Rainbow Children’s Medicare IPO: Investors were on an IPO shopping spree in 2021 as the year was loaded with IPOs. IPOs around the world raised $219 billion in Q4FY21 for companies.

Unfortunately this did not last long enough. By Q4FY22 they raised only $65 billion, down 70%, as per Bloomberg data.

This week, we have two IPOs lined up however here we will focus on the Rainbow Children’s Medicare IPO which will open on 26th April.

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In this article, we shall dive deeper into the details related to Rainbow Children’s Medicare IPO- the company, its promoters, the prevailing grey market premium and more. So keep reading to find out!

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Rainbow Children Medicare IPO Review 2022

Rainbow Children Medicare’s public offering comprises a fresh issue as well as an offer for sale. The fresh issue of equity shares will aggregate up to ₹280 crores and the offer for sale will be of 2.4 crores from a few existing shareholders.

About The Company

Rainbow Children’s Medicare Limited is a leading multi-speciality pediatric, obstetrics and gynaecology hospital chain in India that offers services such as newborn pediatric intensive care and pediatric multi-speciality.

As of December 31, 2021, it operated 14 hospitals and three clinics in 6 cities, with a total bed capacity of 1,500 beds, and had had 641 full-time doctors and 1,947 part-time/visiting doctors, as per the latest information available.

Let’s take a look at a chart that indicates the company’s revenue and profit after tax over the years.

A chart indicating Rainbow Children’s Medicare Limited’s Revenue and Profit After Tax

Here is a chart that indicates the company’s total assets:

A chart indicating Rainbow Children’s Medicare Limited’s Total Assets

The objective of the IPO

  • The proceeds of the fresh issue will be used for the early redemption of Non-Convertible Debentures (NCDs), in full.
  • It will also be used for capital expenditure towards the setting up of new hospitals and the purchase of medical equipment for such new hospitals.
  • General corporate purposes.

Key IPO Information- Promoters, Lead Managers and Registrar

Dr. Ramesh Kancharla, Dr. Dinesh Kumar Chirla and Dr. Adarsh Kancharla are the promoters of the company.

The lead managers of the company are:

  • Kotak Mahindra Capital Company Limited
  • J.P. Morgan India Private Limited
  • IIFL Securities Ltd

KFin Technologies is the registrar for the issue.

IPO Size₹1,580.85 Cr
Fresh Issue₹280.00 Cr
Offer for sale ₹1,300.85 Cr
Opening dateApr 27, 2022
Closing dateApr 29, 2022
Face Value₹10 per equity share
Price Band₹516 to ₹542 per equity share
Lot Size27 Shares
Minimum Lot Size1 (27 Shares)
Maximum Lot Size1 (351 Shares)
Listing DateMay 10, 2022

Grey Market Information

According to market observers, the shares of Rainbow Rainbow Children’s Medicare are available at a premium of ₹50 in the grey market as of 26th April 2022.

Accordingly, the IPO listing is expected at ₹592 ( ₹542 + ₹50), which is around 9 per cent higher than its upper price band of ₹542 per equity share.

Strengths of the Company

  • Presence across various specialities like neurology, nephrology, oncology, cardiology and gastroenterology
  • Its Specialization in pediatric care.
  • It has an extensive transportation network, in and around Hyderabad that helped it to transport 796 long-distance patients to its hospitals in Hyderabad.
  • Rainbow Children’s Medicare had the highest number of hospital beds as of March 31, 2021. This data is as per a CRISIL Research.
  • It has synergies between pediatric, obstetrics and gynaecology which makes it a comprehensive perinatal care provider.
  • Senior-level specialists work exclusively at its hospitals on a full-time retainer basis.
  • Over the last six years alone, the company has added 985 beds across 10 hospitals. It has expanded its presence from two cities to six cities.

Weaknesses of the Company

  • The company’s business is highly dependent on the skills, experience and efforts of its medical professionals.
  • Its doctors work on a consultancy service contract basis. There is no assurance that they will not prematurely terminate their agreements.
  • The Company has six hospitals situated in Hyderabad and three in Bengaluru. Its revenues are highly dependent on these hospitals.
  • The hospitals face intense competition from others in the same industry.
  • Non-compliance with the applicable regulations or failure to obtain applicable licences and approvals might affect its business adversely.
  • The company outsources some of its service functions to third party contractors. Any Lapse by these contractors might affect its business and reputation.
  • There are outstanding legal proceedings against the company and its management.
  • It is involved in related party transactions.
  • Very few patients visit its hospitals from March to May. Its business is affected by seasonality.

In Closing

In this article, we covered details about Rainbow Children’s Medicare IPO. It opens on 27 April 2022 and closes on 29 April 2022.

Investors can analyse the prospects, strengths and weaknesses of the company and then apply for the IPO. Do let us know what you think about the IPO. Happy investing, until next time!

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