Rainbow Children’s Medicare subscribed 55% of the total issue size operated by retail investors and HNIs on the second day of its IPO. The Hyderabad based company is a leading multi-specialty pediatric and obstetrics and gynecology hospital chain in India.
The data given on NSE shows that on Thursday, Rainbow IPO Received cumulative bids of 1,12,62,753 equity shares against the proposed size of 2,05,14,617 equity shares – thus a subscription of 55% against the total.
The share reserved for retail individual investors (RIIs) subscribed to 82 per cent against the proposed equity shares, while the non-institutional investors (NIIs) aka HNI category got a subscription of 56% against the reserved shares. On the other hand, the reserve share of Qualified Institutional Buyers (QIBs) was subscribed by 10 per cent.
The company launched its IPO on April 27 and will be available for subscription on stock exchanges till April 29. The price band of IPO is from 516 542 One Piece.
About Rainbow Children Medicare plans to increase 1,580 crore through IPO.
Here’s what experts say about IPOs.
Siddhant Khandekar, Raunak Thakur and Kush Mehta, Research Analysts, ICICI Securities said, “Rainbow Children Medicare has a children-centric approach. The target market is expected to grow at a CAGR of 14% by FY26. However, the key to Rainbow is the healthcare space and The margin profile will have a sustained current growth trajectory amid increased consolidation. At the upper price band, it is valued at ~36.4x EV/EBITDA for FY2011 and ~22.9x EV/EBITDA for 9MFY22.”
“We give a SUBSCRIBE rating for its unique model and good valuations,” the trio said.
Yasha Shah, Head of Equity Research, Samco Securities, said, “While the company faces high competition in view of the increasing health and insurance coverage and the overall Pediatric, Obstetrics and Gynecology healthcare segment is expected to witness healthy growth, The company’s prospects are attractive over the long term. The company’s operating performance is resilient and on the valuation front too, the company is reasonably priced. Its P/E based on FY 2012 annual earnings is about 31x compared to the industry average of 53x Guna. One aspect that investors should pay attention to is that planning for additional capital expenditure can reduce operating margins in the short to medium term.”
Keeping these factors in mind, Shah said, “We recommend investors to ‘subscribe for the long term’.”
Geojit in his research note said, “At the upper price band of 542, RCML is priced at 32.6x (FY22E yearly), which appears to be a fair price compared to its peers. Therefore, given the strong financial performance of both topline and bottom-line, improving margins, focus on child-care services and increasing preference for specialized maternity hospitals, we will “subscribe” to the issue on a short to medium term basis. “Give ratings.