Rainbow Children's Medicare Limited (RAINBOW) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Rainbow Children Medicare Q2 FY '25 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions] 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.

Yes. Thanks, Angel. 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 '24-'25, 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 significant strides 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 the new hospitals commissioned in the past few years. They have progressed impressively, reaching 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 health care. As expected, we have come up with a strong performance in the current quarter with the 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 sustaining this momentum and achieve further growth in the IVF segment in the coming 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 this for 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 like 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 actually proceeding 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 mother, babies and children. In the first phase, we plan to open Butterfly Essential stores in most of our existing facilities. I would like to bring something different now with most fascinating sequence of events in human life is an early childhood development, any aberration would result in long-term consequences in neurodevelopmental milestones. We are witnessing a significant increase in childhood developmental and the behavioral problems. So we recognize this need for a comprehensive child development center to support these children. So we have set up a 8,000-square feet state-of-the-art comprehensive child development center adjacent to our cardiac centers in Banjara Hills, Hyderabad, is expected to launch on 14 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, 13 of our hospitals are NABH accredited enabled and 3 have earned JCI accreditation. Notably, we are the only pediatric hospital chain in the country with a 3 JCI accredited hospital to achieve this. Now delving into those numbers for Q2 FY -- financial year FY '25, our revenue registered a growth of 25.5% amounting to INR 417.5 crores. Simultaneously, our EBITDA increased by 25.1%, reaching INR 147.1 crores, while the PAT registered a growth of 25.1% to INR 79 crores. I'm happy to share that all these growth numbers of 25% very aligns with our silver jubilee year. Our overall occupancy rate for the quarter was 59.9% with the mature hospitals achieving 68.6% occupancy and the new hospitals, including the recently commissioned hospital 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 of '25. The spoke hospital in Hennur, Bengaluru 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 being sorted, and now the hospital looks to be commissioned by end of H1 FY '26. The project work for our regional hub hospital, Coimbatore, of 130-bed hospital has just started, and is expected to be completed in 24 months' time. On Gurugram projects, we have submitted the drawings to HSVP for building sanction approvals for sector 44 and 56. We are waiting for the approval from the HSVP to start the project works. We signed a lease agreement for a 90-bed brownfield spoke hospital at 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 expect the hospital to commence operations by Q3 FY '26. With this, we will be -- it will be the 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 health care excellence. During the last 6 months, we have treated a lot of sick children in pediatric intensive care and as well as pediatric subspecialty children. I would like to discuss a couple of such cases. A 21-month-old child was diagnosed with spinal muscular atrophy, which is called SMA. It's a rare genetic condition which carries a significant developmental delay, delayed 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 crores. So this child was very fortunate to have a financial support from a large Indian public sector company and its employees to raise the full amount to support this child. Our pediatric neurology team at Rainbow Children's Hospital, Secunderabad 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. Now other case, there's a 2-month-old child who has been having breathing difficulties since birth. A 2-D echocardiogram revealed a right ventricular outflow obstruction, a mass which is adjacent to the pulmonary walls causing the obstruction. This will be requiring open heart surgery, at 2 months discovery of large mass occupying almost 90% of the right lower heart of one of the chambers, right chambers and then obstructing the outflow of the blood flow. The cardiac surgical team could meticulously dissect and remove the entire mass and the baby made a full recovery in a week days' time. The histopathology of the mass demonstrated rhabdomyoma. Rhabdomyoma in children are fairly benign, and we expect this child to lead a normal life. These cases emphasize the importance of the multidisciplinary approach by tertiary and quaternary care to achieve better outcomes. As we celebrate silver jubilee of Rainbow in providing a world-class children's care in India, I extend my heartfelt gratitude to our doctors, nurses, management team and the entire Rainbow family, along with our valued stakeholders and the young 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. Vikas?

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 '24-'25. Our operating revenue for the quarter 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 revenues 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 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 INR 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 crores as of September 30 of this year and will support our ongoing capital expenditure plan. 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 expenditure through internal accruals without any debt financing. During the quarter, the company has invested approximately INR 23.4 crore in the capital expenditures. With these insights, I conclude my financial update. I now invite questions and suggestions from the participants. Thank you.

[Operator Instructions] The first question is from the line of Damayanti from HSBC.

