The Niva Bupa IPO has created quite a buzz among investors, as the health insurance giant looks to raise a whopping ₹2,200 crore with a price band set between ₹70 and ₹74. As of Day 2 of the bidding process, the issue has already been subscribed 72%, sparking curiosity among potential investors. But is this IPO a solid investment opportunity, or is the pricing too aggressive for comfort? Let’s dive into the details of the Niva Bupa IPO and help you decide whether to apply or not.
Niva Bupa IPO Subscription Status: Where Does It Stand?
On the second day of the IPO, Niva Bupa IPO saw significant interest, with overall subscription standing at 72%. Retail investors have shown notable enthusiasm, subscribing 1.05x to their reserved portion. Meanwhile, the Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NII) portions have been subscribed 79% and 36%, respectively, according to data from the Bombay Stock Exchange (BSE).
IPO Details: Who’s Eligible and What’s on Offer?
The Niva Bupa IPO is open to a variety of investors, with 75% of the issue reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors. The lot size for the IPO is 200 equity shares, which means investors can only bid in multiples of 200.
Niva Bupa IPO GMP: What Does the Grey Market Say?
As of now, the Niva Bupa IPO GMP (Grey Market Premium) is reported to be ₹0. This essentially means that the shares are trading at their issue price of ₹74, with no premium or discount in the grey market. Typically, a higher GMP is seen as a positive indicator of strong investor demand ahead of the listing. The lack of premium in this case may signal cautious sentiment towards the IPO.
Key Highlights of Niva Bupa Health Insurance IPO
Let’s break down the essential details of the Niva Bupa Health Insurance IPO:
- Price Band: ₹70-74 per share
- Issue Size: ₹2,200 crore
- Fresh Issue: ₹800 crore
- Offer for Sale (OFS): ₹1,400 crore
- Subscription Period: Opens on November 7, 2024, and closes on November 11, 2024
- Anchor Investors: Raised ₹990 crore from top global and domestic institutions, including Morgan Stanley, Fidelity, and Government Pension Fund Global.
The issue primarily consists of an Offer for Sale (OFS), with major promoters like Fettle Tone LLP and Bupa Singapore Holdings Pte Ltd looking to offload a significant chunk of their shares. Notably, Fettle Tone will sell ₹1,050 crore worth of shares, while Bupa Singapore will offer shares worth ₹350 crore.
Financial Performance: How Does Niva Bupa Stack Up?
Before investing, it’s essential to consider the financial health of the company. Niva Bupa, formerly known as Max Bupa Health Insurance, has experienced impressive growth in recent years.
Key Financial Metrics:
- Gross Direct Written Premium (GDPI): ₹5,499.43 crore in FY24, representing a 37.68% increase over the previous year.
- Profit After Tax (PAT): ₹81.85 crore in FY24, a massive leap from ₹12.54 crore in FY23.
- Gross Written Premium (GWP): ₹5,607.57 crore in FY24.
Despite these positive financials, some analysts caution that the IPO’s pricing might be a little aggressive, with high valuations compared to its listed peers. For example, Star Health and Allied Insurance has a P/E ratio of 38.27, while Niva Bupa’s post-IPO P/E ratio could be seen as relatively steep.
Should You Apply for Niva Bupa IPO? Experts Weigh In
Wondering whether you should apply for the Niva Bupa IPO? Let’s hear what the experts have to say.
Bajaj Broking: Long-Term Investment Opportunity
Bajaj Broking recommends subscribing to the Niva Bupa IPO with a long-term perspective. The firm’s earnings per share (EPS) and return on net worth (RoNW) may not seem exciting in the short term, but the company’s growth potential in India’s booming health insurance market makes it a promising candidate for long-term investors.
Swastika Investmart: Cautious Optimism
Swastika Investmart takes a slightly cautious approach, pointing out that while Niva Bupa is a strong player in the health insurance sector, the IPO is priced aggressively. Investors with a higher risk appetite may find it appealing, but it’s advised for long-term commitments rather than short-term gains.
Mehta Equities: Subscribe for Growth
Mehta Equities believes the Niva Bupa IPO offers a great opportunity to tap into the growth of one of India’s fastest-growing health insurers. The brokerage highlights the company’s strategic partnerships and innovations in digital healthcare solutions as key reasons to subscribe to the IPO for a long-term return.
What’s Next for Niva Bupa?
As Niva Bupa gears up for its IPO, the company plans to use the fresh proceeds to enhance its capital base and improve solvency levels, helping it further expand its market reach. With India’s health insurance market expected to grow rapidly, Niva Bupa is well-positioned to capitalize on this opportunity.
Final Verdict: Is Niva Bupa IPO Worth Your Investment?
The Niva Bupa IPO is a compelling opportunity for long-term investors looking to invest in India’s burgeoning health insurance market. While some analysts caution about aggressive pricing, the company’s solid financial performance, strong anchor investor backing, and growth potential make it a promising candidate for those with a long-term investment horizon. If you’re a retail investor, the subscription rate of 1.05x on Day 2 suggests good demand in your segment.
However, with a GMP of ₹0, it’s essential to weigh the risks carefully and make an informed decision based on your investment goals.
Conclusion
The Niva Bupa IPO has caught the attention of both retail and institutional investors. With a solid growth trajectory, long-term potential, and industry-leading innovations, this IPO might just be worth considering if you’re in it for the long haul.
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