Rainbow Children’s Medicare shares see free fall post weak listing, drop over 16% on issue price; What should investors do?

Shares of Rainbow Children’s Medicare slid further after making a weak debut on the exchanges, NSE and BSE, on Monday. Against upper end of the price band of the issue price at Rs 542 per share, the counter declined over 16% and dropped more than 10% on the issue price. At 12.40 pm, shares of Rainbow Children’s Medicare were trading at Rs 451.50 apiece, below Rs 54.50 against listing price, on the BSE. The shares declined more than Rs 90 on issue price. 

On the BSE, Rainbow Children’s Medicare was listed at Rs 506 per share, a discount of 6.64 per cent on the issue price, and opened at a 5.90% discount to Rs 510 a share on the NSE.  

The stock opened at Rs 506, registering a decline of 6.64 per cent from the issue price on the BSE. It further tanked 11 per cent to Rs 482. 

The Rs 1,581-crore initial public offer of Rainbow Children's Medicare was subscribed 12.43 times last month. The three-day Rs 1,580.85 crore IPO of leading multi-specialty pediatric and obstetrics and gynecology hospital chain, which opened on April 27, closed on April 29. 

Meanwhile, market experts, including Zee Business Managing Editor Anil Singhvi, believes the stock is meant for only long-term investors who are willing to take extra risks can hold the stock. For short-term investors, He suggested keeping a stoploss at Rs 540, Rs 2 below the issue price. Singhvi had expected the similar listing, saying the counter would make debut near the issue price with around 5% margin on either side. 

Santosh Meena, Head of Research, Swastika Investmart Ltd said the company’s muted listing can be attributed to volatile and negative market sentiments and a lack of investor interest in hospital businesses. The company has a specialized nature of business, an experienced management team, proven ability to attract, train and retain high-caliber medical professionals, but the hospital is a highly competitive business and normalization of profitability post covid makes it suitable only for aggressive investors for the long term, said Meena.  

"Those who applied for listing gains can maintain a stop loss of Rs 500," he suggested.  

Meanwhile, Yash Gupta- Equity Research Analyst, Angel One Ltd, suggested retail investors to book profit and said long-term investors can wait for a lower price.