Rainbow Child. Q1 FY27 Results (NSE: RAINBOW)
Signal: Margin pressure
The read
Q1FY27 revenue growth accelerated sharply to +33.2% YoY on a consolidated basis, driven by recent bed additions (Prashanthi, Pratiksha acquisitions), but EBITDA margin compressed 200bps to 18.2% as raw material costs and doctor professional fees rose faster than revenue — the third consecutive quarter of margin contraction (Q3FY26 -100bps, Q4FY26 flat, Q1FY27 -200bps). Net profit growth was flattered by lower tax; excluding other income and tax, operating earnings grew only modestly.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹469.99 Cr | +33.2% | +2.2% |
| EBIT | ₹83.95 Cr | +17.6% | |
| Net profit | ₹60.57 Cr | +13.2% | |
| EPS | ₹5.97 | +13.3% | |
| EBIT margin | 18.2% |
P&L walk
Revenue growth accelerated sharply to +33.2% YoY, but EBITDA margin contracted 200bps to 18.2% as raw material costs rose 35.9% YoY and professional fees grew 34.9% YoY, outpacing revenue; other income declined sharply; net profit growth was flattered by a lower tax rate (25.5% vs 24.6% stated but effective rate lower due to deferred tax credit).
Key positives
- Revenue growth accelerated to +33.2% YoY, the highest in at least 8 quarters, reflecting strong volume growth from recent acquisitions and organic expansions.
- EPS grew +13.3% YoY, maintaining a steady trajectory despite margin headwinds.
- Consolidated PAT (owner's share) grew +13.2% YoY to ₹605.7 Mn, outperforming standalone PAT growth of +1.9% — subsidiaries contributed meaningful incremental earnings.
Key concerns
- EBITDA margin compressed 200bps YoY to 18.2% — the third consecutive quarter of margin contraction (Q3FY26 -100bps, Q4FY26 flat, Q1FY27 -200bps) — driven by rising raw material costs (+35.9% YoY) and professional fees to doctors (+34.9%), both outpacing revenue.
- Other income declined 36.5% YoY, reducing a cushion that had supported bottom line in prior quarters.
- Net profit growth of +13.2% lagged revenue growth of +33.2% by a wide margin (20pp gap), indicating deteriorating operating leverage.
- Tax expense fell as a percentage of pretax profit (25.5% effective rate), partly inflating PAT — without this tailwind, PAT growth would have been lower.
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