sir. And sir, in the Hyderabad market, one of your peers is entering into the Hyderabad market with the a 300-bed women’s and child hospital. So how do you see the competitive intensity in your core Hyderabad market?
Ramesh Kancharla
No, I mean I think you won’t — see, we welcome anybody who wants to do a good quality of work in the pediatric domain anywhere in the country, whichever is a city. That’s not a problem. But I don’t think that we would have any problems because we always have a competition in Hyderabad, the competition there is always better and also perform better and also realize things better. So that’s how, I always have looked at it. I always welcome the competition. But one thing everyone has to — multi-specialty trying to focus on a single specialty is not going to be that easy because all my focus 24/7 is only 1 agenda, how much they can actually drive that focus a multi-specialty and single-specialty is a big question to answer, I mean I believe — but someone who is as disciplined as us, I’m sure they’ll be able to do it.
Rahul Jeewani
Sure, sir. So while we appreciate, sir, then maybe some of these multi-specialty hospitals haven’t been as successful in scaling up children dedicated hospitals. But with increasing competitive intensity in Hyderabad, would we see some sort of an impact in terms of a doctor talent that maybe these other competitors become more aggressive in poaching doctor talent from us?
Ramesh Kancharla
See, what happens is, we’ve got a kind of — we’ve built a kind of a — see, unlike other hospitals, pediatric hospitals, doctors cannot take the business away very easily because it’s a very it’s a brand, it’s a overall service system is more important than kind of doctor alone, right? So that is what is — is a medical branch. It’s not something like a surgical branch where the surgeon moves away, he can take 70% of the surgical patients, somebody needs to kind of understand that. So second important thing is, we are kind of — we produce lot of doctors for internally for our purposes. I think as long as kind of we have a balance, we are packed with the doctors in Hyderabad, we don’t have problems.
Efficiencies in terms of things, I mean I wouldn’t expect people to take such a decision because patients don’t move with the doctors in pediatrics domain, that’s an important thing. And we — it happened to us in the past also quite early for 2009, 2010 — I mean at least 30% of the doctors gone away and start their own venture, but they couldn’t take even 5% of patients. So that is what the strength of the brand is, the strength of the model actually, operating model and top, top in the brand and model.
Rahul Jeewani
Sure, sir. And sir, last question from my end. We were looking at M&A opportunities in, let’s say, Northeast and West India market. So any progress in terms of inorganic as such?
Ramesh Kancharla
So it’s early phase to discuss about it. I think they — I mean, when company is really kind of consolidating when it’s happening, definitely, I would come forward and let you all know.
Rahul Jeewani
But sir, anything which you can call out in terms of, let’s say, the potential sizes of these assets in terms of which you are evaluating either on bed number or what kind of, let’s say, hurdle ratios would you be using for evaluating these assets?
Ramesh Kancharla
Well, we are in a very early task we have, I think let’s give some more time to discuss some of those things.
Rahul Jeewani
Sure, sir. Thank you sir, that’s it from my side.
Ramesh Kancharla
Thanks, Rahul.
Operator
Thank you. The next question is from the line of Ritesh Shah from Lucky Investments. Please go ahead.
Ritesh Shah
[Technical Issues] I have a few questions. One, can you tell me on the slide, I couldn’t see the margins that we would make in a new hospital and margin that you would make in a matured hospital? Other details are there, but if you can just share at this stage of occupancy ratio that you have put in a new hospital, what are the margins?
Ramesh Kancharla
New hospitals, Ritesh, is a mix of a very newly started to the up to four, five year-old hospitals, right? So, but see, it gets really complex to give a kind of a unit-wise one year-old, two year-olds, which is why [Indecipherable] two buckets.
Ritesh Shah
So I’ll put it differently, sir…
Ramesh Kancharla
For the consistency and also visibility, I think rather better in two buckets, matured hospitals and new hospitals and the site.
Ritesh Shah
No, so the new hospital bucket, whatever bucket you have today, irrespective of the vintage of that bucket, what will be the margin there?
