Ladies and gentlemen, good day, and welcome to the Rainbow Children's Medicare Q2 FY twenty-five earnings conference call, hosted by IIFL Securities Limited. As a reminder, all participants in line will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jeewani from IIFL Securities Limited. Thank you, and over to you, sir.
Yeah, thanks, Achal. 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.
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 twenty-four, twenty-five, reflecting on our company's progress, vision, and the 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 some new hospitals commissioned in the past year. They have progressed impressively, reaching the 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 obtaining this momentum and achieve further growth in the IVF segment in the current 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 issuance of the 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 launched a retail brand named Butterfly Essentials, a specialized retail store designed to cater to the unique needs of the 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 build something different now. The 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, so we recognize this need for a comprehensive child development center to support these children.
We have set up an 8,000 sq ft state-of-the-art comprehensive child development center adjacent to our cardiac center in Banjara Hills, Hyderabad. It's expected to launch on fourteenth 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 Visakhapatnam Rainbow Children's Hospital has recently achieved NABH accreditation. With this, thirteen of our hospitals are accredited, and three have earned JCI accreditation. Notably, we are the only pediatric hospital chain in the country with three JCI accredited hospital facilities. Now, delving into the numbers for Q2 FY, financial year, FY twenty-five, our revenue registered a growth of 25.5%, amounting to INR 417.5 crores.
Simultaneously, our EBITDA increased by 25.1%, reaching around INR 47.1 crores, while the PAT registered a growth of 25.1% to INR 79 crores. I'm happy to share that all these, the growth numbers are 25%, very aligned with our similar GB year. Our overall occupancy rate for the quarter was 69.9%, 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 with 100 beds is progressing quite well, and is poised to commence operations by March 2025.
The spoke hospital in Hennur, Bangalore, 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 are being sorted, and now the hospital looks to be commissioned by end of the H1 FY 2026. The project work for our regional hub hospital, intended to a 130-bed hospital, has just started and is expected to be completed in 24 months' time. On Gudivada project, we have submitted the drawings to SSVP for building sanction approvals for plots 44 and 56. We are waiting for the approval from SSVP to start the project works. 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 expected this hospital to be, to commence operations by Q3 FY 2026. With this, it will be a 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 the pediatric subspecialty children. I would like to discuss a couple of such cases. A twenty-one-month-old child was diagnosed with a spinal muscular atrophy.
This is called SMA, is a rare genetic condition and which carries a significant developmental delay in motor milestones, especially. The treatment to this genetic condition includes administering Zolgensma, is an expensive gene therapy drug, which costs up to INR 14.5 crore. So this child was very fortunate to have a 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, Hyderabad, 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 the gene therapy under special clinical circumstances. The follow-up of this child following therapy indicates child is gradually improving motor skills and approaching independent walking.
Another case, there's a two-month-old child who's been having a breathing difficulties since birth. A 2D echocardiogram revealed a right ventricular outflow obstruction, a mass which is adjacent to the pulmonary valve, 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 then obstructing the outflow of the blood flow. The cardiac surgical team could meticulously extract and remove the entire mass, and the baby made a full recovery in a week's time. The histology of the mass demonstrated rhabdomyoma. Rhabdomyoma in children is fairly benign, and we expect this child to have led a normal life.
These cases emphasize the importance of a multidisciplinary approach by closely and partnering with care teams to achieve better outcomes. As we celebrate silver jubilee at Rainbow in providing a world-class children's care in India, I extend my heartfelt gratitude to our doctors, nurses, and the entire Rainbow family, along with our valued stakeholders and the dear 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 that-
Thank you, sir. A very good morning to all of you, and thanks, thank you for attending this investors 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 2024-25. Our operating revenue for the quarter is stood at INR 417.5 crores, reflecting a growth of 25.5% when compared to the corresponding quarter of the previous financial year. For H1, our revenue stood at INR 747.6 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 INR 147.1 crores, marking a 25.1% growth compared to the same period last year.
