Rainbow Children’s Medicare IPO: The IPO of Rainbow Children’s Medicare opened for subscription on Wednesday, April 27, with the company selling its shares in the range of Rs 516-542. It is a multi-specialty hospital chain for pediatrics, obstetrics and gynaecology in India. It offers a wide range of services such as intensive care for newborns and children, multispecialty services for children, obstetrics and gynaecology, multidisciplinary fetal care, perinatal genetic care and fertility care. The company started in 1999 with its first specialized children’s hospital in Hyderabad and currently operates 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 as of September 30, 2021. In the future, it may seek to expand the hospital network through acquisition or development of assets.
Rainbow will list its first public offering (IPO) of Rs 1,581 crore on April 27 and close on April 29. The anchor book section was open for one day on April 26.
Rainbow Children’s IPO Subscription Status
According to BSE data, the company has so far raised bids for 1,12,62,753 shares, or 55 percent against the issue size of 2,05,14,617 shares.
The private investor portion was subscribed at 82 percent, while quotas for non-institutional investors and employees were 56 and 14 percent respectively. Qualified institutional buyers are bidding on 10 percent of the reserved shares so far.
Rainbow Children’s IPO GMP
The gray market premium of the company’s shares has risen from Rs 15 earlier to Rs 30. However, stock market experts said GMP is not the right criterion for determining whether an IPO would outperform or not. They said the company’s financial records provide concrete information about the company’s fundamentals. They advised investors to look at Rainbow’s balance sheet rather than just follow GMP.
Rainbow Children’s IPO Do you need to subscribe?
The majority of analysts have suggested subscribing to the issue, citing the company’s niche expertise and growth prospects. However, a few have expressed concerns about peers’ in-line valuations, leaving little on the table.
One aspect investors should consider is that the planned additional capital expenditures could weigh on operating margins in the short to medium term, said Yesha Shah, head of Equity Research, Samco Securities, with a “Long-term Subscribe” rating.
Rainbow Children’s Medicare, with its pediatric-focused business and clinical expertise in the management of complex diseases, is well placed to capitalize on growth in the market, according to brokerage firm Choice Broking.
At the higher price point, the company is demanding a PE multiple, which is slightly higher than the peer average, it added while assigning a “Subscribe with caution” rating to the issue.
Marwadi Financial Services emphasizes that key business strategies are to strengthen tertiary and quaternary pediatric services and increase presence through hub-and-spoke networks in key geographic clusters and new locations, among others.
The main risks arise from operating in a regulated industry, and complying with safety, health, environmental, labor and other regulations, or failing to obtain or renew approvals, licenses, registrations and permits, could affect the company.
“Given the twelve months (December 2021) earnings per share or earnings per share of Rs 12.56 on an issuance basis, the company will quote at a price up to profit of 43.16x with a market value of Rs 5,501 crore, while colleagues Apollo Hospital Enterprise and Fortis Healthcare are trading at PEs of 77.3x and 56.9x respectively,” said Marwadi Financial Serviecs, assigning a ‘subscribe’ rating to this IPO as it is available at a reasonable valuation compared to peers. .
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