Vikas Maheshwari
So, Ritesh, let me take this question. So as a company, we don’t would like to share the margins on the matured hospitals and the new hospitals, which is likely business hub-and-spoke model and then…
Ritesh Shah
No problem, sir. No problem. Can I ask you differently then? At what utilization level does a hospital start becoming profitable?
Ramesh Kancharla
So it depends on geography, again. If I do an hospital in Hyderabad, very likely at the end of the year, it will be either breakeven or profitable. In Bangalore, it will take about 12 to 15 months’ time. Chennai, maybe takes 18 to 24 months’ time. So depending on your brand recognition and also your and also depends on micro market where you are in and kind of the doctors you are able to curate for that particular center. So these are all things kind of go hand-in-hand together. So broadly, that’s how I can say. If I do it in Hyderabad, first year, at breakeven and…
Ritesh Shah
And what utilization will it be, sir? That utilization there will be 20%, 25%?
Ramesh Kancharla
Yes, 30%, 32% we are actually doing, that’s not generally ballpark is.
Ritesh Shah
Okay. The other question is in your focused markets of Hyderabad, Bangalore and Chennai, if you could tell us the ratio of pediatric hospital to a normal specialty hospital, what would be the ratio of beds or ration, is it one is to…
Ramesh Kancharla
Yeah, no problem. So more or less in all our hospitals, pediatric beds and the mother care beds, the ratios will not change actually. These will be more or less same.
Ritesh Shah
No. My question is, if let’s say, 100 is the total pool of beds in, let’s say, Hyderabad across all hospitals, across all types, in that, how many beds obviously or how many beds will be a pediatric bed? One bed 200, two beds 200, ten beds 200?
Ramesh Kancharla
Okay. See, it works that way. So we have a different hospital. Usually, 30% of the beds are dedicated to the obstetric, some of the spokes, we do up to 40%, 50% also. So it depends on the micro market, what is the requirement and these thing that way, bespoke level. So hub is always like a kind of a 70%, 75% of pediatrics, 25% is about obstetrics, so that’s in terms of separation of beds. Business is the same, numbers are the same, when you look at the slide and everything, it’s kind of our business is 30% and our numbers are 30%, OBG gynecology compared to pediatrics.
Ritesh Shah
Sir, I was actually asking for the market. I know for your company, but for the market, if there were 100 beds treating all types of patients, your case pediatric bed will be what, 1%, 2% of that? See, because in US for every 10 or for every 20 hospitals, we have one dedicated pediatric hospital. So I was just figuring out that what is the ratio that we’ve reached in India?
Ramesh Kancharla
Sir, we have not kind of — we don’t have a knowledge about other hospitals, people like you should do this diligence actually [Speech Overlap].
Unidentified Participant
Maybe you can have a paid [Indecipherable]. And last question is, sir, in the Hyderabad market, Bangalore and Chennai in your opinion what can be a pediatric bed potential in terms of number of beds?
Ramesh Kancharla
There is a growth market outlet like Bangalore and Hyderabad, these are all the growing markets, especially younger populations. If you look at the report, consumption of the retail space, IT space and the number of flats, which are coming up in these two cities and Pune and you could see that the growth of population is definitely is kind of in the area of 15%. This most of the population. So that’s how we can say it. I don’t think it’s the right estimate, it’s a rough estimate.
Ritesh Shah
Sorry, I didn’t get it, sir.
Ramesh Kancharla
So when you look at the growth of the real estate, office space consumption, IT consumption and also the housing, the flats and villas and those things, the consumption, the year-on-year growth in the markets of Hyderabad, Pune and Bangalore, they’re definitely normal 15%. The number of the buyers of the new houses and those things. So, I’m sure, I can’t say it absolutely they are the numbers, but there is definitely — there’s a 12% to 15% increase in the end population in each of the cities year-on-year, that’s most of these populations are coming into city are NPK and that is notable, which is why I think our growth is not a problem in these young cities and like Hyderabad, Bangalore, Pune, Gurgaon and these are all the cities are most vibrant, right?