Sir, 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 1,000 children, how many might require this sort of treatment? So any color on this new initiative will be very helpful.

So Damayanti we serve as kind of in a modern society and growing modern society, one of the significant things which we have been seeing is that the behavioral and developmental problems. Developmental problems as a result of we have various other neurological, [indiscernible] and various other problems, early childhood infections, that's one significant group. Other significant group is the behavioral spectrum where there is attention deficit disorders, autism, autism spectrum so early childhood psychological problems. So these are all the things constitutes a very large proportion. For example, autism itself is about 1 in 80 and the recent report says it's come down to almost 1 in 60. 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 6 pediatric neurologists in Hyderabad City in the Rainbow Group and all of them see at least about 20% of them are behavioral development problems. So this definitely requires not only Rainbow Group, the country definitely requires to address this problem very seriously because of increasing numbers year after year and year-on-year. So what we see is that this -- they are coming now to our hospitals, but these children requires a specialized environment, specialized therapies and specialized doctors and a whole team of our kind of developmental team, including whether educational psychologists and physiotherapists, occupational therapists and developmental clinicians, a whole lot of team is required. We always have about almost 80% of the team. I think we're segregating collecting all of them together in 1 place and trying to kind of deliver excellence into these children. The real problems in children is a serious curse to mother. So they're really looking out for these 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.

And doctor, did you mention all the neurologists -- top neurologists in your hospitals almost 20% of patients which they receive face some or other such issue? Did I hear that correctly?

Yes. In the outpatient department, 20% of the volumes are coming in some sort of neurodevelopmental problems or behavioral problems. So this -- obviously, this 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 1 single individual. And also, there are a lot of therapies coming up now for these children. And it's kind of they go in sessions for example, behavioral modifications for attention deficit disorder is very different and how you approach autistic child is very different. This is something which is the need of the hour for the country.

Sure. And again, I think similarly, I want to hear some more update on your new initiative Butterfly Essential. So I understand your hospitals already have 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 wanted to check here, products will be all private level or it will be a multi-brand sort of facility 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 or for the babies, they would expect pharmacy to provide so much of a range of product range, what is required for the pregnant women as well as babies and children. So what kind of -- we are trying to address is that -- addressing a 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 of that -- niche area where retail specifically focused there's a lot of medically aligned retail which we could improve, which we can give it with not only kind of a vertical 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 wrap these everything else. We can curate better and offer them a kind of a wider range of the products within the hospital. So they don't have to step out and go to other shops.

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 in the previous call also. So we are looking at our IVF growth in very organic growth in the B2C and very unlikely that our B2B growth will come because we're being a mainstream authentic service delivery. So I think within our group, word of mouth on the B2C is going to be the dominant play for us to build our IVF. So I think so far whatever we have seen is that, we were doing the IVF in the 3 centers earlier from H1 comparison to the last year and we see about 50% growth. So that's significant. And the revenue also, we have seen about 40% growth, right?

Yes, 73%.

73% 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 hospitals are very, very optimistic about our -- number one, our service delivery for these patients; number 2 is that overall happiness quotient among doctors and patients.

[Operator Instructions] The next question is from the line of [ Bino ] from Elara Capital.

Just to understand the ramp-up in the newly opened centers over the last few months. 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 opened about end of the last quarter of the financial year. And they're actually tracking fairly well, for example Hyderabad center is doing very well [indiscernible] other centers are actually have a good traction, both [indiscernible]. I think we are very close to kind of a breakeven. Of course, it's a business season now [indiscernible] but as we look at the overall trajectory, very encouraging. It's a pretty good going.

Okay. So we are almost profitability so in the next couple of quarters, probably they should breakeven and then onwards steadily improve. Is that the right assessment?

Yes.

The next question is from the line of Sumit Gupta from Centrum Broking.

So just -- sorry, I joined the call a bit late so sorry for the repeat question if it may. So sir, for the matured hospital, the revenue growth is stupendous, I understand because of the occupancy, but what is driving that majorly? I understand 2Q is relatively strong, but still, I just want to understand more on the fundamental aspect of...

