Rainbow Children's Medicare Limited is a leading multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds, as of December 31, 2021. The core specialties are pediatrics, which includes newborn and pediatric intensive care, pediatric multi- specialty services, pediatric quaternary care (including multi organ transplants); and obstetrics and gynecology, which includes normal and complex obstetric care, multi-disciplinary fetal care, perinatal genetic and fertility care. They established the first pediatric specialty hospital in 1999 in Hyderabad, Telangana. They have also expanded the operations to include obstetrics and gynecology services, whereby they offer comprehensive perinatal services to patients. As of the date of this Red Herring Prospectus, five of the hospitals are accredited by NABH and three of the hospitals are certified by EDGE. In recent years, company has expanded the hospital network and increased our bed capacity from 1,162 beds as of March 31, 2019 to 1,500 beds as of December 31, 2021. Over the same period, they increased the number of hospitals from 10 to 14. As of December 31, 2021, they had 641 full-time doctors and 1,947 part time / visiting doctors. Company follow a hub-and-spoke model in Hyderabad, Telangana with the Banjara Hills hospital (comprising 250 beds) being the hub and four spokes at four locations in Hyderabad, Telangana namely Secunderabad, LB Nagar, Kondapur and Hydernagar. At the hub hospital, they provide comprehensive outpatient and inpatient care with a focus on tertiary and quaternary care and, at the spokes, they provide secondary care in pediatric, obstetrics and gynecology and emergency services. This model has strengthened the market position in and around Hyderabad, Telangana providing them with synergies through referrals for tertiary and quaternary care to the hub arising from the spoke hospitals. Company has good expansion plan with fresh issue. Company is planning 2 hospitals in Hyderabad with proposed 160 beds in 2023, 1 in Bengaluru and 1 in NCR with proposed 150 beds in 2024, and 1 in Chennai and 1 in NCR with proposed beds 220 in 2025. As per financial performance, RCML has posted total income/net profits of Rs 551.14 Cr / Rs 44.59 Cr (FY19), Rs 729.74 Cr / Rs 55.34 Cr (FY20), Rs. 660.31 Cr / Rs 39.57 Cr (FY21) and Rs. 774.06 Cr / Rs 126.41 Cr (Q3 FY22). So company has posted good result over last couple of years except FY21 pandemic year, but shown growth again in 9M FY22. Company has posted an average EPS of Rs. 4.89 and average RoNW of 11% for last three fiscals. Issue is priced at a P/BV of 8.79 as per NAV of 61.63 on 31.12.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 139 and as per FY22 annualised earnings P/E is around 33, which looks fully priced. As per RHP, comparison between listed players is shown in above table. On BRLM's front, four lead managers are associated with this IPO, and have handled around 60 IPOs in last three fiscals. From last 10 IPOs, 3 is opened below issue price and remaining are opened above issue on the day of listing. As of now, 4 are trading below issue price and other are trading above issue price. ( As on 22.04.22) As per financials, Rainbow Chindren's Medicare Limited has shown good growth, RoNW is 8.88% and P/E is respectively 139 and 33 as per FY21 and annualised FY22 earnings, which looks fully priced. Company is in children healthcare segment and had good expansion plans. Also this sector is expected to grow at good rate and company may beat sector growth. Performance of BRLMs are good. So, we give SUBSCRIBE rating for this IPO and one may hold it for long term in portfolio.
✍️ Post a Comment