Ritesh Shah
Okay. And after these these markets, if there can be another focus market, which can eventually be a target market for you, what it should be?
Ramesh Kancharla
I think right now, we are — our next focus is in NCR. NCR itself is huge visuals and that’s I think as we NCR start our four Gurgaon hospitals, then obviously, we’re going to look around more micro markets in the NCR.
Ritesh Shah
Okay. And lastly, in the next 24 months, what is the beds which will come on stream for us, the number of beds?
Ramesh Kancharla
24 months, I think we have about…
Vikas Maheshwari
380 beds. So roughly 380 beds will come, which will be 100 beds, which we are starting by March 2025 and then two hospitals, which is coming at Bangalore, which is Hennur and Electronic City, roughly 150 beds there. And Coimbatore, which will be the fag end of FY 2026, 130 beds, so total 380 beds are expected in next 24 months time.
Ritesh Shah
Okay. So when I look at your OR at about 69% in the quarter for matured hospital, it looks like that the annual OR is about 60% [Phonetic] there. I remember last call’s historical call is to always say that penetration on a annual basis is about 60% OR occupancy business because we have a seasonality element in it. So is it fair to assume that the matured hospitals for you, which is like this 1,200, 1,300 beds is speaking out in terms of OR in terms of OR you may have an ARPOB-led increase that’s different, but on OR, is this comment correct or you want to modify this?
Vikas Maheshwari
In the peak season, we have multiple levers, Karan, to accommodate the patients, which we have done, all of our units have done to accommodate the patients with a faster turnaround, adding few additional beds on a temporary basis, etc, we try to manage. I think we will continue to do this and what you are saying is that 60% on the matured is speaking it, which I partially agree, it has another 5% delta, it can come.
Ritesh Shah
Another 5% delta? So which means that the matured hospital for once on a volume basis can have this 5%, 10% delta? And then whatever is the case mix or price-led increasing, which will flow in your matured hospitals?
Vikas Maheshwari
And also, Karan, what happens is the medical hospital, right? So any matured hospital to grow, what the company of the hospital should do is that keep adding the other super specialties and…
Ritesh Shah
Yeah, yeah. That’s why I said case fixed and price-led, sir.
Vikas Maheshwari
So that we continue, some price corrections will continue. And obviously, if the demand is high, we will not be shying away from adding the beds, which we have done in one of our hospital at Hyder Nagar at Hyderabad, we have added capacity. If you see the robust demand, obviously, we’ll be adding the beds there. We did — added. So we will keep on adding the beds on the existing hospital if the demand is sustainable and we continue to grow.
Ritesh Shah
So you add the structure — you need a warm style guide structure is add, but there’s a limit to what you can add, right?
Ramesh Kancharla
We can — see, we do will take multiple ways away. Sometimes we move out of some of these services, add more beds and take our medicine building for office, some of the diagnostics and those things. And increase beds, we try to — sometimes we build up small block that is individual, land parcel available, land is available, so we’ve done that. We’ve added 150 beds addition to the Hyder Nagar recently adjacent to it, right, next to it. And we added 12 beds in L.B. Nagar for the demand. So creating some space from the existing fleet and we are talking about some space for patients and IVF center in the adjacent building. So we keep doing these things — on discovery and there is there, we discover our self how to take the opportunity.
Ritesh Shah
Okay. And lastly, sir, can you give us the revenue mix for H1 in terms of at least the revenue mix between matured and new? What is the revenue mix?
Vikas Maheshwari
Again, Karan, we don’t share this, figure it out by ARPOB and occupancy we’ve given you…
Ritesh Shah
Okay. No problem. No problem, sir. No problem. Thank you. Thank you, sir and all the best. Thank you and Happy Diwali, sir. Thank you.
Operator
Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Alankar Garude
Hi. Good morning, everyone. Sir, we had mentioned once that if there is demand, we might look to add another hub in Hyderabad at the appropriate time. Now given incremental bed supply coming up from competition, do you think there is enough demand to add another hub in Hyderabad over the medium-term?