For the H1, our EBITDA is stood at INR 240.8 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 INR 79 crores, marking a growth of 25.1% in comparison to the corresponding quarter of the last financial year. For H1, our PAT stood at 118.7 crores, 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 payer 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 INR 580 crore as of September thirtieth of this year, and will support our ongoing capital expenditure plans. Given our current cash and anticipated internal accruals in the coming years, we remain very confident in our ability to complete all the planned capital expenditures through internal accruals without any debt financing. During the quarter, the company has invested approximately INR 23.4 crore in the capital expenditures. With this insight, I conclude my financial update. I now invite questions and suggestions from the participants. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Damayanti from HSBC. Please go ahead.
Hi, good morning, and thank you for the opportunity. So 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 thousand children, how many might require this sort of treatment? So any color on this new initiative will be very helpful.
So, Damayanti, this, you know, as we're kind of in a modern society, in a growing modern society, the. One of the significant things which we have been seeing is that, you know, the behavioral and, developmental problems. Developmental problems as a result of, you have various other neurological, other pathologies, and various problems, early childhood infections. That's one significant group. Other significant group is the behavioral spectrum, whether attention deficit disorders, autism, autism spectrum, so, early childhood psychological problems. So these are all the things constitute a very large proportion. For example, autism itself is about one in, eighty. In the recent reports, it's come down to almost one in sixty. 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 and development problems. It definitely requires, not only at Rainbow Group, the country definitely requires to address this problem very seriously because of increasing numbers year on year. What we see is that they are coming now to our hospitals, but these children require a specialized environment, a specialized therapies, and a specialized doctors, and a whole team of kind of developmental team, including the whether educational psychologists and physiotherapists, occupational therapists, and developmental clinicians. The whole lot of team is required. We already 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 these children. You know, the behavioral problems for children is actually a serious concern to many mothers, so they're really looking out for this kind of facilities.
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?
Exactly. Exactly.
Doctor, did you mention all the neurologists, top neurologists in your hospital, almost 20% of patients which they receive face some or other such issue? Did I hear that correctly?
Yes, yeah. In the outpatient department, 20% of the volumes are coming, some sort of either neurodevelopmental problems or behavioral problems. So this obviously 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 coming up now for these children, and it's kind of a big ongoing sessions. For example, behavioral modification for attention deficit disorder is very different, and how you approach autistic child is very different. And this is something which is a major driver for the country.
Sure. And, again, I think similarly, I want to hear some more update on your new initiative, Butterfly Essentials. So I understand your hospital already has 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 want to check, the products will be all private label or it will be a multi-brand store sort of, entity in the hospital?
Okay. So as a pharmacy, you can only address to the small segment. So even though in terms of the visibility also, the mothers and children, for the babies, they would expect pharmacy to provide so much of a range of a product range, what is required for the pregnant women as well as the babies and children. So what we are trying to address is that, addressing 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 area, where retail specifically focused.
There are a lot of medical, medically aligned retail, which we could improve, which we can give it. It's not only a kind of a vertical, which gives 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 kind of align more towards kind of what patients require, what babies require, right? From soaps, to shampoos, to nappies, everything else. We can curate better and offer them a kind of a wider range of the products within the hospitals. They don't have to step out and go to other shop.
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?
So as I mentioned the previous call also, we are looking at our IVF growth is 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 and the B2C is going to be dominant play for us to build our IVF. So I think that so far, whatever we have seen is that now, we were doing the IVF in our three centers earlier, but from H1 comparison to the last year, and we see about 50% growth. So that is that's significant. And also the revenue also, we have seen about 40% growth, right? Yeah, 70%. 70% growth. So I think it's early phase.
We are actually quite happy, and also the results are very encouraging. Even the doctors also within the hospital are very, very optimistic about, our, number one, our service delivery for these patients. Number two is that overall satisfaction of the, among doctors and patients.
Sure, Doctor. Thank you very much for your response. Thank you.
Thank you. Thanks a lot.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Bino, from Elara Capital. Please go ahead.
Hi, good morning. Just wanted to understand the ramps up in the newly opened centers over the last few months. You know, 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?
