The maiden public offering of Rainbow Children's Medicare, a leading multi-specialty paediatric and obstetrics and gynaecology hospital chain, has been subscribed 29 percent on April 27, the first day of bidding.
The IPO received bids for 59.62 lakh equity shares against IPO size of 2.05 crore equity shares. Retail investors, first to participate in the offer, subscribed to 48 percent of the portion reserved for them.
The portion set aside for non-institutional investors was subscribed 11 percent, while the portion for qualified institutional buyers was subscribed 10 percent.
Half of IPO size has been reserved for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 35 percent for retail bidders.
The public issue, which will fetch Rainbow Childrens Rs 1,581 crore, comprises a fresh issue of shares worth Rs 280 crore, and an offer for sale of Rs 1,301 crore by promoters (Ramesh Kancharla, Dinesh Kumar Chirla, and Adarsh Kancharla), and investors (British International Investment Plc, and CDC India).
Also read - Rainbow Children's Medicare opens IPO: 10 key things to know
The company will redeem NCDs (worth Rs 40 crore) and set up new hospitals and purchase medical equipments (worth Rs 170 crore) through fresh issue money.
The price band for the public issue, which closes on April 29, has been fixed at Rs 516-542 per equity share.
Currently, Rainbow operates 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds, with 641 full-time doctors and 1,947 part-time/visiting doctors as of December 2021.
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Going forward, it may seek to expand the hospital network through acquisition of brownfield assets or development of greenfield assets.
"They have followed a financially disciplined model, focusing on cost-effective growth. The specialized nature of the business, experienced management team, proven ability to attract, train and retain high-calibre medical professionals, under penetration of hospitals in India, make this issue good for long-term investors," Santosh Meena, Head of Research at Swastika Investmart said.
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The profitability for nine months ended December 2021 increased substantially to Rs 126.41 crore, compared to Rs 38.53 crore in the same period of last fiscal. There might be a possibility that this sudden spurt in profitability was due to Covid second wave hospitalizations in Q1 FY21-22. Thus we believe that this exponential rise in profit might not continue in the future, said Santosh Meena.
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