Earnings Miss: Rainbow Children's Medicare Limited Missed EPS By 5.1% And Analysts Are Revising Their Forecasts

Rainbow Children's Medicare Limited (NSE:RAINBOW) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of ₹3.3b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹3.89, missing estimates by 5.1%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rainbow Children's Medicare after the latest results.

View our latest analysis for Rainbow Children's Medicare

Taking into account the latest results, the consensus forecast from Rainbow Children's Medicare's seven analysts is for revenues of ₹15.2b in 2025. This reflects a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 3.7% to ₹22.01. Before this earnings report, the analysts had been forecasting revenues of ₹15.7b and earnings per share (EPS) of ₹25.32 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the ₹1,387 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Rainbow Children's Medicare at ₹1,530 per share, while the most bearish prices it at ₹1,240. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 18% annual growth over the past three years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 17% per year. So although Rainbow Children's Medicare is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Rainbow Children's Medicare. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Rainbow Children's Medicare going out to 2027, and you can see them free on our platform here.

You can also see whether Rainbow Children's Medicare is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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