On Tuesday, HSBC upgraded Rainbow Children's Hospitals (RAINBOW:IN) stock from Hold to Buy and increased the price target to INR1,650 from INR1,290. The upgrade reflects a positive outlook on the company's mother & child care (M&C) focused business model, despite the near-term volatility in EBITDA margins due to costs associated with new units.
Kerai highlighted that Rainbow Children's Hospitals maintains a competitive advantage over multi-specialty hospitals expanding into the M&C sector. This advantage stems from Rainbow's comprehensive pediatric services and its pool of top clinical talent specializing in pediatric care, developed over two decades.
The recent launch of a state-of-the-art child development center (CDC) in Hyderabad on November 14 is expected to further solidify Rainbow's position in specialized pediatric care. The CDC is seen as a high potential segment, responding to the growing number of behavioral and developmental issues in children, particularly those with older parents. For example, 20% of pediatric neurology patients in Hyderabad have developmental challenges.
The analyst anticipates that Rainbow Children's Hospitals' strong performance in existing markets, coupled with the expansion into new services such as the CDC and specialized retail stores, will sustain its dominance in the M&C market against its competitors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.