Thank you very much. We will now begin the question and answer session. The first question is from the line of Pritesh Chedda from Lucky Investment. Please go ahead, sir.

Sir on the existing hospitals what was the revenue growth and the margin profile on a Y -o-Y basis? If you could share that because I was looking at the presentation, you've given all the other data points except the like-to-like comparison?

On the matured units the revenue growth has been healthy. It has been at around 7% to 8% growth year-on-year basis and we expect this growth to go further up as we enter into the season. Typically, the quarter first remains very muted. Still, we could show gro wth of 7.3% year -on- year basis and as we enter into the season which is September and December, you'll see more healthy growth in the double digits going forward.

But when we are comparing on a Y-o-Y basis which is a like-to-like quarter, why shouldn't the growth be, why is the growth single digit?

Your point is correct. We have working on this. The last quarter has been quite hot due to unprecedent he at waves and people have taken leaves and have been travelling due to the (national general) elections (& state election in Andhra Pradesh). There may be other reasons as well, where we have seen this slightly less growth in terms of revenue growth.

And at the 7% growth what is the margin profile there? Is there any erosion in margin?

But at 7% growth, will the margin be a similar number only, is that the fair question?

It should be the same. It's not changed. It has slightly improved only. We are not seeing any sign of EBITDA margin impact on a year-on-year basis.

And my second question is that on the newer hospitals, usually what is the trajectory of occupancy that year 1, year 2, year 3 usually you budget at while making these investments. And at what level of occupancy usually these hospitals breakeven?

It depends on where these hospitals are. Usually in Hyderabad, we expect it to breakeven within the first year itself.

And at what occupancy, sir?

Usually about 35% occupancy we break even. And a t a place like Bangalore, it will take about 12 to 15 months time. Chennai might take about 15 to 18 months time. That's how we look at it. Based on the maturity of the hub and spoke model, we tend to clock that way.

So your prime market Hyderabad has year 1 of break even and everywhere else is less than 2 years basically, anywhere between 1.5, 2. And at the same hover of 35% or less?

I think more or less 35% occupancy.

Okay, done. Thank you very much.

Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead.

Hi, good morning and thank you for the opportunity. My first question is on costs related to new units. So just want to understand whether the first quarter numbers reflect most of the costs which you have incurred or you expect to incur on an ongoing basis for the new units or do you have a plan to add on more doctors, more people, etc there? So som e color on that will be helpful?

Damayanti, I think the quarter first whatever the cost structure we have seen for our new units, (which we started), I think more or less settles there. Obviously, we started these units at the fag- end of the March quarter. T he doctors have started joining April, May and June. You will see some incremental cost might come for the new units, but more or less I think 90%-95% the cost is settled there. As we grow these units and new clinical teams join, there may be some impact but not major. So what you are seeing is more or less settled there.

Understood. So in terms of margin, we understand your September and December quarter very healthy, but on an annual basis, how should we think about improvement or change from the FY24 level?

Understood. And my next question is o n the Hyderabad market, your competitors are getting more aggressive in mother and child care segment. So what are your thoughts on the competitive scenario and have you seen any impact in terms of a loss of clinical talent, etc?

Rainbow is very large and has strong forte. I mean, I don't think we will not be kind of impacted directly through the loss of clinical talent because the brand drives the business here and not individuals. Second important thing is, of course, when a lot of doctors, hospitals have started coming in the similar space, certainly some competition will come. But I mean with our credibility in Hyderabad city, we may not be impacted on the long -term basis. It's (competition) not something new to us. We have been seeing this competition almost more than a decade now.

Sure. And my last question is, you mentioned your I VF program is picking up momentum. So if you can just update us on lik e how do you plan to take it up a nd very broadly like over the next two to three years, how do you want to grow this business? And how critical this is for your existing offerings?

