Shares in Rainbow Children’s Medicare, a leading multi-speciality paediatric and gynaecological hospital chain operator, were listed on May 10 at Rs 506, a 6.6 per cent discount from the issue price. The stock opened at Rs 506, compared with the BSE offering at Rs 542 and the NSE at Rs 510.

The listing is at the expected level, given the tepid response to its IPO from non-institutional buyers and retail investors. However, support from qualified institutional buyers has been fairly strong. The public offering was 12.43 times subscribed between April 27 and 29. The IPO brought the company Rs 1,581 crore, of which Rs 2.8 crore will be used to pay down debt and build new hospitals. The remaining Rs 130.08 crore will be used for the sale of shareholders.

The British International Investment Corporation-backed company operates a chain of multi-speciality paediatric and maternity hospitals in India, with 14 hospitals and three clinics in six cities. As of December 2021, there are 1,500 beds, 641 full-time doctors and 1,947 part-time/visiting doctors. Going forward, the company may seek to expand its hospital network by acquiring brownfield assets or developing greenfield assets.

Most analysts recommend a long-term subscription to Rainbow’s public offering rather than listing proceeds, citing its reasonable valuation and resilient operating performance compared to peers. Profitability for the nine months ended December 2021 surged to Rs 1,264.1 crore from Rs 3,853 crore in the corresponding period of the previous fiscal. The sudden surge in profitability was due to the second wave of Covid hospitalizations in 1Q21-22.