Rainbow Children's Medicare Limited

Healthcare — Medical Care Facilities · NSE

₹1,235.00−₹11.60 (−0.93%)

DalalBaazaar Score

65 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of Rainbow Children's Medicare Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Rainbow Children's Medicare Limited operates a multi-specialty pediatric, obstetrics, and gynecology hospital chain in India. The company offers medical and healthcare services to children and women.

IndustryMedical Care Facilities

SectorHealthcare

Employees4,724

Annual revenue₹1,678 Cr

How does it make money?

Turns over ₹1,678 Cr a year. Of every ₹100 of sales, about ₹17 reaches shareholders as profit, with ₹33 left at the operating level before interest, tax and depreciation. Each of its 4,724 employees supports ₹35.5 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹35.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are APOLLO HOSPITALS ENTER. L, SUN PHARMACEUTICAL IND L, CIPLA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 16.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE14.5%

What is the outlook?

14 analysts covering the stock expect revenue to grow about 17.6% and earnings to grow about 21.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+17.6%

Est. earnings growth+21.5%

Analysts14

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +45% while net margin moved -9% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+45%

Margin effect-9%

DalalBaazaar Score

65/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 43.9x is demanding — it needs sustained high growth to justify
✓ P/E is 25% below its own historical median of 58.3x — cheap by its own standards
✗ P/B of 7.61x is a steep premium to book

Quality vs. Valuation

Company Quality

69/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

41/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

43.9x

3Y Median

58.3x

40 monthly readings · mean 59.0x · range 45.1x–75.5x

Sector Median

34.9x

median of 3 sector peers

🟢Current valuation is approximately 25% below its 3y median of 58.3x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 26% above the peer median of 34.9x.

vs. its own history

Cheap

58.3x median over 40 months · -25%

vs. sector peers

Expensive

34.9x median of 3 peers · +26%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

24.0x

PEG

4.53

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 19.9% to 16.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 20.6% to 16.8% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 56% over 3 years, from ₹570 Cr to ₹891 Cr.
🔴Inventory building faster than salesFinancial
Inventory up 122% against revenue up 45% — stock may not be moving.
🟡Margins are compressingFinancial
EBITDA margin is down 3.7 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 25% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 36.9% to 33.2%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
A premium to the sector to defend
It trades 26% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 19.9% to 16.9%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 10% a year✓ 13.1% CAGR
Latest reported year was 33.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 31%✓ 33.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹203 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 14%✓ 16.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 2 neutral · 2 weak

Market Cap

₹12,494 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

43.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

7.61x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹28.11

Profitable

Profitable on a per-share basis

ROE

16.9%

Strong

Strong capital efficiency

ROCE

16.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.54x

Low

Conservative leverage

Revenue Growth (YoY)

33.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

13.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.28%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹203 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

31.3x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

19.7%

Good

Healthy core-business profitability

Net Margin

15.7%

Good

Strong bottom-line conversion

Current Ratio

3.55

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.15

Defensive

Steadier than the market

52W Range Position

29%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1315.1 / 1404.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

28.5

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,161 Cr	₹1,286 Cr	₹1,495 Cr	₹1,678 Cr	+13.1%
EBITDA	₹428 Cr	₹453 Cr	₹505 Cr	₹556 Cr	+9.1%
EBITDA Margin	36.9%	35.2%	33.8%	33.2%	—
PAT (Net Profit)	₹211 Cr	₹217 Cr	₹243 Cr	₹278 Cr	+9.7%
EPS	₹20.89	₹21.38	₹23.84	₹27.41	+9.5%
ROE	19.9%	17.2%	16.6%	16.9%	—
ROCE	20.6%	17.5%	18.1%	16.8%	—
Total Debt	₹570 Cr	₹765 Cr	₹764 Cr	₹891 Cr	+16.0%
Free Cash Flow	₹187 Cr	-₹32 Cr	₹250 Cr	₹203 Cr	+2.7%

🟢 Revenue has grown at 13.1% a year over 3 years.

🟢 EBITDA has grown at 9.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 36.9% to 33.2% over 3 years (-3.7 pts).

🟢 PAT (Net Profit) has grown at 9.7% a year over 3 years.

🟢 EPS has grown at 9.5% a year over 3 years.

🔴 ROE has fallen from 19.9% to 16.9% over 3 years (-3.0 pts).

🔴 ROCE has fallen from 20.6% to 16.8% over 3 years (-3.8 pts).

🔴 Total Debt has grown at 16.0% a year over 3 years.

🟢 Free Cash Flow has grown at 2.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,775 Cr

Total Liabilities

₹1,111 Cr

Cash & Equivalents

₹34 Cr

Operating Cash Flow

₹420 Cr

Capex

-₹216 Cr

Shareholding (proxy)

Institutional Holding

33.7%

Insider Holding

52.3%

Corporate Actions

Dividend Rate

₹3.5

Ex-Dividend Date

21 Jul 2026

Analyst Consensus

Recommendations

13 Buy · 1 Hold · 0 Sell

Target Price (Mean)

₹1,731.86

+40.2% vs CMP

Target Range

₹1,450 – ₹2,000

Peer Comparison

Company	P/E	ROE
APOLLO HOSPITALS ENTER. L	54.3x	22.0%
SUN PHARMACEUTICAL IND L	34.9x	14.5%
CIPLA LTD	31.8x	9.8%

Recent News

1 positive1 mixed1 negative3 general

Be Sure To Check Out Rainbow Children's Medicare Limited (NSE:RAINBOW) Before It Goes Ex-Dividend

Simply Wall Street, 17 JulCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Rainbow Children's Hospital Share Price: CFO Resigns Aug 31

Univest, 26 AugManagement

🔴Potentially negativeA senior departure, and an auditor's resignation especially, is worth understanding before anything else in this report.

Rainbow Children's Medicare among 3 stocks that closed above VWAP - Market Scan

The Economic Times, 08 Oct

Buy Rainbow Children's Medicare; target of Rs 1700: Prabhudas Lilladher

Moneycontrol.com, 10 Jun

RAINBOW Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Rainbow Childrens Medicare buys 64% stake in Super Prime Medical Care LLP

scanx.trade, 29 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Risk

MiddlingProfitability

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