The initial public offering of Rainbow Children's Medicare received bids for 25.49 crore shares against its size of 2.05 crore shares, getting subscribed 12.43 times on the last day. The issue had opened on April 27.
Retail investors did not seem enthusiastic as they bid for 1.38 times of their quota, while employees put in bids for 31 percent of the reserved portion.
The non-institutional investors' part was subscribed 3.73 times and that of qualified institutional buyers 38.9 times.
The IPO, which is expected to fetch the south-based multi-speciality paediatric and gynaecology hospital chain Rs 1,580.8 crore, comprises a fresh issue of Rs 280 crore and an offer for sale of Rs 1,301 crore by promoters and investors.
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The price band for the offer is Rs 516-542 per share.
"Though the company faces high competition, considering the increasing health and insurance coverage and that the overall paediatric, obstetrics, and gynaecology healthcare segment is expected to witness healthy growth, the long-term prospects of the company are appealing," Yesha Shah, Head of Equity Research at Samco Securities, said.
Also read - Rainbow Children’s Medicare IPO – Should you subscribe?
The operational performance is resilient and on the valuation front the company is reasonably priced. Its price-to-earnings based on annualised FY22 earnings is about 31x as compared to industry average of about 53x, she said.
She added that the additional planned capex can depress operating margins in the short to mid term. Taking into account all these factors, she recommended ‘subscribe for long term’.
Also read - LIC IPO | 6.48 crore policyholders keen to buy shares, says official
The firm operates 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 as of December 2021, up from 1,162 in March 2019.
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