Okay. Well, we had three in the past, one in Bangalore, Vijayawada and Hyderabad. Now we've got to about 11 total. Now I think all of them are commissioned, all the embryology services have started, the doctors have been recruited, the business plan is laid out. And I think whatever the early footfalls that we are seeing are pretty impres sive and are pretty organic. What we are seeing is what we expected of Rainbow - to drive the organic footfalls, which is happening. And they are quite impressive numbers. And as I think, we'll have to see that how this number is going to translate to the cycles. And it will take probably at least a couple of quarters for us to have a better comprehension on that.

So how much you have invested so far?

The investment is not too much because we have expanded into our own hospitals only. It is the equipment and the furniture, fixtures, that's all. That is not very significant. It's very small, minimal.

They're not standalone. They're all within the existing hospital, either new hospitals or existing hospitals. We have included them under the birthright perinatal services.

Okay. Thank you. I'll get back in the queue.

Thank you very much. The next question is from the line of Mr. Mahesh from Atal Investment Managers. Please go ahead.

Sir, just wanted to know the new hospitals that we have just added, like I could see that last few quarters we are still at that occupancy levels of 27%, 28% there. So what are we doing? I mean, the ARPOB in the new hospitals is somewhere around 52,000 something. Is it because of high cost that these hospitals are not showing the occupancy of these areas? I mean, it is going as per your plan. How exactly do you see this new hospitals? Because the earlier guy, you told that 35% it will be a breakeven. So we are still at 27% F or the new hospitals. So when do you s ee this break-even levels reaching if you can please throw some light?

Mahesh, I've earlier already stated about the timelines of the break even. We are in children's healthcare space and also the maternal services. These are organic businesses. These are not aggregation businesses like multi -specialties, like a lot of sales driven, those things. These services will take its own time because we do recruit doctors on a full-time basis. I mean, medical teams have to settle and people have to recognize, and then it starts growing organically. Why we say, we probably are doing the first year break even in Hyderabad , because of the redistribution of the patients and also the huge brand reputation. You say there is a Rainbow, then people automatically go there. To an extent, that also happens in Bangalore. In Chennai the traction will take a little longer time. This is how we work. Generally, the acquisition of the practices is much less in pediatrics and is more of an organic drive. T he timelines what we see, we're quite happy with our timelines of about 12 months to 18 months' time for the spoke hospitals to breakeven at 35% occupancy. And one other thing is that we will take at least ~ 6 months to get all the insurance s sorted out (when we start a hospital). So that's again, they're (Insurance Companies / TPAs) are not going to give you the insurance approval as soon as you start the hospital. It's always challenging. So, we are still waiting for some more permissions, some more insurance tie-ups. They'll all happen in 6 to 9 months’ time. These are all the things which actually takes its own time to settle.

All right. So just for my General knowledge, just wanted to know what do we do to attract this polyclinic that you have in the Hyderabad region, but the spread of polyclinics is huge. I mean, the clinics where they don't have this beds and all, but they are doing it on a very lower scale. How do you - how are you reaching out to those people? And I mean, in terms of working from their site, how do you see that thing coping up in the future? Because I see Hyderabad is, I mean, currently in Hyderabad there are a lot of polyclinics operating. So how do you see that particular thing?

I mean, you see, the polyclinics for children's health care we can do that since we are already there at most locations with seven hospitals in Hyderabad. And we are envisaging to do one more. We are very close to most of the geographies (within Hyderabad). In addition, recently we are contemplating to do one more polyclinic in Attapur area. I think the polyclinics are important, but at the same time they have to be driven by our own doctors. We can't recruit doctors who are non-aligned to do polyclinics that convert patients to you. This is our experience when we look at the other hospitals, multi-specialty hospitals when they run the polyclinics. W hatever we do, it has to be in our control. It has to be within the network.

Of course we have a sales teams they will coordinate with them. You have a lot of doctors' networks who refer patients to us and the patient reference happens only when there's complexity and when they require them to send to Rainbow Hospital for a particular intensive care or speciality. I mean there's a huge connection with our referring doctors across Hyderabad, Telangana and Andhra Pradesh.

