Ladies and gentlemen, good day and welcome to the Rainbow Children's Medicare Q3 FY 2025 Earnings Conference call hosted by IIFL Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jeewani from IIFL Capital. Thank you, and over to you, sir. Yeah, hi, good morning everyone. I'm Rahul from IIFL Capital. I welcome you all to the third quarter earnings conference call of Rainbow Hospitals. 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. So wishing you all a very happy New Year and a very warm welcome to the earnings call for the Q3 and the nine months of the FY 2025. I'll discuss the company's progress, vision, and exciting opportunities ahead. Before that, I would like to take a couple of minutes to share that we have successfully concluded the Silver Jubilee celebrations of Rainbow Children's Hospital. Being an organization with an average age of 32 years, the events were energetic and electrifying, featuring outstanding performances from employees. It was an immense joy and to celebrate this milestone with the entire Rainbow family, and I was deeply touched for the love and the strong bonding the team shares with the Rainbow. We have recognized and honored hundreds of employees for their outstanding contributions. Over the last 25 years, this incredible journey has touched millions of children for their healthcare needs and saved thousands of lives, hundreds of doctors being trained, and created value for all the stakeholders. I would like to take this opportunity to thank all of our medical, paramedical, and support teams for their unwavering commitment in delivering exceptional medical care for children and women, positioning Rainbow Children's Hospital as India's leading children's hospital group. Now, I would like to focus on the results of Q3 and share the key highlights of the first nine months of the year. We had a strong Q3 performance with a growth across all operating metrics, including our new hospitals launched in Hyderabad, Bangalore, and Chennai, three quarters ago. These new facilities have now well integrated within our Rainbow Hub and Spoke model. Our IVF services have shown good progress, gaining traction, reinforcing the potential as a key growth driver for the future. Recently, we have added a new IVF clinic close to Rainbow Unit, Bannerghatta Road, Bangalore, bringing our total number of IVF clinics to 12. As highlighted in the last quarter, we have launched Butterfly Essentials, a dedicated retail store offering a comprehensive range of baby and women care products. So we have successfully opened Butterfly stores in all of 15 hospitals. This initiative is progressing well with a good footfall and an enhanced patient experience. Rainbow opened a state-of-the-art children's child development center in the last quarter at Banjara Hills, Hyderabad. The setting is a new benchmark in pediatric care. This facility now serves as a central hub, consolidating child development services from all the Rainbow Hospitals in Hyderabad to ensure comprehensive and efficient care for children in one location. We are still encountering challenges in our international business, particularly in countries like Bangladesh, Oman, Kenya, and Sudan. There has been a significant reduction in the issuance of healthcare permits for patients seeking medical travel. Now, going on to the numbers, for the Q3 FY 2025, our revenues registered a growth of 18.5%, amounting to INR 398 crore. Similarly, our EBITDA increased by 14%, reaching to INR 134.3 crore, while PAT registered a growth of 10.2% to INR 68.9 crore. Our overall occupancy rate for the quarter was 53.2%, with the mature hospitals achieving 60.2% occupancy, and new hospitals, including a newly launched hospital, recording a 39.6% occupancy rate. Coming to projects update, we opened a new outpatient clinic in the busy residential area of Attapur in Hyderabad. This clinic operates in conjunction with the Banjara Hills facility, ensuring a wider coverage for the Hub Hospital. The regional Hub Hospital in Rajahmundry, Andhra Pradesh, of 100 beds, is nearing completion and is expected to commence operations by May 25 of the calendar year. The project work at the Spoke Hospital in Electronic City of 90 beds and the Hennur, Bangalore of 60 beds are progressing well, with both hospitals expected to commence operations by the end of the Q2 FY 2026. The project work has commenced at the regional Hub Hospital in Coimbatore of 130 beds. The project is running slightly delayed, with the operations anticipated to commence in about 24 months' time. The company has obtained official building plan approvals for the land property Sector 56 in Gurgaon, and while approval for Sector 44 is probably a few weeks away, our project team is busy in tendering processes. In addition to our growth plans, I would like to highlight some key achievements that reflect our commitment to delivering high-quality pediatric and perinatal care. Over the past nine months, we have successfully treated a number of children in intensive care services and also the group level and managed complex pediatric specialty cases. Here are a couple of notable examples which I would like to present. Our cardiac team at Rainbow Children's Heart Institute performed a world-first fetal balloon aortic valvoplasty with a pioneering closure device. So I will explain a little bit about this patient. It's an interesting case. It's a 30-year-old lady who was carrying a fetus of 27 weeks with a severe aortic stenosis and left ventricular dysfunction, and flow was reversal in the aorta, so our multidisciplinary team, including the cardiologists, led by Dr. Nageswara Rao, fetal medicine specialist, and obstetricians, have successfully performed a fetal balloon aortic valvoplasty on a 27-week baby of 700 grams within the womb for critical aortic stenosis. The groundbreaking aspect of this procedure was usage of a closure device to seal the puncture site, making the first known globally, with this innovative approach. What I'm trying to say is that the heart size of this baby of 700 grams will be about a large grape size. Normally, we have to approach this heart through the puncture in the ventricle, the bottom of the heart, and then go and do the balloon valvoplasty. This baby is so small. If we do a small puncture, the balloon would not go through. Therefore, our team has decided to use a large bore and wide open so that the balloon can go and do the work, finish, complete the procedure. That will lead to the massive blood coming into, surrounding the heart, so it will compromise the life. Therefore, the closure of this hole was done by the device. The heart was