Yes, Sumit. So the matured hospital, obviously, as the busy season comes which is quarter second for most of the hospitals, including adults and pediatrics, it becomes busy. And as the mature hospitals they have already existing patients who have already experienced with us. They have a history of more than 5 years in the locality, so any issues comes with the pediatrics or the mother care, they keep coming to our hospitals. So that is driving our growth. So you have seen both IP and OP volume growth in case of our mature hospitals. So it is a 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 a margin. But obviously, matured hospitals will have a better EBITDA margins than the new ones because every year, we are adding the capacity and 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 phenomena, right?

Right. So like this is superb, 35% kind of margins. And in 2Q, obviously, do this kind of margin. So in the second half also, we can expect around 32%, 33% kind of margin?

So what we have guided, Sumit, is that over the longer period, we will be able to sustain this margin whatever we have shown in H1. So because of a little bit seasonality, right? In the quarter 1, the margins will be always little bit impacted because in the hospital, there is an operating leverage which kicks in. But the business is generally the quarter 1 is the weakest quarter for us and the quarter second is the strongest quarter. So if you look at the H1 figures, whatever the EBITDA margins we are showing which is, again, Post Ind AS numbers, we should be able to sustain those numbers, plus/minus 1%, depending upon what type of capacity we are adding. Based on that, we should be able to maintain that EBITDA margin.

Okay. And just sir, 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% to 10% on Y-o-Y basis. So just on an annualized basis or for let's say, over the next 2 to 3 years, what kind of EBITDA per bed we can target?

See, if we are keeping the EBITDA margin same, Sumit, I think per bed EBITDA will also not change. What we have to factor in is that whatever the H1 number has come, we have to take it as a realistic basis and then project that accordingly.

[Operator Instructions] The next question is from the line of Karan Gupta from Invest Portfolio Management.

Sir, my first question on the ARPU side is, continuously from the last quarter...

Karan, there is a lot of disturbance from the voice, if you can just be very closer to your handset, please?

Yes. Sir, my first question is ARPU side, this quarter is continuously on the decline side? And the second question on the Butterfly retail stores, what kind of [Technical Difficulty]

Mr. Karan, I would request you to please use your handset.

Yes. So my question on the ARPU side -- this quarter. And the second one on the Butterfly side, what's your [Technical Difficulty]

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.

Yes. Sir, in Bangalore now with, let's say, the Hennur and Electronic city expansions coming up next year, we will have almost close to 600 beds in Bangalore and Hyderabad capacity right now is around 950 beds. So what kind of a potential do you see in the Bangalore market over the next 5- to 6-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 4 to 5 years down the line?

I think with the -- see, the Hyderabad story is about 25 years. The Bangalore is only about 8, 9 years, Rahul. So what we are trying to do in Bangalore, in Hyderabad, we've 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 Bangalore is a lot more micromarket-driven. So we are, at the moment, we've got 4 hospitals in the 4 key areas. And what we are trying to do is 2 more, one is Hennur and one 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 2, 3, 4 years' time. And we'll get into the kind of doing the more centers as the demand arises anywhere. For example, the central cities, Rajaji Nagar is another area, there are some areas are there. But I think we don't want to go rush in and do something as a kind of expansion, scale up expansion. And right now, once these 2 are done, I think my focus is going to be strongly kind of a build these profitability of these centers and also to build 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 Bangalore.

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, yes.

Sure, sir. And sir, in the Hyderabad market, 1 of your peers is entering into the Hyderabad market with the 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 -- see, we welcome anybody who wants to do a good quality of work in the pediatric domain anywhere in the country, whichever is a city. That's not a problem. But I don't think that 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 1 thing everyone has to -- multi-specialty trying to focus on single specialty is not going to be that easy because all my focus 24/7 is only 1 agenda, how much they can actually drive that focus and multi-specialty and single-specialty is a big question to answer. I mean -- but someone who is as disciplined as us, I'm sure they'll be able to do it.

Sure, sir. So while we appreciate, sir, then 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 our doctor talent that maybe these other competitors become more aggressive in poaching doctor talent from us?

See, what happens is, we've got a kind of -- we've built this kind of a -- see, unlike other hospitals, pediatric hospitals and doctors cannot take the business away very easily because it's very interlinked. The brand, overall service system is more important than kind of a doctor alone, right? So that is what is -- is a medical branch. It's not something like a surgical branch where the surgeon moves away, he can take 70% of the surgical patients. So somebody needs to kind of understand that. So second important thing is we are kind of -- 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. Patients learn in terms of things, I mean I wouldn't expect people to take such decisions because patients don't move with the doctors in pediatrics domain. That's an important thing. And it happened to us in the past also quite early of 2009, '10 -- I mean at least 30% of the doctors gone away and started their own venture, but they couldn't take even 5% of the patients. So that is one of the strength of the brand is, the strength of the model actually, operating model and trust of the people in the brand and 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?