I think we only start, we opened about end of the last quarter of the financial year. They're actually now tracking fairly well. We got the Hyderabad center doing very well because it's our native. In other centers actually have good traction, both inpatients and outpatients. I think we are close, we are very close to kind of a breakeven. It of course in the busy season now, then we have to get through. But as we look at the overall trajectory, very encouraging. It's very good going.
Okay. So, we are almost profitable before in the next couple of quarters, probably they should break even, and then onwards it should improve. Is that the right assumption?
Okay. Yeah.
Oh, got it. Thank you.
Thank you. The next question is from the line of Sumit Gupta from Centrum Broking. Please go ahead.
Good morning. Am I audible?
Yes.
Yeah, please. Yeah. Sumit, yeah.
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, for the matured hospital, the revenue growth is stupendous, I understand, because of the occupancy, but what is driving that majorly? I understand Q2 is relatively strong, but still, I just want to understand more on the fundamental aspect of it.
Yes, Sumit. So the matured hospital, obviously, you know, as the busy season comes in, which is quarter second for most of the hospitals, including adult and pediatrics, it becomes busy. And as the matured hospitals, you know, they have already existing patients who have already experienced with us. They have the history of more than five years in the locality. So any issues comes with the pediatrics or the mother care, they keep coming to our hospital. So that is driving our, our growth. So you have seen both IP and OP volume growth in case of our matured hospital. So it is a, you know, regular organic growth, which I will say, which all our matured hospitals are showing.
Understood. And so what kind of margins are there for matured and new?
So we don't disclose the margin based on the maturity. Overall, at the company, we show as margins, but obviously, you know, matured hospitals will have a better EBITDA margins than the new ones, because every year we are adding the capacity. And you know, matured hospital will have always some impact of the new hospital which is getting opened. So obviously, the matured hospital will always have a better output, which is the industry phenomenon, right?
Right. So, like, this is super 35% kind of margins, and Q2 into H2 obviously do this kind of margins, does that? So in the second half also, we can expect around 32%-33% kind of margin?
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 H one. 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 an operating leverage which it takes 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 H one figure, whatever the EBITDA margins we are showing, which is again, you know, post-index numbers, we should be able to sustain those numbers plus minus 1%, depending upon what type of capacities we are adding. Based on that, we should be able to maintain that EBITDA margins.
Okay. And just 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%-10% on YOY basis. So just on an annualized basis or for, let's say, over the next 2-3 years, what kind of EBITDA per bed we can target?
See, if we are keeping the EBITDA margins same, Sumit, I think, per bed EBITDA will also not change. What we have to factor in is that whatever the H one number has come, we have to take it to the realistic basis and then project that accordingly.
Understood. Thank you.
Thank you, Sumit.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Karan Gupta from Investor Portfolio Management. Please go ahead.
Yeah, hi. Good morning.
Good morning.
Good morning.
Yeah, yeah. So my first question on our insights is from the last quarter.
Karan, there is a lot of, you know, disturbance from the voice. If you can just be very closer to your handset, please.
It is audible now?
Same, little bit, but okay, we can continue if you can't, you know?
Yeah, yeah, yeah. Yeah, so my first question on inpatient, what's the case mix within this quarter is continuously on the decline side. And the second one on the bottom slide, retail space, what kind of products we are-
Mr. Karan, I would request you to please use your handset.
Yeah.
Mr. Karan, I'm not able to hear you.
... Hello. Now it is audible?
Yes, sir.
Yeah, yeah, better now.
Yeah. Yeah, yeah. Yeah, so first one, the Rainbow side, about the case mix this quarter, and, the second one on the Butterfly side, what's your, you know, there are also a few, Hyderabad-
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.
Yeah. Hi, sir. Sir, in Bangalore, now, with, let's say, the Hebbal and Electronic City expansions coming up next year, we will have almost close to 600 beds in Bangalore, and our 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, three- to four- to five years down the line?