Ramesh Kancharla
I don’t know for them, but definitely, when I feel that there’s another hub required, I will definitely do it. I think that maybe I don’t know whether it’s a two years’ horizon or three years’ horizon or five years’ horizon, we will definitely do another hub at some point in 5 years down the line in Hyderabad, that’s thought process. It’s not been consolidated, so we would do it because this is a place where people trust us, people believe in us. It’s just not the Hyderabad, it’s the entire 2 states of people support us and and also the neighborhood like Northern Karnataka and also parts of Maharashtra comes to us. This is a large domain and we have the choice of hospital for these areas.
Obviously, if there is — and also, we need to see the betterment as we look future, build more strength and more specialties and do a lot more work based on what — how is it going to pan out now in the next 3 to 5 years’ time, we will definitely look at — see, for example, we are in the financial district about 100 beds, we have opened up 100 beds and it’s doing very well. I don’t think I’ll probably need another — some more beds in Financial District in Hyderabad. So therefore, I may do another stoke or I mean decide to do the large hub hospitals. So building is another problem, I can do a brownfield over there, the entire building which are constructed and been vacant. So I mean, that’s a call which kind of who we take at some point based on math what we think about it.
Alankar Garude
Understood, sir. Sir, and if you look at the last decade, we have entered into several new markets. So Bangalore, Chennai, then the two hospitals in Delhi now, I mean, maybe we can also include the upcoming Gurgaon and there is Vizag as well. So if you look at the next five, 10 years, you mentioned about Delhi NCR and plans over there. But apart from that, apart from these existing markets, which other markets can we potentially look to target?
Ramesh Kancharla
I think see, we have always been very disciplined. Wherever we go, we want the position of strength of much larger and Bangalore will pan out like Hyderabad as we move forward in five to seven years’ time. Chennai also will have a significant number of beds. And also, there will be significant beds in Andhra also. That’s a South story. Now we are looking at the kind of — once we kind of start in Gurgaon we start operating the hospitals then I will obviously look at kind of how the [Indecipherable] to go in the NCR whether how you look at Noida, [Indecipherable], how do you look at Hyderabad, there is so many like micro markets are there. So obviously, we’re understanding which much better once we start hospital, we will definitely take NCR as a kind of an extra larger space for us to expand. And if we do take up of another geography as a investor somewhere else, we will take the similar view there — if it is West or Northeast, we will take a very similar view of what we have done in these four geographies. I think that that’s what we look at it. Very unlikely, we do sporadic small, small hospital of 100 beds in city, that’s something which kind of we are not really keen to do it.
Alankar Garude
Fair enough, sir. And one final question, possible to qualitatively comment on the performance of Bangalore, Chennai and Madhukar, particularly Chennai and Madhukar, if you can comment? Thank you.
Ramesh Kancharla
I think we — Bangalore is going quite well and that Chennai is firstly, there’s a lot of new beds are there. Chennai we have five years of operation, sixth year running. And there are 2 new hospitals one is about less than 2-year old just opened up and Chennai as a market is a very good market, how I see it is. But Chennai takes its own a little bit of time to kind of progress and build. If I had good doctors, a good name and I think we have been well in Chennai. I mean, last year, there was a little bit of slowness, we addressed all the issues, going fairly well. I think that we have done quite well in the last quarter. And even Madhukar also, I think that things have moved well, the stock lines have moved in Madhukar also overall. But Madhukar will not leave you kind of EBITDA swap like the other Rainbow Hospitals because it is just not our model. It is just kind of we manage the beds and the structure is very different.
So — if I can do a Madhukar about at 12% EBITDA, it’s good, it’s good. I think for me, the Madhukar is something is kind of hard to establish our brand to establish our service model to understand those things, it will be helpful to us as long as I do about 12% to 15% as we move forward, 12% to 15% EBITDA comes in the next one to two years’ time that itself is a kind of — we’re not expecting anything more than that because I cannot do anything more.
