Rainbow Children’s Medicare IPO: The initial public offering (IPO) of Rainbow Children’s Medicare kicked off for subscription on Wednesday, April 27, wherein the company is selling its shares in the range of Rs 516-542. It is a multi-speciality paediatric, obstetrics and gynaecology hospital chain in India. It offers a wide array of services such as newborn and paediatric intensive care, paediatric multi-speciality services, obstetrics and gynaecology, multidisciplinary foetal care, perinatal genetic and fertility care. Having started its first paediatric speciality hospital in Hyderabad in 1999, the company currently operates 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 as of 30 September 2021. Going forward, it may seek to expand the hospital network through acquisition or development of assets.
Rainbow will float its Rs 1,581 crore initial public offering (IPO) on April 27 and close it on April 29. The anchor book portion had opened for a day on April 26.
Rainbow Children’s IPO Subscription Status
According to data from BSE, the company fetched bids for 1,12,62,753 equity shares or 55 per cent so far against the issue size of 2,05,14,617 equity shares.
The portion for retail investors was subscribed 82 per cent, whereas quota for non-institutional investors and employees were subscribed 56 and 14 per cent, respectively. Qualified institutional buyers bid for 10 per cent of the reserved shares so far.
Rainbow Children’s IPO GMP
Grey market premium of the company’s shares have gone up to Rs 30 from Rs 15 earlier. However, stock market experts said that GMP is not the right criteria to find out whether an IPO would perform better or not. They said that the financials of the company gives concrete information about the fundamentals of the company. They advised investors to look at the balance sheet of Rainbow instead of following GMP only.
Rainbow Children’s IPO Should You Subscribe?
Majority of the analysts have suggested subscribing to the issue, citing its niche expertise and company’s growth prospects. However, a few have raised some concerns citing its in-line valuations to the peers, leaving little on the table.
One aspect that investors should be mindful of is that the additional capex planned can depress the operating margins in the short to mid-term, said Yesha Shah, Head of Equity Research, Samco Securities with a ‘Subscribe for long term’ rating.
Rainbow Children’s Medicare with its pediatrics focused operations and its clinical expertise in managing complex diseases is well placed to benefit from the growth in the market, said brokerage firm Choice Broking.
At the higher price band, the company is demanding a PE multiple, which is slightly premium to the peer average, it added while assigning a ‘Subscribe with Caution’ rating to the issue.
Marwadi Financial Services highlights that key business strategies are to strengthen tertiary and quaternary paediatric services and grow presence through hub and spoke networks across key geographic clusters and new locations, among others.
Key risks arise from the fact that the firm operates in a regulated industry, and compliance with safety, health, environmental, labour and other regulations, or failure to obtain or renew approvals, licences, registrations and permits, may affect the business.
“Considering the trailing twelve months (December 2021) earnings per share or EPS of Rs 12.56 on a post issue basis, the company is going to list at a price to earnings of 43.16x with a market value of Rs 5,501 crore whereas peers Apollo Hospital Enterprise and Fortis Healthcare are trading at PEs of 77.3x and 56.9x respectively,” Marwadi Financial Serviecs said assigning a ‘subscribe’ rating for this IPO as it is available at a reasonable valuation compared to peers.