Rainbow Children’s Medicare Limited is a multi-speciality hospital that operates in paediatrics, gynaecology and obstetrics via its hospital chain in India. The company is engaged in providing healthcare services for newborn and paediatric intensive care. The company also operates a paediatric multi-speciality service with a paediatric quaternary care unit. The company has also established an obstetrics and gynaecology centre in its hospital chain, where they carry out intensive and normal to complex treatment and multidisciplinary fetal care. In this article, we take a closer look at the Rainbow Children Medicare IPO Details and its possible future prospects.
Rainbow Children’s Medicare, under its hospital chain, currently operates 14 hospitals and three clinics. The healthcare facility of the company has been widespread in six cities, where it has a total bed capacity of 1,500 beds. The company first established its Healthcare facility in 1999. The company runs their operation on the business model of appointing full-time doctors and nursing staff in their hospitals so that any situation can be tackled. The company majorly operates in terms of children’s emergency and paediatric intensive care services can be provided. Currently, under the hospital chains of the company, it has 602 full-time doctors, with an additional service being provided by 1,686 visiting doctors.
Some of the Competitive Strengths of the company are as follows:
- The company has exhibited an ability to conceptualize, operate and create special treatment services.
- Rainbow Children’s Medicare is a leading paediatric multi-speciality healthcare chain. The company is known for its strong clinical expertise and handling of complex diseases.
- The Hospital Chain under the company provides comprehensive perinatal care and the synergies between paediatric, obstetrics and gynaecology services.
- Rainbow Children’s Medicare operates on a hub-and-spoke business model. It provides them with a perfect synergy and the belief in better care with better patient access.
- The company has a strong track record of optimum operational performance and financial growth.
- Rainbow Children’s Medicare greatly benefits from its experienced senior management team and the promoter base. The company also holds support from the PE firms, which are company shareholders.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the company’s loans, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
- The company also has an objective to fund their CAPEX Plan for a build-up of the new hospital and a facility of all highly innovative and modern machinery and types of equipment.
- The company also intends to fund various investments and strategic acquisitions.
KEY PARAMETERS OF RAINBOW HOSPITALS:
| KYC Parameter | 2021 | 2020 | 2019 |
| Bed capacity | 1,475 | 1,296 | 1,162 |
| Operational beds | 1,132 | 1,001 | 931 |
| Occupancy rate (%) | 34.23% | 56.27% | 54.13% |
| Inpatient volume | 51,165 | 66,871 | 53,422 |
| Outpatient volume | 624,111 | 941,049 | 787,345 |
| Number of full-time doctors | 593 | 596 | 498 |
| Number of nurses | 1,169 | 1,485 | 1,401 |
| ARPOB (₹) | 14,925,896 | 10,715,405 | 9,744,124 |
| ALOS (days) | 2.57 | 3.05 | 3.2 |
| Basic EPS | 4.36 | 5.98 | 4.83 |
| RoE | 8.82% | 13.52% | 11.98% |
| RoCE | 10.48% | 16.32% | 11.68% |
RAINBOW CHILDREN MEDICARE IPO DETAILS:
Rainbow Children’s Medicare Limited, a company with headquarters in Hyderabad, recently got approval from SEBI to float its IPO in the market. The company initially submitted their Draft Red Herring Prospectus (DRHP). The IPO offer of the company is Rs.280 Crores & 24,000,900 equity shares OFS. The company also stated that it is not looking to carry out any Pre-IPO placement. Check Day by Day IPO Subscription Details (Live Status)
The company further stated that it would utilize around Rs from the funds raised via the IPO offer. 40.0 Crores for early redemption of NCDs that have been issued to CDCEML. The company also stated that it holds a Capex Plan of Rs. 170 .0 Crores for setting up a new hospital with innovative and modern technology. The remaining funds will be utilized for general corporate purposes Post allotment, and the issued shares will be listed on BSE and NSE. The company also stated that the IPO issue constitutes around 28.74% of the company’s post-issue fully paid-up equity capital base. In the IPO offer, the company has reserved 300000 equity shares for its eligible employees with a discount of Rs. 20 per equity share so that they can get employee benefits. Post-IPO, the company’s current fully paid-up equity capital base will enhance to Rs. 101.50 crores. Also, on the upper price band valuations of the IPO, the company will target a market capitalization of Rs. 5501.30 crores.
