Rainbow Children's Medicare listing expected to be muted

2022-05-14 20:19:15 By : Ms. Amy Chen

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Multi-specialty paediatric and gynaecology hospital chain Rainbow Children's Medicare is expected to see a lower listing premium on May 10 as compared to Campus Activewear, experts feel.

Campus Activewear listed at a 23 percent premium on May 9 and closed the first day of trading with 30 percent gains.

Experts said the public issue did not receive a good response from investors during subscription days and the overall sentiment in the market is weak. Even the grey market trade is indicating towards a weak premium.

As per the IPO Watch and IPO Central data, on May 9 the Rainbow shares traded at Rs 552-557 in the grey market, a meagre 2-3 percent premium over issue price of Rs 542. Generally the grey market, which is an unofficial platform for trading in IPO shares, is an indicator of the listing price.

"Its IPO saw a mild response compared with the Campus Actiwear IPO. The listing premium could be less compared with the Campus Actiewear IPO, looking at the primary market response by investors," Harshad D Gadekar, Fundamental Research at GEPL Capital said.

Saurabh Joshi, Research Analyst at Marwadi Financial Services feels Rainbow shares could list at a premium of 5 percent, while Astha Jain, Senior Research Analyst at Hem Securities expects status quo on Rainbow listing.

The company is going to list at a valuation of 43 times P/E at the upper price band, which is significantly lower than its peers namely Apollo Hospitals and Fortis Healthcare which are trading at P/E of 63 times and 53 times respectively, said Saurabh.

The initial public offering of Rainbow Children's Medicare was subscribed 12.43 times during April 27-29, largely supported by qualified institutional buyers whose reserved portion booked 38.9 times. Non-institutional investors bid 3.73 times the allotted quota, while the portion set aside for retail investors was subscribed 1.38 times and employees have put in bids for 31 percent shares of the reserved portion.

South-based Rainbow Children's Medicare operates 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds, as of December 2021.

On the financials front, the company reported a whopping 228 percent year-on-year increase in profit at Rs 126.4 crore for the nine-month period ended December 2021, and revenue jumped 56.6 percent to Rs 761 crore during the same period.

However, profit during the full year (FY21) fell 28 percent to Rs 39.6 crore compared to the previous year, and revenue dropped 9.6 percent to Rs 650 crore in the same period.

Rainbow has raised Rs 1,581 crore through its public issue that was comprised a fresh issue of Rs 280 crore and an offer for sale of Rs 1,301 crore by selling shareholders.

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