So it's early phase to discuss about it. I think they -- I mean, when [indiscernible] really consolidating when it's happening, 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 a bed number or what kind of, let's say, hurdle ratios would you be using for evaluating these assets?

We are in a very early [indiscernible], I think let's give some more time to discuss on those things.

The next question is from the line of [ Ritesh Shah ] from Lucky Investments.

I have a few questions. One, can you tell me on the slide, I couldn't see the margins that we would make in a new hospital and margin that you would make in a matured 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, Ritesh is a mix of a very newly started to the up to 4-, 5-year-old hospitals, right? But see, it gets really complex to give a kind of a unit-wise 1-year-olds, 2-year-olds, which is why you put it in always 2 buckets.

So I'll put it differently, sir...

For the consistency and also legibility, I think it's always better to have them in 2 buckets, matured hospitals or new hospitals under the...

No, so the new hospital bucket, whatever bucket you have today, irrespective of the vintage of that bucket, what will be the margin there?

So Ritesh, let me take this question. So as a company, we don't would like to share the margins on the matured hospitals and the new hospitals -- business hub-and-spoke model and then...

No problem, sir. Can I ask you differently then? At what utilization level does a hospital start becoming profitable?

So it depends on geography as I know. If I do an hospital in Hyderabad, very likely at the end of the year, it will be either breakeven or profitable. But in Bangalore, it will take about 12 to 15 months' time. In Chennai, maybe it takes 18 to 24 months' time. So depending on your brand recognition and also your -- and also depends on micro market where you are in and kind of the doctors you are 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. If I do it in Hyderabad, first year, at breakeven. And...

And what utilization will it be, sir? That utilization level will be 20%, 25%?

I think 30%, 32% we are -- that's what generally ballpark is.

Okay. The other question is in your focused markets of Hyderabad, Bangalore and Chennai, if you could tell us the ratio of pediatric hospital to a normal specialty hospital, what would be the ratio of beds or ratio? Is it 1 is to...

See, so more or less in all our hospitals, pediatric beds and the mother care beds, the ratios will not change actually. These will be more or less same.

No. My question is, if let's say, 100 is the total pool of beds in, let's say, Hyderabad across all hospitals, across all types, in that, how many beds obviously -- or how many beds will be a pediatric beds? One bed 200, 2 beds 200, 10 beds 200?

Okay. See, it works that way. So we have a different setting in hospital. Usually, 30% of the beds are dedicated to the obstetrics. Some of the spokes, we do up to 40%, 50% also. So it depends on the micro market, what is the requirement and the things positioned that way, bespoke level. So hub is always like a kind of a 70%, 75% of the pediatrics, 25% is about obstetrics that's in terms of separation of the beds. Our business is the same or numbers are the same when you look at the slide and everything, it's kind of our business is 30%, and our numbers are 30% OBG gynecology compared to pediatrics.

Sir, I was actually asking for the market. I know for your company, but for the market, if there were 100 beds treating all types of patients, your pediatric bed will be what, 1%, 2% of that? See, because in U.S. for every 10 or for every 20 hospitals, we have 1 dedicated pediatric hospital. So I was just figuring out that what is the ratio that we've reached in India.

We have not kind of -- we don't have a knowledge about other hospitals. People like you should do this diligence frankly. We won't be able to tell about others...

Maybe you can have a paid consultant job, 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?

There is a [indiscernible] Bangalore and Hyderabad, these are all the growing markets, especially for younger populations. If you look at the JLL report, consumption of the retail space, IT space and the number of flats, which are coming up in these 2 cities and Pune. And you could see that the growth of population is definitely going to be year-on-year is 15%. This most of the addition is in population. So that's how we can say it. I don't think it's the 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, office space consumption, IT consumption and also the housing, the flats and villas and those things, the consumption, the year-on-year growth in the markets of Hyderabad, Pune and Bangalore, they're definitely north of 15%. The number of the buyers of the new houses and those things. So I can't say absolutely their numbers. But there is definitely -- there's a 12% to 15% increase in the population in each of the cities year-on-year, that's most of these populations are coming into city are NPA and that is notable, which is why I think our growth is not a problem in these young cities like Hyderabad, Bangalore, Pune, and Gurgaon and these are all the cities are most vibrant, right?

