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Rainbow Children's Medicare on the second day of its IPO received a subscription of 55% of the total issue size driven by retail investors and HNIs. The Hyderabad-based company is a leading multi-specialty pediatric and obstetrics and gynecology hospital chain in India.
Data given on NSE shows that, on Thursday, Rainbow IPO received cumulative bids of 1,12,62,753 equity shares against the offered size of 2,05,14,617 equity shares - thereby subscribing by 55% against the total.
The portion reserved for retail individual investors (RII) subscribed by 82% against the offered equity shares, while non-institutional investors (NII) aka HNIs category got subscribed by 56% against the reserved shares. On the other hand, the reserved portion for qualified institutional buyers (QIB) got subscribed by 10%.
The company launched its IPO on April 27 and will be available for subscription till April 29 on stock exchanges. The IPO has a price band of ₹516 to ₹542 a piece.
Rainbow Children's Medicare plans to raise about ₹1,580 crore through the IPO.
Here's what experts say about the IPO.
Siddhant Khandekar, Raunak Thakur, and Kush Mehta, Research Analysts at ICICI Securities said, "Rainbow Children’s Medicare has a focused children centric approach. The target market is expected to grow at a CAGR of 14% till FY26. However, the key for Rainbow would be a sustained current growth trajectory amid increased consolidation in the healthcare space and margin profile. At the upper price band, it is valued at ~36.4x EV/EBITDA for FY21 and ~22.9x EV/EBITDA for 9MFY22."
"We assign SUBSCRIBE rating given its unique model and decent valuation," the trio said.
Yesha Shah, Head of Equity Research, Samco Securities said, "Though the company faces high competition, considering the increasing health and insurance coverage and that the overall pediatric, obstetrics, and gynecology healthcare segment is expected to witness healthy growth, the long-term prospects of the company are appealing. The operational performance of the company is resilient and on the valuation front as well, the company is reasonably priced. Its P/E based on annualised FY22 earnings is at about 31x as compared to industry average of about 53x. 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."
Taking into account these factors, Shah said, "we recommend investors to ‘SUBSCRIBE FOR LONG TERM’."
Geojit in its research note said, "at the upper price band of ₹542, RCML is priced at 32.6x (FY22E annualized) which appears to be reasonably priced compared to its peers. Hence, we assign a “Subscribe" rating for the issue on a short to medium term basis considering its strong financial performance both topline and bottom-line, improving margins, focus on child-care services and growing preference for specialty maternity hospitals."