| IPO Opening Date | April 27, 2022 |
| IPO Closing Date | April 29, 2022 |
| Issue Type | Book Built Issue type IPO |
| Face Value | Rs. 10 per equity share |
| IPO Price | Rs. 516 to Rs. 542 per equity share |
| Market Lot | One lot of 27 Equity Shares |
| Minimum Order Quantity | 1 lot corresponding to 27 Equity Shares of the company |
| Minimum Order Price | Rs. 14,634 |
| Maximum Order Quantity | 13 lots corresponding to 351 Equity Shares of the company |
| Maximum Order Price | Rs. 190,242 |
| Listing At | BSE, NSE |
| Issue Size | 29166945 Equity Shares of the company that corresponds to Rs. 1,580.85 Crores |
| Fresh Issue | 5166045 Equity Shares of the company that corresponds to Rs. 280.00 Crores |
| Offer for Sale | 24,000,900 Equity Shares of the company that corresponds to Rs. 1,300.85 Crores |
| Employee Discount | Rs 20 per share |
| QIB Shares Offered | 50% of the net offer |
| Retail Shares Offered | 35% of the net offer |
| NII (HNI) Shares Offered | 15% of the net offer |
| Basis of Allotment | May 5, 2022 |
| Initiation of Refunds | May 6, 2022 |
| Credit of Shares to Demat | May 9, 2022 |
| IPO Listing Date | May 10, 2022 |
WEAKNESS AND THREATS OF RAINBOW CHILDREN MEDICARE IPO:
- The company was badly hit on the operational front during the COVID -19 pandemic due to disruptions in the supply and demand chain and network support.
- The company is engaged in a very competitive business where it faces competition from many organized and unorganized players.
- The company is in a regulated industry and is subject to strictly adhere to all the safety, operational, health, and environmental guidelines. Any non-compliance can lead to a major setback in the company’s operation.
- Rainbow Children’s Medicare is also vulnerable to the sustainability of its brand, challenges being faced in the healthcare sector, and the correct execution of the growth and operation matrix to its hospital chains.
- The company’s major source of revenue is from hospitals in Hyderabad and Bengaluru only.
- Another major threat to the company is its financial needs and the anticipated Net Proceeds deployment.
- The company stated in its DRHP that the company itself, along with its Promoters and the Group Company, is currently facing a trial under legal processes. Any negative outcome or news from the company regarding it could be a major setback.
FINANCIAL TRENDS OF RAINBOW CHILDREN MEDICARE IPO:
| Particulars | For the year ending with the amount as in Rs. in Crores | ||||
| 30 Sep 21 | 31 Mar 21 | 31 Mar 20 | 31 Mar 19 | ||
| Total Assets | 1,179.77 | 1,081.27 | 1,019.24 | 926.40 | |
| Total Revenue | 519.59 | 660.31 | 729.74 | 551.14 | |
| Profit After Tax | 81.22 | 39.57 | 55.34 | 44.59 |
| Earnings Per Share (Rs) | 9.10 | 12.68 | -28.19 |
| CEPS (Rs) | 12.53 | 13.84 | -9.49 |
| DPS (Rs) | 0.00 | 0.00 | 0.00 |
| Book NAV/Share (Rs) | 99.05 | 89.73 | 10.38 |
| Tax Rate (%) | 28.96 | 40.72 | -28.89 |
| Core EBITDA Margin (%) | 25.40 | 27.90 | -8.93 |
| EBIT Margin (%) | 15.70 | 19.69 | -20.24 |
| Pre – Tax Margin (%) | 8.57 | 12.98 | -33.98 |
| PAT Margin (%) | 6.09 | 7.69 | -20.87 |
| Cash Profit Margin (%) | 17.37 | 17.34 | 0.16 |
| ROA (%) | 3.46 | 6.68 | -48.21 |
| ROE (%) | 9.54 | 13.85 | -31.16 |
| ROCE (%) | 21.32 | 30.49 | -30.06 |