All right. My last question would be on this Haryana thing, sir. I mean, it's been like taking us a very long time because it's almost more than a year that we kind of, I mean, we went ahead with that proj ect and it's taking a long time. Can you please throw some light on what exactly is happening on ground there and why it's taking so much time? Is it because of bureaucracy or some change of government or something like that I mean, what exactly

I think, it's just a phase of government nothing else, actually. W e know the CEO and despite knowing the CEO of HSVP , it still takes that much time becau se this how the systems work . Also, for Haryana, it has got two offices, one is in Gurugram and other is in Panchkula. Between these two offices it takes its own time. And, yeah, finally, We have got the permissions, we got land registered which is more important. Now, we have applied for the permissions. Hopefully, that won't take much longer. There’re some more clearances that needs to be done. Then post that, the land and drawings would be ours, post that it'll be our project's team, how aggressively we're going to do that. Once you have all the permissions on board, I think it shouldn't take more than two years, plus or minus a few months.

Okay. So, 26, 27 as we reported in your presentation that's when we are going to get back?

Yes maybe six months. We have to give some additional time.

Thank you so much.

Thank you very much. The next question is from the line of Harsh Bhatia from Bandhan AMC. Please go ahead.

Thank you. So, just one clarification. Apologies if this is repetitive, but on this ARPOB move on a year-on-year basis, I understand the ALOS has also moved up, which is why there could be a case of ARPOB moving down. But this has been the case for both the new hospitals as well as the old hospitals. So, if you could help us understand like what exactly is happening across both the units.

Yes. See, even I was wondering of the dynamics of this actually. I was trying to look at it. What I could actually look into and conclude is that on ARPOB guidance, whatever we have given during the last three, four earnings calls, our ARPOB guidance has always been 55,000 to 60,000. This is probably the right ARPOB for our business. And sometimes it (the ARPOB) goes up because of the change in the case mix. When you have the season, we do a lot of pediatric business, then ARPOBs tend to go down. However at the same time you clock higher revenues and better profitability also. Now in the current quarter, when you look at the ARPOB s today it is slightly lower and the ALOS is slightly higher when compared on year-to-year basis, that’s because of the change of the business (case-mix). If you look at ALOS, it has increased by only 4 hours and that could because of a little change in the case mix than anything else. Last year dominantly, the business was obstetrics and lots of pediatric surgeries that took the lead (in Q1FY24). Therefore ARPOBs are higher and ALOS have gone lower (in Q1FY24). If you go back and see the last four quarters, our ALOS was about 2.65 to 2.7 days. Somewhere around that is usually the ALOS. I'm not very sure if ALOS of less than 2.5 days could be there. It may happen occasionally, but not on a regular basis. Our ALOS will probably stand somewhere between 2.6 to 2.8 days. This is actually a proper business (case- mix) resulting in higher ALOS. This is how I look at it.

Mahesh, if I can add, since that has explained about the ARPOB and ALOS. If you just multiply this, you will get the average revenue per patient, right, irrespective of their ALOS, etc. If you see that, that has gone up. That shows that we are getting the high-end complex cases at our hospital. And that has gone up on year-on-year basis by 6% and quarter-on-quarter basis also. So, I think 1,07,000 is ARPP, which has gone up by 7%, which is a healthy sign. ALOS is the factor which depends on, critical cases, which you get, whether you are getting quaternary care, more cases or tertiary care. Based on that, the ALOS keeps changing. But being an industry, we feel that what is more important is the ARPOB , what type of cases we are getting. So, we are happy with the ARPP growth of 6%, 7%, which we have seen in our case, both year-on-year and quarter-on-quarter.

Okay, so simply it is just about the cases, overall case mix becoming more-and -more complex to a certain extent.

Correct. So, the more complex cases, the patients tends to stay, longer period at the hospital. So, that may impact the ARPOB. But what is more important is ARPP. Obviously, ARPOB is very important because it is the key matrix, how we drive our occupancy and then revenue. But that is also one of the key matrix (ARPP), which we should look at.

Just in terms of this vo lume growth, the double -digit volume growth that we have delivered, again, my understanding might be very limited and might be inaccurate in a certain way. But would we continue to see this double-digit volume growth going for the next few quarters on a year-on-year basis? Because FY '24 was also the year where we saw first quarter doing a double- digit growth on a year-on-year basis. But then the volume growth was very mixed picture for the next 9 months of FY '24. So, would that be the case this year as w ell, or would we expect to see FY '25 remaining quarters to be a double-digit volume growth?