actually being closed with a device closure. This is what's groundbreaking in this particular case. This is done the first time in the world. Obviously, this pioneering success marks a milestone in fetal cardiology, expanding the possibilities of in utero interventions and also bringing hope to the families worldwide facing severe fetal heart conditions. This case widely gained wide interest in national media, and almost all major national publications carried the news article. Perhaps the honorable Prime Minister Modi acknowledged this groundbreaking procedure. The second case is successful keyhole surgery for a rare brain tumor in a seven-year-old child who was experiencing persistent headaches for 10 months and gradually losing the peripheral part of the vision, along with two seizure episodes. The family consulted our pediatric neurology team. The MRI revealed a cystic tumor in the sellar and suprasellar parts of the brain extending into the frontal lobe. The biopsy confirmed to be adamantinomatous craniopharyngioma, a rare type of surgically treatable brain tumor. The child underwent minimally invasive keyhole surgery, and our surgeons could manage to excise completely the tumor. Doing a keyhole surgery in this child reduced the complications, reduced complications and ensured a short stay and also provided a better cosmetic outcome. Two weeks post-surgery, the child was discharged with a complete neurological recovery. This case underscores the critical role of a multidisciplinary team in managing tertiary and quaternary care patients. With that, I will now pass the mic to our Group CFO, Mr. Vikas Maheshwari, to take to the financial update. Thank you once again for joining us today. We look forward to your questions and insights as we move forward. Thank you. Thank you, sir. A very good morning to all of you, and thank you for attending this investors conference. I'm pleased to brief you on the financial performance and the key developments of Rainbow Hospital for the third quarter and the first nine months of the current financial year. Our operating revenue for the quarter stood at INR 398 crore, reflecting a growth of 18.5% when compared to the corresponding quarter of the previous financial year. For the first nine months, our revenue stood at INR 1,146 crore, reflecting a growth of approximately 20% when compared to the nine months of the previous financial year. Our EBITDA for the third quarter amounted to INR 134 crore, marking a 14% growth compared to the same period last year. For the first nine months, our EBITDA stood at INR 375 crore, reflecting a growth of 16% when compared to the nine months of the previous financial year. For the nine months of the current financial year, EBITDA is slightly impacted by close to INR 7 crore due to one-off event related to 25th year's anniversary celebrations. The EBITDA margin for the current quarter is 33.8%, while for the first nine months, our EBITDA margin is 32.7%. The profit after tax for the quarter is INR 69 crore, marking a growth of 10.2% in comparison to the corresponding quarter of the last financial year. For the first nine months, our PAT stood at INR 188 crore, reflecting a growth of 12.2% when compared to the nine months of the previous financial year. In terms of the operational performance, both outpatient and inpatient volumes witnessed a growth of 12% each when compared to the corresponding period in the last financial year. Our payer mix continued to remain robust and balanced with 51.3% of the revenue coming from the insurance and the balance 48.7% coming from the cash patients. For the first nine months, the payer mix stands at 48% cash and 52% insurance. Furthermore, international business constitutes now approximately 2% of our total business for the third quarter. As highlighted earlier by our chairman, we are facing some headwinds in the international business, and we are working to mitigate the impact. I'm pleased to inform that our company's balance sheet remains very robust, with a net cash position of INR 667 crore as of December 31st of the last year, and will support our ongoing capital expenditure plan. Given our current cash and anticipated internal accruals in the coming quarters and the years, we remain confident in our ability to complete all planned capital expenditures through internal accruals without any debt financing. During the quarter, the company has invested approximately INR 22 crore in the capital expenditure. With these insights, I conclude my financial updates. I now invite questions and suggestions from the participants. Thank you very much. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of R. Sen from MAS Capital. Please go ahead. Yeah, thank you for the opportunity. Happy to see the good set of numbers that you've kind of reported. So I just wanted to understand, we spoke about the largest pediatric training program. If you can just shed some light about the opportunity size and, what kind of market, do we see this kind of turning out to be? Thank you. Yeah. So we train up. We have about total DNB seats of about 200 across the group to train. This is a postgraduate training for the pediatrics, and it's competitively selected through the NEET examination. And Rainbow being the premier institute, and they you know the seats get filled in the first time itself, well within about 2,000 ranking. So we also do a lot of super specialty training for the neonatology and pediatric intensive care, pediatric hepatology, endocrinology, and cardiology. So we have neurology. So we do a lot of. There are a lot of training centers today to train people. Okay. Sure. So, just drawing parallel with some of the other hospital chains, not in the pediatric region, I mean space, but especially in the eye space, I see there's an asset-light model that they have kind of used and especially for penetration into tier two cities. Now the question was, is there a school of thought within the management to kind of explore this model, to enter tier two cities with the asset-light model, which acts as a catchment area and feeds into the tier one branches that we have? For a Rainbow operating model, ultra light may not suit whether we go to the main cities or even the Spoke hospitals or even the districts also. That's because we are a complete healthcare model. We are not a kind of a part of segmental healthcare model. So, especially children's healthcare and also, when you combine with maternity, you require a space required for the woman as well as the children with emergency services and the outpatient department. You do surgical, you do intensive care works, you do birthing. So