I think, with... See, the Hyderabad story is about twenty-five years. The Bangalore is only about eight, nine years, so Rahul. So what we are trying to do in Bangalore... So in Hyderabad, we 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 micro market, market driven. So we are at the moment about four hospitals in the four key areas, and what we are trying to do is two more. One is in Hebbal, another in Electronic City. With that, I think we kind of have a fairly good kind of a spread in the Bangalore city.
However, I think, we'll have to see that how these hospitals are going to go next two, three, four 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, Rajajinagar, another area. There's some areas are there, but I think, we don't want to go rush and do something, as a kind of expansion, scale of expansion. And, right now, once these two are done, I think my focus is going to be as strongly as kind of, build this profitability of these centers and also build a hub more strongly and then see, look at the demand, whatever the demand. Then becomes easier for me, doing beds for demand is less stressful, right?
So this is how our approach is going to be for Bengaluru.
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?
Exactly, yeah.
Sure, sir. And sir, in the Hyderabad market, one of your peers is entering into the Hyderabad market with 300-bed women's and child hospital. So how do you see the competitive intensity in your core Hyderabad market?
No, I mean, I think, you know, see, we welcome anybody who wants to do a good quality of work in the pediatric domain, anywhere in this country or whichever the city. That's not a problem. But I don't think that, you know, we would have any problems, because we always have a competition in Hyderabad, and the competition made us 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, you know, one thing you, everyone has to... You know, a multi-specialty trying to focus on single specialty is not going to be that easy, because all my focus twenty-four by seven is only one 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 if someone is as disciplined as us, they, I'm sure they'll be able to do it.
Sure, sir. So while we appreciate, sir, that 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?
See, what happens is we have got a kind of a, you know, we have built a kind of a, it's. See, unlike other hospitals, pediatric hospitals, the doctors cannot take the business away very easily, because it's a very interlinked. It's a brand, it's a overall service system is more important than kind of a, a doctor alone, right? So that is what is a medical branch. It's not something like a surgical branch. If a surgeon moves away, you can take 70% of the surgical patients. So somebody needs to kind of understand that. So second important thing is we are kind of a, we produce a lot of doctors 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. Efficiency is not in terms of things. I mean, I would expect, you know, people to take special decisions, because patients don't move with the doctors in pediatric domain. That's an important thing. And, you know, it happened to us in the past also, from quite early of 2009, 2010. The, I mean, at least 30% of the doctors gone and started their own venture, but they couldn't take even 5% of the patients. So that is what the strength of the brand, the strength of the model, actually operating model and trust of the people in the world, in the brand and the model.
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?
It's early phase to discuss about it. I think, you know, they. I mean, when company is really kind of consolidating, when the time comes, definitely I would come forward and let you all know.
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?
Sir, we are in a very early stage. I think, let's give some more time off, you know, to discuss on those things.
Sure, sir. Thank you, sir. That's it from my side.
Thank you. Thank you.
Thank you. The next question is from the line of Ritesh Shah from Lucky Investments. Please go ahead.
Yeah, sure. I have few questions.
Yeah.
One, can you tell me, on the slide, I couldn't see the margins that you would make in a new hospital and margin that you would make in a mature hospital. Other details are there, but if you could just share, at this stage of occupancy ratio that you have put in a new hospital, what are the margins?
New hospitals are in, Ritesh, is a mix of very newly started to the up to four, five-year-old hospital side.
Mm-hmm.
So, but it gets really complex to give a kind of a unit-wise new units one-year-olds two-year-olds, which is why we put it in always two buckets. So-
I'm putting it differently, sir.
So for the consistency and also visibility, I think always it's best to talk of two buckets: mature hospitals or, or new hospitals under five years.
No. So, so on the new hospital bucket, whatever bucket you have today, irrespective of the vintage of that bucket, what will be the margin there?
Ritesh, let me take this question. As a company, we don't would like to share the margins on the mature hospitals and the new hospitals.
No problem.
This is interlinked business model and then interlinked.
No problem, sir. No problem. Can I ask you differently then? At what utilization level does a hospital start becoming profitable?
