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In our earlier a part of Rainbow Kids’s Medicare IPO story, we examine the important thing particulars of the IPO together with vital details about the specialty hospital chain. Right here we are going to reply some questions on Rainbow Kids’s Medicare and consider it on parameters like administration, financials, valuations, and so on.
IPO questions
The corporate/enterprise
1) Are the corporate’s earnings earlier than tax greater than Rs 50 crore within the final 12 months?
Sure. The corporate’s revenue earlier than tax was Rs 127 crore within the 12 months ended December 2021 interval.
2) Will Rainbow Kids’s Medicare be capable to scale up its enterprise?
Sure. The corporate has opened 4 hospitals within the final three years and is planning to open extra in order that it may possibly set up a correct hub and spoke mannequin in all of the locations it operates in.
3) Does the corporate have recognisable manufacturers really valued by its prospects?
Sure. Rainbow Kids’s Medicare is called top-of-the-line paediatric hospitals in India.
4) Does Rainbow Kids’s Medicare have excessive repeat buyer utilization?
Not relevant. The idea of returning prospects shouldn’t be utilized to healthcare.
5) Does the corporate have a reputable moat?
No. Though Rainbow Kids’s Medicare is a specialist in paediatrics and obstetrics, there are different established gamers within the trade who present comparable providers. Their specialty or model recognition doesn’t give a stable moat.
6) Is the corporate sufficiently strong to main regulatory or geopolitical dangers?
Sure. The hospital chain has adhered to all of the laws persistently over time.
7) Is the enterprise of the corporate resistant to simple replication by new gamers?
Sure. Whereas it could be simple to arrange a hospital, gaining a status and changing into an trade chief just isn’t simple for a brand new participant.
8) Is the corporate’s product capable of face up to being simply substituted or outdated?
Sure. Medical therapy can’t be outdated or substituted.
9) Are the purchasers of the corporate devoid of great bargaining energy?
Sure. Since prospects are people, they don’t have important bargaining energy. This may be witnessed in its common income per day. From Rs 26,696 in FY19 to Rs 45,951, as of December 2021.
10) Are the suppliers of Rainbow Kids’s Medicare devoid of great bargaining energy?
No. Because the hospitals offered a distinct segment and specialised service, they’re required to rent one of the best medical doctors accessible and so they have varied choices to decide on and may negotiate their pay too.
11) Is the extent of competitors the corporate faces comparatively low?
No. There’s excessive competitors in each the broader healthcare trade and paediatric market. It contains each listed and unlisted gamers.
Administration
12) Do any of the corporate’s founders nonetheless maintain at the very least a 5 per cent stake within the firm? Or do promoters maintain greater than a 25 per cent stake within the firm?
Sure. Submit-IPO, the promoter and promoter group will maintain about 43.7 per cent stake within the firm.
13) Do the highest three managers have greater than 15 years of mixed management on the firm?
Sure. The Chairman and Managing Director, Dr Ramesh Kancharla (additionally a promoter) has been related to Rainbow Kids’s Medicare since its incorporation in 1998.
14) Is the administration reliable? Is it clear in its disclosures, that are in step with SEBI tips?
Sure, we now have no motive to imagine in any other case.
15) Is the corporate freed from litigation in courtroom or with the regulator that casts doubts on the administration’s intention?
Sure, the corporate is free from any materials litigation.
16) Is the corporate’s accounting coverage steady?
Sure, the corporate’s accounting coverage is steady.
17) Is the corporate freed from promoter pledging of its shares?
Sure. The corporate’s shares are freed from any pledge.
Financials
18) Did the corporate generate a present and three-year common return on fairness of greater than 15 per cent and a return on capital employed of greater than 18 per cent?
No, Rainbow Kids’s Medicare managed to generate a three-year (FY19-21) common return on fairness of 11.4 per cent and a return on capital employed of 12.8 per cent. For FY21, the corporate generated a return on fairness of 8.8 per cent and a return on capital employed of 10.5 per cent.
19) Was the corporate’s working money circulate constructive over the past three years?
Sure, the corporate has reported constructive working money circulate over the past three years.
20) Did Rainbow Kids’s Medicare enhance its income by 10 per cent CAGR within the final three years?
No. Its revenues elevated from Rs 542.8 crore in FY19 to Rs 650 crore in FY21 at a CAGR of 9.4 per cent.
21) Is the corporate’s web debt-to-equity ratio lower than one, or is its interest-coverage ratio greater than two?
Sure. The corporate’s web debt-to-equity ratio stood at -0.21 (i.e., web money) as of December 31, 2021, and its interest-coverage ratio stood at 4.48 as of December 2021 TTM.
22) Is the corporate free from reliance on large working capital for day-to-day affairs?
Sure. The corporate had a unfavourable working capital cycle of 166 days in FY21. It would not require large working capital.
23) Can the corporate run its enterprise with out counting on exterior funding within the subsequent three years?
Sure. The corporate is well-capitalised. It has been doing effectively and has already surpassed its FY21 income, working revenue and web revenue numbers within the 9 months ended December 2021 interval. Furthermore, the IPO proceeds of Rs 280 crore would fund the corporate’s capital expenditure (growth of hospital community and buy of medical tools).
24) Have the corporate’s short-term borrowings remained steady or declined (not elevated by larger than 15 per cent)?
No. Quick-term borrowings have elevated greater than 4.5 instances from Rs 2.9 crore in FY19 to Rs 13.4 crore, as of December 2021.
25) Is the corporate free from significant contingent liabilities?
Sure, Rainbow Kids’s Medicare is free from significant contingent liabilities.
Inventory/valuations
26) Does the inventory provide an operating-earnings yield of greater than 8 per cent on its enterprise worth?
No, the inventory will solely provide an operating-earnings yield of three.6 per cent on its enterprise worth.
27) Is the inventory’s price-to-earnings lower than its friends’ median degree?
No. Submit-IPO, the corporate’s inventory will commerce at a P/E of round 49.2, which is greater than its friends’ median P/E of 48.3.
28) Is the inventory’s price-to-book worth lower than its friends’ common degree?
No. Submit-IPO, the corporate’s inventory will commerce at a P/B of round 7.2, which is greater than its friends’ common P/B of 6.7.
Additionally, learn our earlier story on Rainbow Kids’s Medicare IPO to study key IPO particulars and vital firm data.
Disclaimer: The creator could also be an applicant on this Preliminary Public Providing.
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