This Hyderabad-based company operates a multi-speciality pediatric, obstetrics and gynaecology hospital chain in India. The company kicked off its operations in 1999.
Rainbow Children’s Medicare is issuing fresh equity shares worth Rs 280 crore, whereas existing promoters and shareholders are offloading 24,000,900 equity shares aggregating up to Rs 1,300.85 crore.
Shareholders participating in the OFS include promoters Ramesh Kancharla, Dinesh Kumar Chirla and Adarsh Kancharla and promoter group entity Padma Kancharla and investors British International Investment and CDC India.
The net proceeds from the fresh issue will be utilised towards the early redemption of non-convertible debentures (NCDs) issued by the company, along with capital expenditure towards setting up new hospitals and purchase of equipment.
Investors can make a bid of a minimum of 27 equity shares and then in multiples of thereof. The issue is open for subscription till April 29.
Backed by a UK-based CDC Group, Rainbow operated 14 hospitals and three clinics in six cities in India, with a total bed capacity of 1,500 beds as of December 20, 2021.
Rainbow will be giving a discount of Rs 20 per share to eligible employees. Fifty per cent of the net offer will be reserved for qualified institutional investors, whereas 15 per cent for non-institutional bidders while the rest 35 per cent for retail investors.
Ahead of its IPO, Rainbow Children’s Medicare allocated a total of 8,663,404 equity shares to anchor investors at Rs 542 apiece, taking the transaction size to Rs 469.55 crore, according to a circular uploaded on BSE website.
Investors participating in the anchor round included the Government of Singapore, Monetary Authority of Singapore, Amansa Holdings, Goldman Sachs Pte, IIFL Special Opportunities Fund, Bajaj Allianz Life Insurance, Max Life Insurance and various domestic mutual funds.
Kotak Mahindra Capital Company, JP Morgan India and IIFL Securities are the books running lead managers to the issue. KFin Technologies has been appointed as the registrar to the issue.
Let us have a look at what brokerages have to say and recommend about the IPO of Rainbow Children’s Medicare:
ICICI Direct
Rating: Subscribe
Rainbow Children’s Medicare has a focused children centric approach and the target market is expected to grow at a CAGR of 14% till FY26, the brokerage said, adding that key for Rainbow would be to sustain the current growth trajectory amid increased consolidation in healthcare space and margin profile. It assigned ‘subscribe’ rating given its unique model and decent valuation.
Nirmal Bang Institutional Equities
Rating: Subscribe for Long term
Specialty chains like Rainbows are likely to gain higher market share in the specialty field as people are more inclined towards overall service aspects especially for the birth of a child which is a form of celebration. It suggested to ‘Subscribe for Long Term’.
Angel One
Rating: Neutral
Based on the latest numbers, the IPO is priced in line with listed peer groups. The company’s revenue and return ratios have improved significantly but are not expected to continue to maintain this momentum. Brokerage found its valuations aggressive and stayed Neutral on the issue.
Choice Broking
Rating: Subscribe with Caution
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 the brokerage.
At the higher price band, the company is demanding a P/E multiple, which is slightly premium to the peer average, it added while assigning a ‘Subscribe with Caution’ rating to the issue.
Reliance Securities
Rating: Subscribe
It has the strong clinical expertise to manage complex diseases, and its hub and spoke model, provides synergies and ensures better care and access for patients, said Reliance Securities.
“In view of the specialized portfolio, hospital expansion, improving financials, likely margin improvement and valuation comfort compared to peers, we recommend ‘Subscribe’ rating to the issue,” said the brokerage.
Marwadi Financial Services
Rating: Subscribe
Considering the TTM as of December 2021, the company is going to list at a P/E of 43.16x with a market cap of Rs 5,501.3 crore whereas its peers namely Apollo Hospital Enterprise and Fortis Healthcare are trading at PE of 77.3x and 56.9x, respectively, the brokerage said.
“We assign ‘Subscribe’ rating to this IPO as the company is a leading pediatric multi-specialty healthcare chain with strong clinical expertise in managing complex diseases,” said the brokerage firm.
Swastika Investmart
Rating: Subscribe for long term
The company has followed a financially disciplined model, focusing on cost-effective growth. Going forward, they may seek to expand their hospital network through the acquisition of Brownfield assets or development of Greenfield assets, the brokerage said.
“The specialized nature of business experienced management team, proven ability to attract, train and retain high caliber medical professionals, under penetration of hospitals in India, makes this issue a good choice,” it added.
Hem Securities
Rating: Subscribe
Rainbow Children’s Medicare being a leading pediatric multi-specialty healthcare chain with strong clinical expertise in managing complex diseases follows a hub-and-spoke model that provides synergies, said the firm with a ‘Subscribe’ rating.
“It has a strong track record of growth, operational and financial performance and an experienced senior management team with strong institutional shareholders but looking after current occupancy rate & future business plans of the company,” it added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