Okay. And after these 3 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 huge. huge, huge. And that I think if you focus NCR [indiscernible] Gurgaon hospitals, then obviously, we're going to look around more micro markets in the NCR.

Okay. And lastly, in the next 24 months, what are the beds which will come on stream for us, the number of beds?

24 months, I think we have about...

380 beds. So roughly 380 beds will come, which will be -- 100 beds, which we are starting by March '25 and then 2 hospitals, which is coming at Bangalore, which is Hennur and Electronic City, roughly 150 beds there. And Coimbatore, which will be the fag end of FY '26, 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 mature hospital? It looks like that the annual OR is about 60% there. I remember last fall's historical call used to always say that pediatrics on an annual basis, is about 60% OR occupancy business because we have a seasonality element in it so is it fair to assume that the mature hospitals for you, which is like this 1,200, 1,300 beds is speaking out in terms of OR in terms of OR you may have an ARPOB-led increase that's different. But on OR, is this comment correct or you want to modify this?

In the peak season, we have multiple levers current to accommodate the patients, which we have done, all of the units have done to accommodate the patients with a faster turnaround, adding a few additional beds on a temporary basis, et cetera, we try to manage. I think we will continue to do this and what you are saying is that 60% on the mature is speaking 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 increasing, which will flow in your matured hospitals?

And also, [ Karan ], 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 specialties and...

Yes. That's why I said fixed 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 Hyder Nagar at Hyderabad, we have added capacity. If you see the robust demand, obviously, we'll be adding the beds there. We [indiscernible] added. So we will keep on adding the beds on the existing hospital if the demand is sustainable and we continue to grow.

So you have the structure -- if you need a warm shell kind of structure, you can add beds, there's a limit to what you can add, right?

We can -- see, we do, we will take multiple ways. Sometimes we move out of some of these services, add more beds and take an adjacent building for some of the diagnostics and those things. And increase beds [indiscernible] sometimes we build a small block adjacent to the land parcel available, land brownfield is available so we've done that. We've added 150 beds addition to the Hyder Nagar recently adjacent to it, right, next to it. And we added about 12 beds in LB Nagar for the demand. So creating some space from the existing fleet. And we are taking about some space for outpatients and IVF center in the adjacent building. So we keep doing these things [indiscernible] 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, [ Karan ], we don't share them, you can figure it out by ARPOB and occupancy we've given you...

The next question is from the line of Alankar Garude from Kotak Institutional Equities.

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, 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 2 years' horizon or 3 years' horizon or 5 years' horizon, we will definitely do another hub at some point in 5 years down the line in Hyderabad, that's thought process. It's not been consolidated, we would do it because this is a place where people trust us, people believe in us. It's just not Hyderabad, it's the entire 2 states of people support us and also the neighborhood like Northern Karnataka and also parts of Maharashtra comes to us. This is a large domain and we have the choice of hospital for these areas. Obviously, if there is -- and also, we need to see the betterment as you will future, build more strength and more specialties and do a lot more work based on what -- how is it going to pan out now in the next 3 to 5 years' time, we will definitely look at -- see, 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 I'll probably need another -- some more beds in Financial District in Hyderabad, so therefore, I may do another spoke, I might decide to do the large hub hospitals. So building is another problem. I can do a brownfield over there, there are plenty of buildings which are constructed and been vacant. So I mean, that's a call which kind of we take at some point based on math what we think about it.

