The Rainbow Children’s Medicare hospital network intends to invest approximately ₹220 billion to expand its hospital infrastructure to over 5,000 beds by the financial year 2032. All funds for this expansion will come exclusively from the company's internal reserves, without attracting new debt or private equity capital.
Currently, the network, based in Hyderabad, has 2,685 beds and forecasts an increase to 3,875 beds by the financial year 2030. Furthermore, the company is negotiating to add another 1,125 beds, which could potentially push the total capacity beyond 5,000 beds by FY32.
Abharali Dalal, CEO of Rainbow Children’s Medicare, told Business Standard that the expansion will be financed using the company's own resources. He emphasized that the required amount of ₹2,000 or ₹2,200 crore will be secured through internal accruals, and the company does not plan to raise external loans or investors.
According to Dalal, as of September 2026, Rainbow had about ₹540 crore in cash and bank balances. The company estimates the average investment at ₹70-80 lakh per bed, depending on the type of hospital and its infrastructure requirements.
Priority on Mumbai and NCR
In a presentation to investors for Q2 FY27, Rainbow outlined a plan to add 1,190 beds by FY30. This plan includes 25 beds in FY27, 385 in FY28, 630 in FY29, and 150 in FY30. The projects cover the cities of Mumbai, Gurugram, Coimbatore, Pune, Indore, Bengaluru, and Amaravati in Andhra Pradesh state.
The company plans to commence operations of a 100-bed hospital in Mumbai in Q1 FY28 and is already exploring possibilities for further expansion in the city. Dalal noted that there will certainly be more hospitals in Mumbai, and the company will continue to evaluate new opportunities after the commissioning of the next facility.
In Gurugram, Rainbow is developing two medical facilities with a total capacity of 450 beds: one facility with 325 beds in Sector 44 and a hospital with 125 beds in Sector 56. Opportunities in Noida are also being explored. Dalal clarified that the expansion will primarily occur through 'greenfield' and 'brownfield' projects, rather than acquisitions, as there were relatively few operators with a comparable combination of pediatric, obstetric, and fertility services.
New Hospitals Put Pressure on Margins
This expansion comes as Rainbow's revenue growth continues to outpace profit growth. In Q2 FY27, revenue increased by 23.2% year-on-year to ₹548 crore, while Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 14.2% to ₹170 crore. The EBITDA margin decreased to 31% from 33.5% the previous year.
Overall occupancy dropped to 49.2% from 52%, despite a 15% increase in patient discharges from the hospital and a 19% rise in outpatient consultations. Dalal attributed part of the margin pressure to the fact that new hospitals require time to reach optimal occupancy. He stated that a new hospital will take about 18–24 months to break even, with the payback period varying depending on the market.
In Hyderabad, where Rainbow has an established presence, patient intake is typically faster than in Bengaluru, where competition is higher. He expects the impact of new hospitals on margins to remain within 0.5–1 percentage point. The company aims for an aggregate occupancy of over 55% in the long term, with mature hospitals operating at 55–60% or higher.
According to the company's annual report for FY26, occupancy fell to 46.3% compared to 50.5% in FY25, even with a 6.2% increase in inpatient admissions and a 12.1% increase in outpatient visits. Average revenue per occupied bed grew by 11.5% over the year.
Dalal reported that Rainbow aims for revenue growth of 25% or more in FY27 and slightly over 20% in FY28. The company is also considering expanding advanced pediatric treatments, including organ transplantation, bone marrow transplants, cardiac surgery, and oncology. Pediatrics accounts for about 60–65% of its business, and the company is strengthening its focus on high-end services in this segment.
“We are promoting quaternary care. We are looking at multiple transplants,” Dalal said, referring to liver, kidney, and bone marrow transplants. The proposed 325-bed hospital in Gurugram will place a greater emphasis on pediatric oncology, including advanced diagnostics and treatment. Fertility is another area of growth. Rainbow currently manages IVF centers in its hospitals and two standalone fertility clinics in Bengaluru. Dalal noted that over 90% of fertility patients currently come via internal referrals from the company's obstetrics departments. The company is now exploring ways to attract patients directly to its standalone clinics and expand this business.
International patients represent another potential growth driver. The company is increasing its presence in West Asia, Africa, and Commonwealth of Independent States countries, especially for advanced pediatric procedures. Dalal reported that the volume of international patients has nearly doubled in the last six months, although this business still constitutes a relatively small share of revenue. The company has no immediate plans to build hospitals abroad; instead, it will focus on attracting international patients to its facilities in India.