it's a larger space. So however much ever we kind of compromise, usually the 50-50 beds is the lowest, about 35,000-40,000, the lowest kind of space which we require. That's what actually what we look at it always. Going ultra small, you're actually compromising some of your offerings to the patients. As an emergency hospital, this is going to be difficult for us to operate and satisfy the people and gain the traction. Got it. Got it. So if I may, I'll just ask one last question. This is at a macro level, 1,935 beds as of 2025. Can you share your aspirations till 2030? Where do we see how many beds and at a long-term goal? So we have a trajectory which has already been discussed about 1,000 beds in the next three and a half years. About 400 beds are going to be in the NCR, which is already planned in the Gurgaon two hospitals, and the 600 beds are going to be in the regional spokes as well as the spoke hospitals in the south. Some regional spokes that are new, like Rajahmundry and Coimbatore and those in the new geographies. Thank you so much and all the best for the next quarter. Thank you. Thank you. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi, good morning and thank you for the opportunity. So my first question is on your Gurgaon site. So can you update us, like, what are the pending approvals? And as you said, like, some work has already started, but, when are you expecting to start the construction work? And now, like, what should be the timeline for completion, for the Gurgaon site? We're almost there actually. The permissions of one of the sites have come, and we heard that, you know, the other site permission is just on its way about a couple of weeks' time, and we are actively engaged kind of with; we built our project team. They're all busy in the tendering process, and they're trying to kind of float the tenders, inviting people to kind of for the basement building construction. So we're quite active now. Probably kind of we start the site construction probably in about four weeks-six weeks' time. Four weeks- six weeks? Yeah. Yeah. Yeah. You mentioned approval for Sector 44 is a few weeks away. What about the other site? Other one is already there. We have received the permission for Sector 56. Okay. So, very broadly, say you start on the construction, etc., in another four to six weeks. So reasonably, we should be looking at FY 20 28 as the launch timeline for this Gurgaon facility? Yes. We are also taking some kind of steps to kind of how to speed up the construction and also going more with the steel structures and those things. Now, there are a lot of things which we are trying to see that how to speed up the process to construct the base building. Then once we have the base building constructed, within a year time, then we can set our pace more aggressive to complete it. So we expect about two and a half years from now to start. Okay. That's helpful. My second question is your international business. So right now, it's small, like 2% of your total business. But what are your aspirations here? And especially in light of what we heard about this Heal in India program for promoting medical tourism. So just want to hear your thought on this business, this part of the business. So we started our international business as a post-COVID actually. It was going pretty well. Perhaps we budget about 4% of the top line to come from the international business about this year. Last year, we clocked about INR 44 crore. We were quite ambitious about it. Unfortunately, that geopolitical situation and also the Congo region and some other areas, like Oman is also a problem. And you know, with Somalia, which is our largest contributor, Sudan, they're all into kind of a serious internal political problems. So that's why there's a significant reduction in the healthcare visas for all these things. I'm not sure about other groups, but we have seen almost a reduction 40%, right? Yes. 40% in the business from the last year. So, you said you earlier budgeted for 4% of revenue from this segment, but due to macro uncertainties, there has been some 40% reduction from your initial anticipation. So where should we end for FY 20 25 in terms of contribution? I think at the end of this one, I think it's probably about INR 34 crore, something we are expecting it to close to now. Last year, we did about INR 44 crore. You know, we just see waiting for actually two things to open up. See, it's our international journey is very early phase, which is why kind of it's a building story. Once things have opened up, we are also exploring other countries' opportunities at the moment, actually: things like Philippines, Mauritius, and Rwanda and other areas, Zimbabwe. We are kind of hoping that it's an early phase building story. We also wanted to kind of have a closer connect with the doctors in those African and also Indian neighborhoods in those countries to have a better relationship with them and try to kind of engage to have a better referral system. Okay. So, and my last question is, in this quarter, the staff cost, we have seen around 8% sequential decline. I understand there is a bit of seasonality-related factor as well. But, in your staff cost, like, what percentage will be variable in nature and which can just be adjusted according to, say, top line performance? Damayanti is a good question. This is a good observation. So if you go back to first quarter, our staff cost was also at around INR 49 crore. In the second quarter, which is seasonally very strong, you know, so we hired nurses, paramedic staff, extra, on the contractual basis, cleaning, etc. So the cost slightly goes up, and there will be some OT payment because nurses, etc., has to work a little harder on the patient's handling, etc. So I think this is a normalized one which has come back to the normal level. So that should be the cost on the current bed capacity which we are operating. Around INR 49 crore-INR 50 crore, kind of staff cost? INR 50 crore is what it should be. In the fourth quarter, obviously, you know, there will be some slight adjustment on the graduating, etc., but will not impact much of the things. Okay. That's helpful. Thank you. Thank you very much. Thank you. Ladies and gentlemen, to ask a question, you may press star and one now. The next question is from the line of Sumit Gupta from Centrum Broking. Please go ahead. Hey, hi. Thanks for the opportunity. Am I audible? Yes. Hi. So just now, so on the CapEx part, like, now that, this Delhi NCR project, Gurgaon Hospital is now moved to FY 2028, so I just want to understand on the overall CapEx set of plans for the next two years. Is