So it depends on geography, right? You know, if I do a hospital in Hyderabad, very likely in the end of the year, it'll be either breakeven or profitable. If it's in Bangalore, it will take about 12-15 months' time. Chennai, maybe it takes 18-24 months' time. So depending on your brand, you know, recognition and also your, and also depends on the micro market, where you are in, and the kind of the doctors you're 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 it. You know, if I do it in Hyderabad, you know, first year, a breakeven, and the last-
What utilization will it be, sir? That utilization level will be 20%-25%.
I think it's 30, 30, 30% we are at.
Okay.
That's what generally, well, put it.
Okay. The other question is, in your focus markets of Hyderabad, Bangalore and Chennai, if you could tell us, the ratio of, pediatric hospital to a normal specialty hospital, what will be the ratio of beds? Or ratio.
Is it one is to-
Yeah.
More or less in all of our hospitals, pediatric beds and the mother care beds, the ratios will not change actually. They will be more or less the same.
No, my question is, if let's say 100 is the total pool of beds in, in let's say Hyderabad, across all hospitals, across all types, in that, how many beds into obviously, in how, how many beds will be pediatric beds? One bed, 200, two beds, 200, 10 beds, 200?
Okay. See, you see, it works that way. So we have a different size hospital. Usually, 30% of the beds are dedicated to the obstetrics. Some of the spokes we do up to 40, 50, depending on hospital. So it depends on the micro market, what is the requirement and those things we position that way, the spoke level. The hub is always like a kind of a 70, 25% is pediatrics, 25% is about obstetrics.
Sure.
In terms of separation of the beds. You know, our business is the same, our numbers are the same. When you look at the slide and everything, it's kind of, our business is 30% and our, our numbers are 30%, OBG oncology compared to pediatrics.
Sir, I was actually asking for the market. I know for your company, but for the market, if there were a hundred beds treating all types of patients, your pediatric beds will be what? 1%, 2% of that? See, because in U.S., we have for every 10 or for every 20 hospitals, we have one dedicated pediatric hospital. So I was just figuring out that, you know, what is the ratio that we have reached in India.
Sir, we have not. We don't have a knowledge about other hospitals.
Okay. Okay.
People like you should do due diligence, actually. We won't be able to tell you about other hospitals.
Maybe you can have a paid consultant to probably do it. 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?
No, there is a growing market. Places like, you know, Bangalore and Hyderabad, these are all the growing markets, especially for younger populations. If you look at you know the JLL report, the 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 now the growth of population is definitely going to be year on year 15%. This most of the are young population. So that's how we can say it. I don't think it's a right estimate, it's a rough estimate.
Sorry, I didn't get it, sir.
So when you look at the growth of the real estate, the office space consumption, IT consumption, and also the housing, you know, the flats and villas and those things, the consumption, the year-on-year growth in this, in the markets of Hyderabad, Pune and Bangalore, they're definitely not the 15%. The number of the buyers of the new houses and those things. I can't say it's absolutely that number, but there is definitely a 12%- 15% increase in population in each of the city year on year. That's most of this population which are coming into city are MNC. That is notable.
Okay.
Which is why I think the 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?
Okay. And after these three markets, if there can be another focus market which can eventually be a target market for you, what it should be?
I think right now we are. Our next focus is in the NCR. NCR itself is a huge, huge, huge and that's I think if you focus NCR, start our four Gurgaon hospitals, then obviously we're going to look around more micro markets in the NCR.
Okay. And lastly, in the next twenty-four months, what is the beds which will come on stream for us, the number of beds
Twenty-four months, I think, we have about three eighty beds. So, Karan, so roughly three eighty beds will come.
Yeah.
which will be Rajajinagar, 100 beds, which we are starting by March 2025. And then, two hospitals which is coming at Bangalore, which is Hebbal and Electronic City, roughly 150 beds there. And Coimbatore, which will be by end of, you know, FY 2026, 130 beds. So total 380 beds are expected in next 24 months time.
Okay. So, when I look at your OR at about 69% in the quarter for matured hospital-
Right.
