Choice Equity Broking IPO report on Rainbow Children's Medicare
South India focused pediatric multi-specialty hospital chain operator, Rainbow Children’s Medicare Ltd. (RCML)is coming up with an IPO to raise Rs. 1,581cr, which opens on 27th Apr. and closes on 29th Apr. 2022. The price band is Rs. 516 - 542 per share. The IPO is a combination of fresh issue and OFS portion. It will not receive any proceeds from the OFS part. Of the fresh issue net proceeds, Rs. 40cr will be utilized for the early redemption of non-convertible debentures, while another Rs. 170 will be used to fund the capex requirement mainly towards setting up new hospitals and purchase of medical equipment. On 22nd Oct. 2021, the company executed a right issue by allocating 0.193cr shares at Rs. 140 per share.
Valuation and Outlook
At the higher price band, the company is demanding a TTM P/E multiple of 43.2x (to its TTM EPS of Rs. 12.5), which is slightly premium to the peer average of 38.1x. Thus, we assign a “Subscribe with Caution” rating for the issue.
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