it the same like INR 58 crore that you guided for? See, we have already listed out our CapEx plan in our presentation. In FY 2025, 2026, you know, we are coming with 2250 beds. These are all asset-light means these are leased assets. Then similarly in FY 2026, 2027 is 130 beds. So roughly 380 beds or close to 400 beds which will come in next two years. Since these are on the leased assets, roughly INR 60 lakh-INR 65 lakh per bed, you should assume on that as a CapEx. As far as Gurgaon is concerned, we have already spent around close to INR 180 crore-INR 190 crore on land acquisitions and related registration and permissions, etc. Now you should budget at around, you know, another INR 400 crore in the next three years' time, starting from FY 2025, 2026 to FY 2027, 2028. The most of these CapEx will happen post one year because right now, you know, once we have the approval, the groundbreaking and then foundations, etc., will not take much of the cost. So the most of the cost will come after one year. So that is what is the trajectory. The exact trajectory of Gurgaon, you know, once we start the project, we will come to know. But that is more or less INR 400 crores in the next three years for the Gurgaon. Understood, sir. Thank you for the detailed explanation. And so lastly on the, like, how the overall new centers which were opened in the last two to three quarters, they are trending in terms of occupancy and profitability. Like, what has been the trend that you have seen? So, for the nine months, if you look at, because we have opened our, you know, units sometime in March last year, right, nine months before. So if you look at nine months, our new hospital occupancy at around 37%. I think that is a good, you know, in the blended basis, which is few units which were opened two years back and so on and so forth. If you look at, I think the occupancy level is at a good level. The new units are doing well. It is on the given trajectory. We have already guided our, you know, for the Hyderabad, we break even in 12 months' time. For the Bangalore, it takes 15 months' time, and Chennai takes some 18 months' time. I think these are all on the same trajectory. There is no change on that. Okay. Thank you, sir. Thank you. Thank you. The next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead. Hi. Thank you for the opportunity. So at the beginning of the fiscal, you had alluded to focusing more on volume growth in FY 2025, especially with all the new hospitals which became operational in 2024. Now, given that we are seeing decent volume growth across both these newer centers as well as the existing centers, how should we look at ARPOB growth in FY 2026? Okay, Alankar, there's a good question. See, always we have kept on guiding for the last at least two, three quarters. So say ARPOB is a little bit of a different complex subject because there are two variabilities. One is the seasonality. Second is ALOS. If the ALOS goes up, your ARPOB gets suppressed, right? Thus occupancy goes up. So what we are guiding or requesting all the analysts and the investors to look at what is our ARPP growth. I think ARPP growth has been consistently between 5%-8% depending upon the quarter-on-quarter. So I think this trajectory will continue because of two things. One is that the new centers which are getting matured, we have get a little bit of the pricing power. Those are the mature centers that start operating the more complex cases and the more clinical difficult work where the ARPP, etc., is high. So I think if you look at ARPP, I think you should look at something like that 5%-9% growth on ARPP, which is, this is the real growth because that eliminates at least one portion which is easier, which is ALOS. In our this case, the ALOS has gone up by 12%, right, which has got impacted. You know, ARPOB, if that would not have been, the ARPOB would have been higher. Actually, that was my other question. I mean, ALOS, both in new and existing, has increased meaningfully in nine months. So. Correct. Can you let us know the reason, at least for the mature hospitals, what is the reason for the sharp increase? It's because of the operational issues. Sometimes, you know, as the insurance business is 50% for us, sometimes the insurance approval comes late. It automatically gets delayed four, five hours. So, you know, these are most of the things operational efficiency-related. Plus, if the more complex cases, the patients are staying longer at the hospital. So it's a combination of both. But the operational-related, whatever is there, obviously we can improve ourselves. So how should we look at ALOS then going forward? Should it come back to that 2.6, 2.7 number? Nine months median is the good average to take up. So I think it is at 2.8, 2.9, and then nine months average should be good. We should improve from here, but you should take that average. Yeah. Traditionally, Alankar, our ALOS will be kind of anywhere between 2.6-2.8. So it depends on actually how the seasonal, if there is a lot more seasonal, a lot more outpatient side, then the ALOS will come down. If there's more of the complexity, more of specialties, more of NICU admissions, the ALOS get treated more towards a little longer length of stay. So this is the dynamics which keeps going on. So typically in the Q2, Q3, the ALOS usually will be low. But this quarter, the seasonal business is not that higher. So therefore the ALOS are kind of a little more treated. I will definitely look into that, you know, are there any other factors that, you know, ALOS have increased. So even then, I think the ALOS of 2.7, 2.8, that's what we generally will settle down to, a mature pediatric hospital. That's what my thought process is. Got it, sir. And one last question. You had spoken about evaluating certain M&A opportunities in the past. Can you update us on the progress on that front? We, Alankar, continue to look at those funds. I mean, we continue to work on these opportunities. I'm sure, you know, we'll let you know once it comes to some degree of kind of a conclusion. Got it, sir. That's it from my side. Thank you. Thanks, Alankar. Thank you. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead. Hi. Thanks for the opportunity. My question is related to the new hospitals that we added in Q4 of last year and Q1 this year. I think we have added close to 230 new operational beds. So what was the EBITDA drag because of these new beds this quarter? Yeah. It's a good question. It is a single-digit high number of EBITDA drag. So it is close to INR 8 crore-INR 9 crore for the three hospitals together for the first nine months. Understood. Got it. Second question, the delays in three hospitals that you have mentioned, just wanted to understand the reasons for the delays. Gurgaon one, I think you mentioned due to approvals, but for the remaining ones, and also any chances of further delay or during the stated timelines, by those timelines, the hospitals should become active? I think there's a mere couple of months delay in Rajahmundry, not much of delay. It is just basically going slow. It's tight to the city, obviously the challenge is always going to be there because our teams are all located in the city, so our project teams and also the vendors. So that is a couple of months delay in Rajahmundry. In Chennai, Coimbatore, there was a kind of a redesign of plans that happened because of some change in the government rules and the regulations and the offsets and those things. So that's why we had to resubmit the plans and then get a reapproval process. So being in Coimbatore, all the process runs in Chennai city. So that was some degree of delay. So otherwise they're all ready to construct and do things. Now execution is going on. I think we want to kind of fast pace it now. Understood. Okay. One more question. Can you just give some sort of outlook for FY 2026, both on occupancies and ARPOB? I think it's a bit early to kind of look at it. Still we are in the current financial year, operating, you know, financial year. So probably we'll kind of discuss in the next earnings call. Sure. Sure. No worries. Thank you, Alankar. Thank you. Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Nathan Subramanian, an individual investor. Please go ahead. Yeah. Good morning, everyone. First of all, wish us for your excellent performance. Okay. I just want to know, I'm a new investor. I just want to know how do you differentiate a new hospital and a mature hospital? And that means how many months, you know, after you consider a new hospital as a mature hospital? And my second question is, what are the likely growth drivers? Okay. So, how we classify the matured hospital and the new hospital is based on the tenure from the date of we start the operation. So the new hospital we categorize, which is less than 60 months, which is five years. And the matured hospital is commenced the operations more than five years. So this is how we differentiate on this? The growth drivers will be three. One is that our matured hospitals will keep on adding the doctors and the new specialties. So the growth will come from one vehicle of that. The second growth is our new hospitals or the non-matured hospitals, which is less than five years. They will keep on growing at the faster pace than the matured hospitals. That growth will come from there. The third growth will come from the new hospitals which we are adding. Next year we are adding in FY 2025, 2026, three hospitals we are adding, and we are adding close to 12.5%-13% of our capacity, close to 250 beds in the next financial year, so that will also drive the growth in the coming quarters and the year. Okay. Thank you. Thank you very much. Thank you very much. Thank you. The next question is from the line of Anshul Agrawal from Emkay Global. Please go ahead. Hi. Thank you for the opportunity. Am I audible? Yes, Anshul. Great. Any reason that you would want to call out for the dip in gross margins in the current quarter? I believe this quarter would have lower surgical mix. Yeah. So Anshul, if you come, if you are comparing it with quarter second, yes, the mix will be slightly better in case of quarter three because the quarter second is seasonally strong quarter. And there will be a lot of, you know, low ticket, normal, businesses which comes due to the season. So the quarter three compared to the quarter second will be more of, surgical or the clinical mix better. No, I was trying to look at it, sir, on a Yo Y basis as well. We've seen a gross margin decline of almost 80 basis points, and I thought, you know, considering that there are more medical cases in this, there should not be any reason for gross margins to sort of dip. So on year-on-year basis, what has happened is, Anshul, that last quarter, you know, March, we have added three facilities. And those three facilities, the drag has come into the P&L. This is one. And second, as I have informed, during our opening remarks, that close to INR 70 million is the one-off item which we have spent for our 25th year of the anniversary. If you knock off these two, probably we are better off on the same EBITDA margins. Got it. Got it. Thank you for that answer. My second question, sir, is on EBITDA margins going ahead. Now I believe we'll about start to see break-even on certain new facilities that we added in Q4. And at the same time, these new facilities should also start coming up in Coimbatore, etc. So would our margins sort of remain stable, or do you see that, do you feel that it will dip for probably about two, three quarters in FY 2026 as well? So as a business, you know, in the hospital, whenever the new hospital gets opened, there will be always some drag. The question, how much is the drag and how much is the capacity is being opened, right? So if you look at the last year, March, we have opened three hospitals, means, from April to December, the three hospitals' drags are coming. But it's still, you know, our EBITDA margin has been stood at, you know, 32%-33%, or for the nine months, it is 32.7%. I think going forward, three hospitals which we are adding, obviously there will be some drag. But our effort is that we keep the range ± 1%. From there, whatever we are at nine months, the range should be ± 1%. Because what will happen as we progress, the new hospital which we have opened, they will also be start contributing, on the EBITDA side, though on the lower side. But it will, from the negative, they will move to the positive. And the new hospitals will be slightly, you know, drag will be there. So more or less, we should be able to balance it between ± 1%. It's a good percentage to maintain, you know, 32.7%. I think it's a good margin to maintain. Got it. Yeah. Just one last question, sir. So once the Gurgaon facility comes online or in the run-up to that, I believe our return profile would sort of get hit because of the asset-heavy nature of this facility. Any insights around how we see this? Do we intend to get back to our 30%+ ROCE profile post one or two years of this Gurgaon facility commencing? Any thoughts around this, sir? See, any capacity which is, you know, large one gets opened by nature, by arithmetical matter. The ROCE will have the impact, right? Now it is a question, how much is the impact, so