Looks like that the annual OR is about 60% there. I remember last calls, you know, historical calls used to always say that pediatric usually on an annual basis is about 60% OR or occupancy business because you have a seasonality element in it.
Correct.
So, is it fair to assume that the matured hospital for you, which is like this twelve, thirteen hundred beds, is peaking out in terms of OR, you know, in terms of OR? You know, you may have ARPOB-led increase at different, but on OR, is this comment correct, or you want to, you know, modify this?
In the peak season, we have multiple levers, Karan, to accommodate the patients, which we have done, all our units have done, to accommodate the patients with the faster turnaround, adding few additional beds on a temporary basis, and so we try to manage.
Mm-hmm.
I think we will continue to do this. And what we are saying is that, you know, 60% on the matured is peaking it, which I partially agree. It has another 5% delta, it can come.
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 increases, which will flow in your matured hospitals.
And also, Karan, you know, what happens is the medical hospital, right? So any matured hospital to grow, what the company or the hospital should do is that keep adding the other super facilities and-
Yeah, yeah, yeah. Yeah, that's why I said case mix and price led, sir.
So that will 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 L.B. Nagar. At Hyderabad, we have added capacity. If you see the robust demand, obviously we will be adding the beds there. We did at Hebbal, we added. So we will keep on adding the beds on the existing hospital if the demand is sustainable, and we feel that will continue to grow.
So you have the structure, you need a warm shell kind structure where you can add bed, but there will be a limit to what you can add, right?
We can-
We see, we do, we take multiple ways of it. Sometimes we move out of some of these services, add more beds, and take a medical building for office, some of the diagnostics and those things. We create beds, you know, we find a way. Sometimes we build a small block addition to the land parcel available, land bank is available. We have done that when we added 150 beds addition to the Hyderabad recently, addition to it, right next to it. We added some beds, about 12 beds in L.B. Nagar for the demands. Creating some space from the existing space, and we are taking over some space for outpatient from IVF centers in the adjacent building. We keep doing these things, you know.
Okay.
One discovery, when the unit is there, you discover yourself how to take the opportunity.
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?
... Again, you know, Karan, we don't share it. Figure it out by ARPOB and occupancy we have given you.
Okay, no problem. No problem. No problem. Thank you. Thank you, sir, and all the best. Thank you, and Happy Diwali, sir.
Thank you.
Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
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?
I don't know for them, but definitely we. When I, 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-year horizon or three-year horizon or five-year horizon, we will definitely do another hub at some point in, in five years down the line in Hyderabad. That's thought process. It's not been consolidated, we will do it. Because this is a place where people trust us, people believe in us. It's just not Hyderabad, it's the entire two states of Telugu people support us, and it's a household name. And also the neighborhood, like North Karnataka and also parts of Maharashtra comes to us. It's a large domain, and and we have a choice of hospital for the areas. Obviously, if there is a...
And also we need to see the betterment as we go future, build up more strength and more specialties and do a lot more work. Based on what, how it's going to pan out now in the next three to five years' time, we'll definitely look at... Say, 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 that I'll another. I will probably need another, some more beds in Financial District in Hyderabad. So therefore, I may do another spoke or I might decide to do a, the large hub hospital. So buildings are not a problem. I can do a brownfield over there. There's plenty of buildings which are constructed and been vacant.
So, I mean, that's a call which kind of we take at some point, you know, based on demand what we think about it.
Understood, 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 ones. There is Vizag as well, so if you look at the next five, 10 years, you mentioned about Delhi NCR and the plans over there, but apart from that, apart from these existing markets, which other markets can we potentially look to target?
I think, see, we've always been very disciplined. Wherever we go, we want the position of strength, much larger. And, you know, 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 number of beds in Andhra also. That's a south story. Now we are looking at a kind of Gurgaon. Once we kind of start in Gurgaon, we start operating the hospitals, then I will obviously look at kind of how the tentacles will going to go in the NCR. Whether how we look at Noida, how we look at Greater Noida, how we look at Ghaziabad, how we look at Faridabad. There's so many micro markets are there.
