Can you tell me details about the forthcoming Rainbow Children Medicare IPO and is the IPO worth applying?

Rainbow Hospital is an all-India chain of hospitals focusing on paediatric care, gynaecology and on obstetrics care. The IPO will be a combination of a fresh issue and an offer for sale (OFS). The IPO will open on 26-April i.e. Tuesday. Here is a quick view.

· Rainbow Children IPO opens on 27th April and closes for subscription on 29th April, Thursday. , both days inclusive. On successful completion of the IPO allotment basis will be finalized on 05-May and refunds will be initiated on 06-May. Shares allotted to eligible applicants will be credited to demat accounts by 09-May and the stock is expected to be listed on the BSE and the NSE on 10-May. Rainbow plans to conduct the anchor book placement on 26th April.

· The price band for the Rainbow Children Medicare IPO has been set in the range of Rs.516 to Rs.542. Based on the upper price band assumption, minimum market lot for the IPO will be of 27 shares each. Investors can apply in multiples of 27 shares. Retail investors can invest a maximum of 13 lots of 351 shares which will have a maximum application size of Rs.190,242. A total of 3 lakh shares have been reserved for employees of the company and they will be offered at a discount of Rs.20 to the final offer price.

· Let us focus on the OFS portion of the IPO. The total offer for sale or OFS will be for 2,40,00,900 (2.40 crore) equity shares and at the upper price band of Rs.542 the OFS size will be Rs.1,300.85 crore. The three promoters (Ramesh Kancharla, Dinesh Kumar Kancharla and Adarsh Kancharla) will sell 87.26 lakh shares in total. PE investor, British International Investment PLC (formerly CDC) will sell 1.46 crore shares in the OFS.

· The new issue component will comprise of 54,37,984 (54.38 lakh) shares, worth Rs.294.74 crore at the upper price band of Rs.542. The fresh issue funds will be used for early redemption of NCDs, capex for new hospitals and for purchase of medical equipment. If you combine the OFS and the fresh issue, the total issue size will be of 2,94,38,884 (2.944 crore) shares to raise a sum of Rs.1,595.59 crore. The break up of allocation will be 50% for QIBs, 15% for HNIs/NIIs and 35% for retail investors.

· Here is a quick brief on the business model of Rainbow Children Medicare. It is a multi-specialty paediatrics, gynaecology and obstetrics chain of hospitals. Among its niche offerings are new-born and paediatric intensive care, paediatric quaternary care, normal & complex obstetrics care, multidisciplinary foetal care and prenatal genetic and fertility care. The group currently operates 14 hospitals and 3 clinics across 6 cities in India with total bed capacity of 1,500 beds. Rainbow boasts of a panel of 602 full-time doctors and 1,686 visiting doctors. It started in Hyderabad, way back in 1999.

· To get the most current picture of the financials devoid of the COVID constriction effect, we look at the 9-month period to Dec-21. Rainbow reported sales revenues of Rs.774.06 crore and net profits of Rs.126.41 crore; effective net profit margin of 16.33%. Profit growth for the 9-month period has been 228% on a yoy basis.

· IIFL Securities Ltd, JP Morgan India and Kotak Mahindra Capital Company are the Book Running Lead Managers (BRLMs) while KFIN Technologies will act as registrars to the IPO.