I'm giving the perspective. The exact numbers will work it around, or you can also work it around, right? Right now we have 200 beds, and by that time we hit the Gurgaon starting, we should be of the size of, you know, whatever the beds we have told it is getting added. We'll be at around some, somewhere 2,500 beds-2,600 beds because some new other opportunity, acquisition opportunity will get integrated with us. We'll be at the size of from where we are expense, and we should be 25%-30% higher than the current base, and those should be EBITDA generating and contributing whatever the capital we have invested. So that will offset to some extent of the Gurgaon. But obviously, as the Gurgaon starts, there will be some drag, of the ROCE. But that is the nature of the business. We have to keep on feeding the capital for the future growth and drive the efficiencies, make sure that the Gurgaon facility matures, early and then it starts contributing. So that is what is our effort. Great. Thank you, sir. Thank you for your detailed answer. Thank you. Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Satish from Lucky Securities. Please go ahead. Sir, thank you for the opportunity. I have two questions. You know, one on the matured hospital at 60% over in nine months, you know, what is the further room in this, occupancy ratio? Yeah. We can actually clock up toward a 68%-70%, on, matured sites. We still have a room to grow further in, these matured hospitals. So there, within the matured hospital bucket, you still have a kind of, some of them are kind of, the occupancy is about 50%-55%. Some of them are kind of doing about 68%-70% occupancy. We still have a room, in the matured, bunch of hospitals and a lot of headroom in the, the new hospitals. Okay. And, wasn't this that, you know, versus a typical multi-specialty, tertiary hospital, or children's hospital, you know, earlier calls you had always mentioned new hospitals that are lower occupancy. So, am I confusing something here or there is some revision in this OR number? No, sir. Let's not confuse ourselves with comparing multi-specialty hospitals because multi-specialty is a different game. It is, it's multi-specialty is a hospital which treats wear and tear problems, right, of life. Children's hospital is a hospital which is for, it's a medical hospital which treats the children who require hospitalization, admissions, and acute illnesses, majority of them. Some of them are chronic illnesses. The proportion is inverse compared to multi-specialty hospitals. So therefore you have a seasonal impact, you have a differential area in the hospitals. And on top of it, we do not have a fixed government business coming and occupying our beds. So it's 50% insurance, 50% out-of-pocket. Yeah. So, sir, then by that logic, versus 70% occupancy of the adult hospital, shouldn't the children's hospital be a lower occupancy? Yeah, definitely. We are closing a lower occupancy because even if you look at the matured bucket, we are having over 60% occupancy. And very unlikely that we cross 70% occupancy because of the differential areas of the beds and, as well as, the seasonality, combining these two factors without having a government fixed business. So we will always have a kind of a percentage occupancy about, let me put it this way, if we do an occupancy of blended occupancy of about 60%, we'll deliver a residency. So that is how we kind of positioned it. Do we kind of look forward to increase the kind of occupancies? We always would like to do that. But because of these factors, the children's hospitals traditionally will have much lower occupancies compared to adult hospitals. So that's why we don't say that, you know, let's compare ourselves to adult. It's a different domain. No, sir. So then that number is still 70% or the number is not less. It will be less than 70% for a mature? It's only the first children's hospital in the country which is operating at that level. It's a learning story. I think if you ask me at what level we can do it, maybe about 65%-68% of the occupancy. Beyond that, it's going to be difficult to clock it because of these factors. Okay, and my second question is on the Gurgaon CapEx. So did you mention that INR 180 crore is spent on land plus INR 1 crore per bed incremental? That's how it is? Yes, that's correct. Yeah. Another INR 400 crore. Okay. So then it becomes INR 180 crore and INR 400 crore. So then your CapEx is INR 140 crore. Yeah, it's INR 145 lakh per bed, right? Yeah. Close to INR 1.5 crore per bed. That's correct. So then the ROCE in this hospital will be less than 20%. So any observation there? The ROCE profile will be really different here. It will be a little different because it's a heavy asset and it's a large facility which is coming up. So, when we are looking at ROCE, we should look at for the long term, how does it pan out? And it is going to be something, you know, state-of-the-art, which is being built, in India to cater to the whole, India, particularly for the North India, international businesses and everything. So, you know, if you look at all other multi-specialty who are putting up, the hospitals in that region, their cost is also similar, INR 1.5 crore-INR 1.75 crore. Since its land and building belongs to us, it's a little heavy asset. It will cost the same, but, you know, from the zero day, we'll start as a super-specialty hospital. Then all the equipment, whatever is required, and the doctors, the facilities. So can we, sir, go into more like a multi-specialty because we are positioning this as a kind of a pediatric, multi-specialty hospital of the highest standards in the country. So that, which is why this, as a greenfield project which is being built for the future of the country and, the cost of that is going to be the same, including the medical equipment, is going to be a kind of almost on a par with any multi-specialty hospital of today's standards. So how is it different from your Hyderabad cluster, where you have the large hospitals there? So you must be having a multi-specialty hospital even in your Hyderabad cluster, right? That's true, sir. How different is it by a CapEx? Let's say you have a Banjara Hills hub. How different it will be from that hub? So we have spent about INR 75 lakh-INR 80 lakh per bed, Banjara Hills about seven years ago. Today we got. Including land building or excluding? Excluding the base building and land. Here, this building, the land and the building is our own, and we're going to spend the CapEx on top of it. Okay. So obviously that, you know, seven years to today, the cost of expansion is almost 30%-40% time. If you