This year largely, many things remain very positive. T here is nothing major. All the elections have been over and the monsoons are right on t ime. Things are going on right on track. I think the overall, even the first quarter itself, we sensed that there is a positive trajectory for the year. So, I would expect this year to be a kind of a late-teens growth for Rainbow.

Sure, and you would continue to feel that would entirely flow through at the bottom line as well, given the incremental cost that we have seen in the first quarter?

Yes. Let's see how the case-mix is and what kind of pathology we see and how we're going to deal with that. T he revenue is a derivative. It depends on how and what we are going to do in the next 9 months' time as a hospital, that results in revenue generation. And I'm sure when you do about late-teens growth, you will definitely do an impressive show on the financial side.

Sure. Thank you.

Thank you very much. The next question is from the line of Bansi Desai from JP Morgan. Please go ahead.

Hi. Thanks for the opportunity. So, just philosophically checking, is demand in this industry sensitive to pricing? So, I assume that probably for our newer units, we would have competitive pricing and probably that also could have had some bearing on our ARPOB. So, maybe just your thoughts on these.

You're absolutely right, Bansi. I think there are two -three things which plays up in the newer units. One is that you want to be attractive for the patients. Generally, in a new hospital, people see how expensive it is. First thing is you don't want to get that in major name. So, you will definitely price it attractively in the beginning. Second important thing is, you may not have the insurance to solve those things. So, that some of the patients may not come into the hospital because there's no cash left, which will take about 6 - 9 months’ time to settle down and all the insurances tie-ups to come in. So, th ese factors certainly will play in. You're absolutely right.

Okay. That's helpful, sir. And from a longer term perspective, when we think about expansion, besides whatever you have shared, where do you think you have opportunities, if you think from slightly longer term perspective? Would it be these existing cities, locations, or you think there is promise, probably newer markets, newer cities? And if at all, you want to call out where you probably see that opportunity for us?

Yes, Bansi. One, we have absolute clarity about what Rainbow's plan is for the next 3 , 4 years' time. So, what we have done in Hyderabad, I think we're going to be closer to 1,000 beds . And definitely, we are in the business with the expansion in Bangalore to becoming the largest player in Bangalore. We are already there. And Chennai is the same way, and also regional spokes in Andhra Pradesh and Tamil Nadu. This will continue. I think this is where the Rainbow is a household name. This is where the demand continues to be there. This is where the patronage of the brand is very significant. We'll continue to play our dominance in the south, within the cities, and also connecting regional spokes. That will continue to expand. And while we do that, and also we are exploring other opportunities. Of course, Delhi is up, NCR is a larger play. And als o, the opportunities we're looking at seriously are acquisitions, which we are quite optimistic about. If something comes which is philosophically aligned to us, we'll definitely go for it. This is how we look at it. There is a constant research going on what are the new cities? How do we enter? One thing we are very sure of, we are not going to do about 50 beds or 100 beds into one large city and going around putting dots in multiple places. I don't think that's efficient way. If we get into the city, we will address the city needs of children's health care in a larger, on a long term basis. And also we do hub and spoke model to include the larger part of the city into our network. This is our game plan.

Thank you. So that's very clear. And just one clarification, on the cost side, for this quarter, the other expenses have declined sequentially. So anything to read there, I see, increase in professional fees, and you highlighted that's probably because of the newer units coming in. But why would have other expenses decline? And should we see this as a sustainable trend?

So there is a, accounting standard, this ECL provisions, which keeps coming. Based on that the other expenditure, which is the one part there gets a little bi t adjusted. I think, whatever the numbers we have shown, should be stand there right now, because it's a clean quarter, there is no ECL impact, etc., in this quarter.

Okay, thanks a lot.

