Hi, today we will tell you about the upcoming IPO of Rainbow Children Medicare.
First, let's talk About the company.
Rainbow Children Medicare Limited is a multispecialty pediatric, obstetric, and gynecology hospital chain.
There are 14 hospitals and 3 clinics under the chain in Hyderabad, Bengaluru, Vijayawada, Visakhapatnam, Chennai, and New Delhi.
Their total capacity is 1500 beds, out of which 1150 beds are currently operational.
The company's first Pediatric Specialty Hospital was opened in Hyderabad in 1999.
Its core specialties are Pediatrics.
Under this, treatment comes under Newborn and Pediatric Intensive Care, Pediatric Multispecialty Services, and Pediatric Quaternary Care.
Next is Obstetrics and Gynecology.
It includes treatments like general and complex obstetric care, multi-disciplinary fetal care, and perinatal genetic and reproductive care.
Most of the company's experts work exclusively for them on a full-time retainer basis.
As of 31 December 2021, the company has 641 full-time doctors and 1,947 part-time/visiting doctors on its payroll.
The retention of full-time doctors of the company was also 81% in the last 3 years.
Rainbow Hospital follows a hub and spoke model in the network setup.
They have their central hub in Hyderabad City at Banjara Hills and 4 spokes at Secunderabad, LB Nagar, Kondapur, and Hydernagar.
Similarly, in Bengaluru city, their hub is at Marathahalli and spokespersons are at Bannerghatta Road and Hebbal.
Rainbow is also planning expansion in Chennai and New Delhi with the same model.
The company's average revenue per bed per day in 9MFY22 is Rs 45,951 vs only Rs 40,893 in FY21 and Rs 29,277 in FY20
Apart from core specialties, it has a presence in other specialties like Neurology, Nephrology, Gastroenterology, Oncology, and Cardiology.
Rainbow did over 1.25 lakh video consultations in FY21.
It wants to provide an exit to its shareholders, through IPO, early redemption of its NCDs from the fresh issue, and fund Capex for new hospitals.
Now lets talk about the investment pros.
Rainbow's biggest strength is its market position as one of India's largest multi-specialty pediatric care providers.
There are many hospital chains in India but very few hospital chains with a core focus on Pediatrics, Obstetrics, and Gynecology.
Pediatric Hospitals are built and run at different ages than Adult Centric Hospitals
Rainbow has +22 years of experience in the creation and operation of Children Centric Hospitals giving a good advantage in this sector.
India's private maternity care market is expected to grow at a CAGR of 12% from FY20 to FY26 to reach a market size of Rs 33,000 crore.
It is expected that India's private pediatric care market will grow at a CAGR of 14% from FY20 to FY26 to a market size of Rs 1,34,000 crore.
Rainbow is one of the largest bed capacity players in the in-both segment
The company is likely to benefit from capturing the bulk of the growth in these segments.
Another major strength is its high full-time doctor retention rate and its full-time core specialists who are exclusively associated with Rainbow.
Its retention rate was 81% in the past 3 years.
Most of its core specialists work in an exclusive full retainership structure supported with 24/7 coverage in its hospitals.
With this good coverage, Rainbow can operate services like Children's Emergency and Neonatal and Pediatric Intensive Care
and achieve seamless healthcare delivery and high patient satisfaction.
Now let's talk about the Investment Cons.
The biggest weakness of the company is its high attrition rate.
Rainbow's attrition rate for full-time employees, including nurses, interns, and paramedics, was 45.5% in FY21.
The full-time doctor retention rate of a light company is quite high.
If the high attrition rate of permanent employees continues, the company's operations and expansion will be cut short
as it is essential to train and retain nurses and paramedical staff for their overall performance.
The company has 77% patient volumes in FY21 across Hyderabad and Bengaluru locations.
This shows that Rainbow has a geographic concentration risk
It could seriously damage its business due to natural disasters and political unrest occurring in Hyderabad and Bengaluru.
Expansion in this industry requires a lot of capital and time.
There is a need to train and develop new doctors and other medical personnel at new locations.
So, the payback period of new locations is very long
Each new hospital initially has to operate at a loss post which could pad financial stress on the whole company during expansion.
Now let's talk about the company's financials.
As you can see on your screen, all the figures given are in crores.
We will be comparing FY20 with FY21.
Total assets figure slightly increased from 1019 to 1081 crores.
Total revenue figure declined from 729.74 to 660.03
Profit after tax declined from 55.34 to 39.57.
If we talk about the first 9 months of FY22, profit and revenue both have shown improvement.
Both these figures are more than FY21.
Now let's talk about a few important ratios.
Net Profit Margin is 6.00%
Operating Profit Margin is 15.11%
ROCE is 10.48%
P/E is 110.84
Industry PE is 98.49
Debt to Equity is 1.09
Current Ratio is 2.41
2 Year Sales CAGR is 9.43%
2 Year Profit CAGR is -5.80%
Now let's talk about the IPO details.
IPO Opening Date is Apr 27, 2022
IPO Closing Date is Apr 29, 2022
Listing Date is May 10, 2022
Issue Size is ₹1595 crores. Fresh Issue is ₹280 crores. Offer for Sale is ₹1315 crores
IPO Price is ₹516 to ₹542 per equity share 1 Market Lot is 27 shares.
So this was today's IPO alert.
We hope you liked today's video.
If you liked this video then like it and share it with friends.
We remind you that this video is for educational purposes only and is not a buy or sell recommendation.
For more such IPO alerts, subscribe to the Groww channel. Bye-bye.