calculate that way, and that's. Okay. Probably about INR 1.5 crore is kind of a what has been coming. Okay. So excluding land building, Banjara was INR 65 lakh. Today that same INR 65 lakh is about INR 1 crore per bed for a hub. And over and above that, in Gurgaon, you have the land and building also coming in. That's how we should interpret it. Yes. Okay, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Sumit Gupta from Centrum Broking. Please go ahead. Hi. Thanks for the opportunity again. Sir, I have two questions. First is on the ARPOB. So how do you plan to increase, optimize the ARPOB over the near and the medium term? And secondly, on the Gurgaon facility, like once the Gurgaon facility gets opened, I hope, I expect that, international patient mix will change for the better. So how do you expect that to improve the overall case mix as well as in improvement of overall ARPOB? Thank you. Yeah. It's a pretty long shot about Gurgaon. You know, see, obviously this is going to be a, you know, different class of hospital. It will have definitely a better price point. And also it is an ability to treat patients of more complex. And we would definitely be positioning it very differently, this hospital. So closer to that, we can discuss about how the ARPOBs, how the revenues are going to play out. It's too early to talk about it. So overall, our ARPOB trajectory is certainly as, earlier in the call, Mr. Vikas mentioned about it. Otherwise, we've got so many other variants to influence. So therefore, I think the ARPP is something which is actually we've been working on for internal purposes. We look at the ARPP more as a significant factor than ARPOB. We have seen in the last eight quarters, our ARPPs are growing about the 6%-7%. So this is how we track it because ARPOBs can be completely very variable based on the ALOS and based on the seasonality. These two factors keep changing in pediatric healthcare because the seasonality is always there, the Q2 and Q3. And also the business, we can't anticipate the business mix how it's going to be. So it's not consistently that, you know, this is how the business will do it, 360 degrees, 360 days. So therefore, we need to see, I mean, when we look at the ARPOB and we actually again look at the ARPP, as long as the ARPP is growing, we know that, you know, the revenue generation is, we know that, you know, it is rising, overall your business is improving in quality. Okay. So sir, just on the ARPP point only, so like your insurance has been consistently around 52%, moving around nearly 52%. So how, like regarding the, like, price hike, what is the time frequency in which you take a price hike to improve the ARPP? And what are the overall drivers driving it? One is the price hikes. Number two is the case mix. These are the two things which drive ARPPs, provided you have consistency in the similar set of patients. Let's put it that way. Then you can fix the ALOS to be more or less kind of a, not much of variation. So pricing is always to be done everywhere. So you will adjust in a way to the kind of inflation, and also the quality. Every hospital looks at the kind of being a better quality year- on- year and adding more and more complexities to the business. So what is the magnitude of the price hike that you have taken over the last two to three years? See, the price hike was at around, you know, on the two fronts is a blended basis we have to do. On the cash side, last year we have not taken price hike. We have just corrected, to the extent the competition was higher. We have just, you know, adjusted ourselves. This year we will take some price hike. So the working is going on. We are benchmarking also with the competitions, etc., looking at this one. So probably by March, once we are finishing our budgets, we'll take a call and then inform whatever price budget is being taken. As far as the insurance is concerned, you know, they take a two-year price and then fix it. But generally, you know, they keep dragging and it takes sometimes three years also, maybe more also sometimes. But on an average, you know, once we do it, we consider that, you know, it is going to be two, three years price hike. So the adjustment should happen at around, you know, 12%-15%. So roughly 4%-5% price hike from the insurance. And cash, we have to work it around because we are in the competitive landscape. And at the same time, we should not charge more with our patients. We have to be, you know, healthcare. So we will balance ourselves, including the cost inflation, whatever is coming, and balance ourselves to protect our EBITDA margin. Understood. And sir, lastly, in the nine months FY 2025, just your ARPOB has been, like, a decline of 6%. So what was the major reason? Like, did you take any price hike or was it not taken? And And subsequently, there was an inferior case mix. So what really happened in that? What has fallen 6%? Sorry, I could not understand. ARPOB 6% by those. If you adjust the ALOS, you will not get it because the ALOS has gone up, right? Right. Despite ALOS, your ARPOB would have gone up. Or if you look at ARPP, it has gone up by 7%-8% basically. Right. So we should look at you're saying ARPP and then adjust to ALOS. Yeah, yeah. So we are disclosing ARPOB and ALOS. If you multiply, you will get the ARPP. Yes. consistency we have seen year-on-year basis, seasonal adjustments notwithstanding. So you have to see the year-on-year basis. We have seen the ARPP growing actually. Understood, sir. Thank you. Thank you. Thank you. The next question is from the line of Deven from Marcellus Investment Managers. Please go ahead. Yeah, hi. So, what's the extent of price correction that we have taken? You just referred to it while answering the previous question. Price corrections, okay. So the last year, for the cash patients, we have not taken across the board price hike. We have just taken up wherever we have benchmarked ourselves with the competition and increased it. The net impact may not be more than 1% or 2% basically if you look at. As far as the insurance is concerned, you know, every year some cluster, etc., will keep coming for the renewal. And the impact of that, you know, as we have just informed, you know, once we take up one cluster or one hospital when we started, it should be 12%-15% price hike. And generally, it is for two years-t hree years times. So it is, you know, blended basis. It should be 4%-5% basically. This year, since the budget is going on, we will review with our management and what the other hospitals are doing based on that and what the cost inflation is expected to come because in our case, 40% is the