If you look at the quarter 3, and the quarter 2, the number is in the same range, but the quarter 4 got slightly impacted because of the ECL. I think the numbers which we are showing for the quarter first is a clean quarter. That is the number which we should see. Is it clear, Bansi?

Yes, understood. Thanks.

Thank you very much. The next question is from the line of Rahul Jeewani from IIFL Securities Limited. Please go ahead, sir.

Yes. Sir, you indicated in terms of the break -even timelines for new hospita ls in Hyderabad being within 12 months, and for other hospitals being 18 months to 24 months. So can you please also talk about the timelines for break -even for these four new hospitals, which we commissioned in fourth quarter of last year? Because one of those was a brownfield expansion at Hyder nagar. And I'm assuming that the brownfield hospital would achieve EBITDA break -even faster than some of your other newer hospitals.

That is actually, Rahul, is an additional block which we built adjacent to the Hydernagar hospital. Earlier it used to be about 85, 80 plus beds. Now that's become 110-120 beds. It's a new block. Actually, we have dedicated this block to the perinatal services because we do a large number of deliveries in that hospital. We just made it completely the woman's block. So these are additional beds which we have done for the demand. That unit does very well anyway and it deserved that expansion. We have done it. We are very happy with that. The doctors are happy. Bus inesses also is actually going to be very well. And the next one is that we have done in Himayat Nagar in Hyderabad city, which is actually the central part of Hyderabad city, the competitive area of Hyderabad city. I think it was commissioned about 5 months ago. It's tracking pretty well. And it's all a new team completely, and they're doing well. It's going well. It is within the first year itself that we'll break even. In Bangalore, Sarjapura, I think it's also going very well. It will take probably ~12 to 15 months to break even. I think we're quite happy with the way it's going. Chennai (Anna Nagar) is a large facility, a new area with a very new set of doctors. It will take ~15-18 months’ time for break even because it's a little high cost unit and we have put in a lot of money into that. It is one of the areas where it is difficult to get a land or building or anything, which is called Anna Nagar area. We managed to get it and do a hospital, and it will take a long term. That's a great area to be in.

Sure, sir. So then potentially the Hydernagar, Himayat Nagar and the Sarjapura Hospital should achieve EBITDA break even by end of this year. And Chennai, you are possibly targeting break even in first half of next year.

Yes, exactly. Possible next year's season, we should be fine.

Sure, sir. And given that this year, obviously, with the drag from these four new units, which would impact our margins this year, by end of this year, we would again be commissioning, let's say 160 incremental beds across Rajahmundry and Hennur. So next year, do you think that given that this year already, we would have seen the impact of these new hospital’s FY '26 should see a margin improvement for us despite incremental capacity addition in fourth quarter of FY '25?

You're right, Rahul. That's what actually our strategy is.

Sure. That's it from my side. Thank you.

Rahul, to add one more point it shows the resilience of our business model. We have opened three new hospitals and one extension. Still we have been able to deliver a very healthy EBITDA margin. And the trajectory of the break -even, as CMD sir has explained, I think is well poised for the next leg of the growth. And by the year end, once these hospitals get opened, I think two and a half of our hospitals including this extension which we did, I think they will be doing very well. So I think we are well poised for the next leg of growth in terms of both margins and the revenue growth and EBITDA.

Thanks, Rahul.

Thank you very much. Now, the next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead, sir.

Yes. Hi. Good morning, everyone. So first question, we have eight hospitals in Hyderabad now with 110 new beds commencing operations in the past few months alone. You also spoke about possibly adding another hospital in the coming years. So just wanted to understand, how are you thinking about the impact of cannibalization in Hyderabad?

Yes, it's interesting. We always see some degree of cannibalization because the patients which are on the border between the two hospitals will settle down to the new hospital. But we have always seen that growth opportunity is much larger. This cannibalization would not be really significant because the other hospitals have always been in demand for the beds and those things. So in a way that works better when you have a a new hospital network, some degree of adjustments between both the units of the occupancies would help us in the long term to create more beds for that geography.

Understood, sir. The second question was, any color on the performance of the Madhukar Hospital in this quarter? You had mentioned about a pickup in performance in this scale. So any thoughts on how's the performance been in the first quarter?