Understood, sir. Sir, and if you look at the last decade, we have entered into several new markets. So Bangalore, Chennai, then the 2 hospitals in Delhi now. I mean, maybe we can also include the upcoming Gurgaon and there is Vizag as well. So if you look at the next 5, 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 have always been very disciplined. Wherever we go, we want the position of strength of much larger. And Bangalore will pan out like Hyderabad as we move forward in 5 to 7 years' time. Chennai also will have a significant number of beds. And also, there will be significant beds in Andhra also. That's a South story. Now we are looking at the kind of Gurgaon. Once we kind of start at Gurgaon, we will start operating the hospitals then I will obviously look at kind of how the tentacles will going to go in the NCR. Whether it's how you look at Noida, [indiscernible] how do you look at Hyderabad, how do you look at Faridabad there is so many micro markets are there. So obviously, we're understanding which much better once we start the hospital. We will definitely take NCR as a kind of an extra larger space for us to expand. And if we do take up another geography whether it's West or somewhere else, we will take a similar view there. If it is West or Northeast, we will take a very similar view of what we have done in these 4 geographies. I think that that's what we look at it. Very unlikely, we do sporadic small, small hospital of 100 beds in a city, that's something which kind of we are not really keen to do it.

Fair enough, sir. And 1 final question, possible to qualitatively comment on the performance of Bangalore, Chennai and Madhukar, particularly Chennai and Madhukar, if you can comment?

I think that the Bangalore is going quite well and the Chennai is -- Chennai, there's a lot of new beds are there. Chennai we have 5 years of operation, sixth year running. And there are 2 new hospitals, one is about less than 2-year old another one is just opened up and Chennai as a market is a very good market, how I see it is. But Chennai will 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 have been well in Chennai. I mean last year was a little bit of slowness. We addressed all the issues going fairly well. I think that we have done quite well in the last quarter. And even Madhukar also, I think that things have moved well. The topline for growth in Madhukar also overall. But Madhukar will not leave you kind of EBITDA swap like the other Rainbow Hospitals 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 at 12% EBITDA, it's good, it's good. I think for me, the Madhukar is something kind of to establish our brand to establish our service model to understand the Delhi those things, so it will be helpful to us as long as I do about 12% to 15% -- as we move forward, 12% to 15% EBITDA comes in the next 1 to 2 years' time that itself is the kind of -- we're not expecting anything more than that because we cannot do anything more. For example, I do about INR 70 lakhs, INR 75 lakhs of free treatment every month. So otherwise, that would have come to EBITDA, right? So -- and also, it's -- we only manage beds and it is again if a lot of money flows back in the form of rental or other forms to the owners. So it is -- our CapEx per bed was low. So when you look at combine all the factors together, it is not high EBITDA. We have seen another hospital, other group, which runs a similar model like Narayana does in hospital in initially, they also struggled with same thing because the hospital will do well, but you can't generate EBITDA.

Sir, just 1 follow-up there on Delhi NCR. If you look at the 2 sectors wherein we are opening our hospitals in a Gurgaon, clearly, there are a lot many more multi-specialty hospitals coming up for expansion over the next 3 to 5 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 multispecialty capacity coming up -- significant capacity coming up in that same micro market. Is it something which worries us? Is it something which is 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?

What happens is Gurgaon, I think how people see, 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 kind of a health city overall. And it is for NCR for the North. Everyone's view point is, it's not just for Gurgaon. It is for the NCR, it's for the North and it's for the international. Every hospital's thought process is 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, I'm not sure about other promoters. They may have more knowledge about because they've already done in 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 health care hub in the world. So that is how the Gurgaon is going to shape up. If you see the people putting the CapExs and the quality of the hospital, are actually a condition to be proud of what the promoter is doing in Gurgaon. So that is how the network effect works for everybody. I don't think we are competing with each other. There is a competition between each of this. But opportunity also will be larger. And also people will come from the greater part of the country towards -- flock towards the Gurgaon. That's what I'm saying, even international. That's how I think everyone see, even for me also, when I'm looking at doing a 300-plus bed, 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 other everyone's promoters, what they're doing, other hospital groups. People are looking at Gurgaon to be a kind of a major health care hub.

And sir, 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, these are the more beds per million than NCR with the projected whatever you are giving, right? It is going to be roughly 2,700 beds per million whereas Bengaluru has 4,300 beds per million, Hyderabad 3,600, Chennai 4,000 beds. So I think there is a lot of scope as doctor is also saying that NCR we should not project as only the NCR population, the road connectivity and the nearby states, which hardly have or have a less health care infrastructure. So Gurgaon is going to emerge as a health care center for the whole North India, basically, and plus international.

Maybe you should tell 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.

[Operator Instructions] 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. Saurabh Bhandari, IR Head, Investor Relations, or at [email protected].

Thank you.

Thank you everybody.

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