Obviously, your understanding will be much better once you start hospital. We will definitely take NCR as a kind of a next larger space for us to expand. And if we do take up another geography, whether it's west or somewhere else, we will take the similar view over 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's what we look at it. Very unlikely we do sporadic small hospitals of hundred beds in a city. That's something which kind of we are not really keen to do it.
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.
I think that the Bangalore is going quite well, and Chennai is actually a Chennai. There's a lot of new beds are there. Because Chennai, we have fifty-five years of operation, sixty year running, and there are two new hospitals have come. One is about less than two year old, the other one just opened up. And Chennai as a market is a very good market, how I see it is. But Chennai, it takes its own little bit of time to kind of progress and build. We've got good doctors, we've got good name, and I think we are doing well in Chennai. I mean, the last year was a little bit of slowness. We addressed all the issues, and things are going fairly well. I think that we have done quite well in the last quarter.
Even Madhukar also, I think that things are moving well. The top lines have looked in Madhukar also overall. But Madhukar will not give you kind of EBITDA slot like other Rainbow Hospital, 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, you know, at 12% EBITDA, it's good. It, it's good. I think for me, the Madhukar is something is kind of to establish our brand, to establish our service model, to understand the Delhi. Those things will be helpful to us. As long as I do about 12%-16%, as we move forward, 12%-16% EBITDA comes in next one to two years' time. That is helpful to kind of...
We're not expecting anything more than that, because I cannot do anything more. For example, I do about 70-75 lakhs for free treatment every month, so otherwise that would have come to you with the right. So, and also it is a, it's a we only manage beds, and it is a kind of lot of money flows back in the form of rental or other forms to the owners. So it is, our capacity bed was low. So when you combine all the factors together, it is not high with hospital. We have seen other hospital, other group, you know, which runs a similar model like Narayana does one hospital in [Australia]. They also struggle the same way because the hospital will do well, but you can't generate EBITDA.
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 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?
No, what happens is, the Gurgaon is, I think how people see us, you can talk to other promoters also. I don't think people are looking at Gurgaon as a micro market. People are looking at Gurgaon as a kind of a, health city overall. And it is, for, for NCR or for the North. Everyone's viewpoint is it's not just for the Gurgaon, it is for the NCR, it's for the North, but and it's for the international. Every hospital start processing in the same lines. So sitting in the Gurgaon, you want to drive the opportunities. In a way, what happens is the network effect of Gurgaon in the longer term, my personal view, you know, I'm not sure about other promoters, they may have a more knowledge about it because they've already been 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, they're putting the CapExes and the quality of the hospital, and actually, I've conditioned to be proud of what every, promoter is doing in Gurgaon. So that is how the network effect works for everybody. I don't think they are competing with each other. There is a competition between each other, but the opportunity also will be larger, and also people will come from the, the wider part of the, the, for, country towards the, flock towards the Gurgaon. That's what I'm saying, even internationally. That's how I think, everyone's ...
Even for me also, when I'm looking at doing 300-plus beds, 400 beds in Gurgaon, 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 the positioning of me of that hospital. So this is, I think, the way forward. I understand from others, everyone's promoters, what they're doing, other hospital groups. People are looking at Gurgaon to be a kind of a major healthcare hub.
And 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, you know, it has a more beds per million than, NCR, with the projected, whatever you are giving, right? It is going to be roughly two thousand seven hundred beds per million, whereas Bangalore has four thousand three hundred beds per million, Hyderabad, three thousand six hundred, Chennai, four thousand beds. So I think there is a lot of scope, as doctor is also saying that, you know, 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.
Understood. That's helpful. Thank you, and all the best.
Maybe you should try me talking to, because you interact with all the promoters, so you can give me a better view about it. Next time when we meet together.
Thank you. A reminder to all the participants, you may press Star and One to ask a question. Ladies and gentlemen, you may press Star and One to ask a question. A reminder to all the participants, you may press Star and One to ask a question. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
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. Karthik Bhandari, IR, Investor Relations, or at the investorrelations@rainbowchildrensmedicare.com.
Thank you.
Thank you, everybody.
Thank you.
On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.