manpower cost, right, including doctors and the other paramedic staff and the corporate staff. Considering that, whatever the cost inflation is, we'll adjust it and take a call on that. Got it. And this 1%-2% price correction that you have taken, in which cities or which cohort of hospitals have you done it? Across. Once we take across the cluster. Sometimes some are higher, some are lower. So that way. Okay, so like this is, let's say, even in Hyderabad, Bangalore, which are your, let's say, core or old markets as well as new markets across the board, you have taken a price correction. Correct, correct, correct. It's mainly OPD or IPD or both? Both, both. Across all. Okay. Got it. And my second question. So, you know, while answering an earlier question, you said that a mature hospital can do around 65%-68% occupancy. I remember that when we used to, you know, discuss this a year ago, you used to say that a mature hospital can do 60% occupancy at peak. Now today that number seems to have gone up to 65%-68%. So has anything changed in the last one year that we have increased the, you know, the occupancy cap? Earlier we used to expect 60% and now 65%? It's an overall trajectory you see as we kind of hospitals maturing, you know, the more and more hospitals coming into the mature stage. And also some of them are becoming a kind of very, you know, the almost decades businesses. They will clock a higher expenses, definitely. So if you look at the blended, you know, what I've said is that, you know, it could go up to 68%. But it cannot go up more than 68%. I, for example, I have a few hospitals in Hyderabad. They do about that much occupancy. But those are the hospitals which I have a perennial problem with the beds. Okay? So that's why based on that I've told. But it will never come to a 60% of occupancy at a group level. It's a possibility. But it can never come to because we always have a hospitals adding into the mature group. So the blended occupancies will come out to the kind of around 60%, maybe around 62%-63%. What is the maximum possibility a hospital can clock is that 168%. That's what I say. At a group level, would that be possible? I don't think it's possible because see, I mean, what's important is that, you know, it's not checking the patients in. You know, children's healthcare is a different domain, a different ball game. Nobody would like to stay a few hours extra in a hospital than required. That's all right for children's healthcare. So because of the young parents and the children, you know, nobody wants to stay in a hospital if even fewer than required compared to other hospitals where people are happy to stay a few days extra. So therefore, that's why we never compare ourselves to other hospitals. It is an evolving story. We are still a pilot project. We are discovering the new path, new benchmarks all the time. So the answer to the question what I've told is that how much it could go up is up to 68%. But at a group level, at a matured hospital, would it go to 68% means, you know, it is 80% at a year, at a yearly or quarterly level, it's going to be a very difficult task. But anyway, what is the throughput is something which you and I require, to look at it. If you are doing about 60%, 60%+ occupancies in your mature hospital, a blended occupancy of over 55%, you deliver your results. What do you want? You want the results, right? You use 56% of the blended, you will deliver it. If you do it 60% blended, you will do fantastic. That's how it is, the dynamics of a children's hospital. We can't keep people in the hospital more than a few hours required. I understood. And, finally, sir, when I'm looking at your mature hospitals performance for Q3, it seems like the IP volume growth is 0%. In Q2, this number was 8%+. So it has like slowed down from 8%- 0%. Any reasons behind it? On the mature side, you know, the occupancy must have seen it gone up by right on the sequential basis that has come down right? 68.6%-60% occupancy. Obviously, you know, quarter second is a seasonally strong quarter, and we feel, you know, you see the influx of our patients on that quarter, and if we have maintained the same trajectory in the quarter three, I think we have done a good job basically. No, so I am actually looking at year-on-year. So let's say the occupancy has increased from last year. So last year it was, no, just Q3 to Q3. okay. Yeah. So then last year it was 56.5% occupancy and this year it's 60%. But at the same time, ALOS has gone up from 2.6 - 2.9. So net net, inpatient volume seems to be flattish, year-on-year. That's true, that's true. That's correct. Yeah. So, did this exact number, if you look at Q2, that number had grown at around 8% YoY and Q3 is 0% growth. So what has happened that the growth has come off? There's not a very particular, you know, time. What happens is that, you know, you keep moving from the, mature or non, non-matured hospital to mature hospital. So that trajectory, whatever you're looking at is a moving trajectory, right? So if you look at, on like-for-like basis, if we are comparing, probably we have seen the IP number growth of roughly two, by roughly 9% basically. okay, okay. Yeah. Okay, good. Got it. But there is a movement of the beds which keeps happening. So that is where you are looking at. But on the standalone basis, if you look at mature hospitals growth only, it is roughly 9% basically. It's a little confusing data because we are looking at the moving data and looking at the static data, so of the last quarter. So that is the difference. Thank you. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead. Hi, just a quick clarification. The INR 7 crore one-time impact that you mentioned, was it for Q3 of this year or was it during previous quarters? So quarter second and quarter three is evenly distributed, you can say, almost evenly. So INR 3.5 crore roughly in this quarter and the last quarter is the similar amount. So total INR 7 crore in two quarters. Understood. Thanks. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Yeah, thank you. We appreciate your participation in today's conference call and the insightful questions. Your support plays a vital role in our strategic progress, and we truly value the time each of you has taken to understand our business and the future plans. For further information, if any, please reach out to Mr. Saurabh Bhandari, our investor relations head at investorrelations@thegreatrainbowhospitals.in. With this, I close the conference. Thank you for participation. Thank you. Thank you. Thank you. Thank you. On behalf of IIFL Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.