| Asset Turnover (x) | 0.57 | 0.87 | -34.55 |
| Sales/Fixed Asset (x) | 0.70 | 1.12 | -37.41 |
| Working Capital/Sales (x) | 8.66 | 9.90 | -12.53 |
| Fixed Capital/Sales (x) | 1.42 | 0.89 | 59.77 |
| Receivable days | 24.69 | 18.40 | 34.16 |
| Inventory Days | 7.32 | 5.83 | 25.58 |
| Payable days | 197.76 | 161.38 | 22.55 |
| EV/Net Sales (x) | 0.01 | 0.02 | -40.88 |
| EV/Core EBITDA (x) | 0.05 | 0.07 | -35.73 |
| EV/EBIT (x) | 0.08 | 0.11 | -25.88 |
| EV/CE (x) | 0.01 | 0.01 | -50.67 |
| Net Sales Growth (%) | -9.64 | 32.54 | -129.63 |
| Core EBITDA Growth (%) | -16.88 | 75.52 | -122.35 |
| EBIT Growth (%) | -27.93 | 69.99 | -139.90 |
| PAT Growth (%) | -28.50 | -4.47 | -537.46 |
| EPS Growth (%) | -28.19 | -3.41 | -727.10 |
| Total Debt/Equity (x) | 0.11 | 0.14 | -24.46 |
| Current Ratio (x) | 1.44 | 1.42 | 1.32 |
| Quick Ratio (x) | 1.38 | 1.33 | 3.94 |
| Interest Cover (x) | 2.20 | 2.93 | -24.99 |
| Particulars as in Crores | Dec 21 | Mar 21 | Mar 20 | Mar 19 |
| Sales | 761 | 650 | 719 | 543 |
| Medical Consumables and Pharmacy Items Consumed | 161 | 103 | 105 | 80 |
| Employee Benefits Expense | 84 | 102 | 109 | 86 |
| Other Expenses | 259 | 282 | 308 | 228 |
| Operating Profit | 257 | 163 | 197 | 149 |
| OPM % | 33.77% | 25.08% | 27.40% | 27.44% |
| Other Income | 13 | 10 | 10 | 8 |
| Finance Cost | 37 | 44 | 45 | 39 |
| Depreciation | 61 | 73 | 69 | 60 |
| Profit before tax | 172 | 56 | 93 | 58.00 |
| Total Tax Exps | 45 | 16 | 38 | 13 |
| Net Profit | 126 | 40 | 55 | 45 |
| NPM % | 16.56% | 6.15% | 7.65% | 8.29% |
| No. of shares | 10.15 | 10.15 | 10.15 | 10.15 |
| EPS | 13.39 | 4.36 | 5.98 | 4.83 |
Also Read : List of Mainboard IPO’s in India.
Also Read : List of Upcoming SME IPO’s in India.
COMPARISON WITH PEERS:
| Name of the Company | Sales as in Crores | PAT as in Crores | EPS | PE | RoCE | Market cap | Returns 3Y | Sales Growth of 3Y |
| Rainbow Children’s Medicare | 867 | 53 | 17.85 | 30.36 | 4.79% | 5,501 | NA | 59.69% |
| Apollo Hospitals Enterprise Ltd | 13,984 | 1,133 | 78.8 | 79 | 8.44% | 69,275 | 288% | 45.41% |
| Fortis Healthcare Ltd | 5,592 | 530 | 7.02 | 57.8 | 5.59% | 20,765 | 97% | 25.13% |
| Narayana Hrudalaya Ltd | 3,597 | 341 | 16.7 | 42 | 1.62% | 14,321 | 236% | 25.73% |
| Max Healthcare Institute Ltd | 1,679 | 272 | 2.81 | 145 | 3.55% | 39,299 | 265% | 66.57% |
| Krishna Institute of Medical Sciences Ltd | 1,637 | 310 | 38.9 | 35.1 | 29.60% | 10,935 | 34% | 78.32% |
PROMOTERS OF THE COMPANY:
The promoters of the company are as follows:
- Dr Ramesh Kancharla,
- Dr Dinesh Kumar Chirla
- Dr Adarsh Kancharla.
| Pre – Issue Share Holding | 62.19% |
| Post Issue Share Holding | 49.83% |
CONTACT DETAILS:
Rainbow Children’s Medicare Limited
8-2-120/103/1, Survey No. 403,
Road No. 2, Banjara Hills,
Hyderabad – 500 034, Telangana,
Telephone: + 91 40 49692244
E-mail: companysecretary@rainbowhospitals.com
Website: www.rainbowhospitals.in
REGISTRAR:
KFin Technologies Private Limited
Selenium, Tower-B
Plot 31 and 32, Financial District
Nanakramguda, Serilingampally
Hyderabad, Rangareddi 500 032
Telangana, India
Telephone: +91 40 6716 2222
E-mail: rcml.ipo@kfintech.com
Website: www.kfintech.com
LEAD MANAGER(S) OF RAINBOW CHILDREN MEDICARE IPO:
- J.P. Morgan India Private Limited
- Kotak Mahindra Capital Company Limited
- IIFL Securities Limited