Madhukar definitely there's an uptick in the performance and overal l shape of the Madhukar Hospital and traction seems to be well. Perinatal services are pretty good and the intensive services are picking up. I think the number of footfalls have increased significantly. These are all very positive signs and we've been co nstantly working on the cost structures and we're seeing some tangible results from our operational teams working on the cost side and I think towards the end of the year we'll probably have a much better opportunity to post good EBITDAs for Madhukar as well as Rosewalk.

So I think FY '24 we were at high single EBITDA margins in Madhukar. So would it be fair to assume maybe a mid-teens kind of a low to mid-teens kind of a number in FY '25 and possibly higher going forward in FY '26?

I think what we are looking at Alankar is a double-digit EBITDA. That's what I'm aiming at. I'm not sure where I would end up whether it is early teens or just teens or mid-teens. I'm not very sure at the moment. So definitely I think achiev ing double -digit EBITDA in that kind of a structure is quite satisfying to be honest with you.

Understood and maybe a quick follow-up there. What's the outstanding amount from the trust?

Okay understood and one final question from my side. When it comes to Gurgaon, construction has not started yet at both the hub as well as the spoke hospitals. Just wanted to get a sense are we seeing any delays in both these hospitals?

I'm not saying (delay), I mean we have still said about FY 27 right, mid of FY27. I think there may be a four to six months delay because we didn't expect that it will take about a year to get the land parcels registered and now we applied for the permissions. Hopefully this phase of the permissions if we can cut short to two - three months' time then we should be right on the track. Maybe with a three four months leeway. We have already boarded the head of the project s and we are actually working on the drawing and various other things. I think we are also trying to see some innovative ways to cut short the timelines in terms of a core construction or in terms of going the hybrid way. There are multiple things that we are exploring and I think from our side we are gearing up to try to bridge some gaps.

If we assume say you get an approval in the next say couple of months how much time do you think would it need to construct the spoke as well as the hub hospital?

Once you start groundbreaking it will probably take about two years’ time in the modern way of construction. If you have got everything else finalized and go on the turnkey basis or if you try to work with a great executive team.

Understood sir. That's it from my side. Thank you and all the best.

Thank you very much. The next question is from the line of Anand Mishra from Philip. Please go ahead sir.

Yes. So I had just a couple of questions on your Gurugram expansion. So do we have any broad capex number for the whole project?

I think we do have a broadly but once we are at BOQ stages and those things , we'll have a lot more clarity about it.

Okay and just quickly so I mean on the competitive side right so I think the Gurugram market is fairly competitiv e given the density of hospitals there. So I mean what is our go-to market strategy there? So are we looking at maybe being a premium player or are we looking at being a mid-market player? If you could give us some color on that.

I think our Gurugram flagship hospital is going to be a national hospital for entire North India. That's the positioning t hat we're going to base on this hospital. The spoke hospital of 100 plus beds is going to be a local Gurugram high-end hospital and these hospitals are actually are going to be very well built and will be very futuristic.

But is it fair to assume a capex per bed in the range of INR 1.5 crores to INR2 crores? I mean that be on the higher end or something?

Okay. Great, thanks that answers my question. Thank you.

Thank you very much. Ladies and gentlemen that was the last question. I now hand the conference over to the management for closing comments.

Yes. T hanks. We would like to thank you all for joining today's conference call. Your participation and insightful questions are invaluable as we continue to navigate our strategic path forward. The support and engagement are crucial and we appreciate the time and efforts you have invested in understanding our business and the future plans. We look forward to our continued partnership and are excited about opportunities ahead. For any queries please reach out to investors@rainbowhospitals.in or Mr. Saurabh Bhandari. Thank you very much.

Thank you. On behalf of IIFL Securities Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.

Thank you. This is a transcript and may contain transcription errors. The Company or the sender takes no responsibility for such errors, although an effort has been made to ensure high level of accuracy. Please also note that this document has been edited without changing much of the content, for enhancing the clarity of the discussion. No unpublished price sensitive information was shared/discussed on the call.