For example, I do about INR77 fair lakhs of free rent every month. So otherwise, that would have come to EBITDA, right? So — and also it’s a only managed bed and it is again of a lot of money flows back in the front of rental or other forms to the owner. So it is a — our capex for rent was low. So when you look at combine all the factors together, it is not highly. We have seen other hospital, other groups which runs similar model like [Indecipherable] there is one hospital in East Delhi, they also sail the same thing, because the hospital will do well, but you can’t generate EBITDA.
Alankar Garude
Sir, just one follow-up there on Delhi NCR. If you look at the two sectors wherein we are opening our hospitals in Gurgaon, clearly, there are lot many more multi-specialty hospitals coming up for expansion over the next three to five years in that same micro market, if I take a certain radius, I understand that our model is different. But just can you share your thoughts on whether incremental multi-specialty capacity coming up, significant capacity coming up in that same micro market, is it something which worries us? Is it something which is something which we are actively considering? And also, I mean, when I look at our future plans, do we also consider upcoming capacity of multi-specialty beds coming up in any of the newer markets for us?
Ramesh Kancharla
What happens is, Gurgaon, I think our people see, you can talk to other promoter also. I don’t think people are looking at Gurgaon as a micro market. People are looking at Gurgaon as a kind of health city overall. And it is for NCR or for the north, everyone’s view point is it’s not just for Gurgaon. It is for the NCR, it’s for the North and it’s for the international. Every hospital’s thought process is in the same line. So sitting in the Gurgaon, you want to drive the opportunities. In a way, what happens is the network effect of Gurgaon, the longer term, my personal view, I’m not sure about other promoters. They may have more knowledge about because they’ve all running the hospitals. So it will create a large ecosystem for the medical care in the country.
Maybe you’ll see that this is one of the kind of the healthcare hub in the world. So that is how the Gurgaon is going to shape up. If you see the people putting the capex’s and the quality of the hospital, are actually a condition to be proud of what the promoter is doing in Gurgaon. So that is how the network effect works for everybody. I don’t think rather competing with each other, there is a competition between each of us, but opportunity also will be larger and also people will come from the guider part for the country towards — flock towards to Gurgaon, that’s what I’m saying, even international.
That’s how everyone see, even for me also, when I look at and I’m doing a 300-plus bed, 400 beds in Gurgaon, now 300 beds I’m looking at for — not for the Gurgaon, that is for NCR, that’s for the North, that’s for the international. And I’m — that’s what is positioning up me of that hospital. So this is, I think, the way forward. I understand from other every ones promoters, what they’re doing other hospital groups. People are looking at Gurgaon to be a kind of a major health care hub.
Vikas Maheshwari
[Speech Overlap] also we have gone through with your report, right? I think that also gives you the comfort. If you look at Bangalore, Chennai, Hyderabad, even Mumbai, these are the more beds per than NCR with the projected whatever you are giving, right? It is going to be roughly 2,700 beds per million, whereas Bangalore has 4,300 beds per million, Hyderabad 3,600, Chennai 4,000 beds. So I think there is a lot of scope as Doctor is also saying that NCR we should not project as only the NCR population, the road connectivity and the nearby states, which hardly have or have a less healthcare infrastructure. So Gurgaon is going to be emerge as a healthcare center for the whole north India, basically, and plus international.
Alankar Garude
Understood. That’s helpful. Thank you and all the best.
Ramesh Kancharla
Maybe you should tell me talking to because you interact with all the promoters, so you can give you a better view about it, next time when we meet together.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Ramesh Kancharla
Thank you. We appreciate your participation in today’s conference and thoughtful questions.
Your support is integral to our strategic progress and we value the time invested by all of you in understanding our business model and future plans. For further information, please reach out to Mr. Saurabh Bhandari, IR, Investor Relations or investorrelations@rainbowhospitals.in.
Vikas Maheshwari
Thank you.
Saurabh Bhandari
Thank you, everybody.
Ramesh Kancharla
Thank you.
Operator
[Operator Closing Remarks]