Niva Bupa IPO Day 1: Check GMP, subscription status, review, other key details. Should you subscribe or skip?

Niva Bupa IPO: The initial public offering for Niva Bupa Health Insurance Company Ltd, previously known as Max Bupa Health Insurance Company, opens for subscription today (Thursday, November 7) and will close on Monday, November 11. This issue, with a price band of ₹70-74, raised ₹990 crore from anchor investors on Wednesday, November 6.

Among the foreign and domestic institutions that received shares in the anchor round are Zulia Investments Pte, Amansa Holdings, A91 Emerging Fund II LLP, Morgan Stanley, Fidelity, and Government Pension Fund Global, as indicated in a circular posted on the BSE’s website.

The Niva Bupa IPO lot size is 200 equity shares and in multiples of 200 equity shares thereafter. Niva Bupa Health Insurance IPO has reserved not less than 75% of the shares in the public issue for qualified institutional buyers (QIB), not more than 15% for non-institutional Institutional Investors (NII), and not more than 10% of the offer is reserved for retail investors.

Niva Bupa Health Insurance Company aims to fulfill this goal through its health insurance solutions and services that help customers manage their healthcare experience by offering access to a comprehensive health ecosystem.

The company stands out as one of the top standalone retail health insurers (SAHI) in India, reporting a Gross Direct Written Premium (GDPI) of ₹5,499.43 crore for the fiscal year 2024.

The Gross Written Premium (GWP) for the insurance provider rose by 37.68 percent, reaching ₹5,607.57 crore in fiscal 2024 compared to ₹4,073.03 crore in the previous year. Additionally, the profit increased significantly to ₹81.85 crore in fiscal 2024, up from ₹12.54 crore in fiscal 2023.

As per the red herring prospectus (RHP), the company’s listed peers are Star Health and Allied Insurance Company Ltd (with a P/E of 38.27), ICICI Lombard General Insurance Company Ltd (with a P/E of 48.91), and The New India Assurance Company Ltd (with a P/E of 28.62).

Niva Bupa IPO Subscription Status

Subscription for the public issue will open at 10:00 IST during Thursday’s deals.

Niva Bupa IPO Review

Bajaj Broking

The brokerage reported that in the past three fiscal years, the company has achieved an average earnings per share (EPS) of Rs. 0.05 (basic) along with an average return on net worth (RoNW) of -2.58%. The share issue is valued at a price-to-book value (P/BV) of 6.19, calculated from its net asset value (NAV) of Rs. 11.95 as of June 30, 2024, and a P/BV of 4.73 based on its post-IPO NAV of Rs. 15.66 per share (at the upper limit).

When we adjust FY25 earnings to reflect the fully diluted equity base after the IPO, the proposed price leads to a negative price-to-earnings (P/E) ratio. Using FY24 earnings, the P/E ratio is calculated to be 642.22. As a result, this situation seems to be priced quite aggressively.

“We recommend to subscribe the IPO with a long-term perspective,” the brokerage said.

Swastika Investmart

The brokerage noted in its report that the company is a prominent contender in India’s health insurance sector and ranks among the quickest-expanding firms in the industry. It achieved a favorable recovery in FY23, although recent earnings from the first quarter of the ongoing fiscal year are showing negative results. The pricing for the IPO seems a bit aggressive. It is suggested only for high-risk investors thinking about applying.

Niva Bupa IPO Details

Niva Bupa Health Insurance IPO, valued at ₹2,200 crore, includes a fresh issuance of equity shares amounting to ₹800 crore and a promoters’ offer for sale of up to ₹1,400 crore. The company scaled down the issue size from its initial goal of raising ₹3,000 crore.

As part of the offer for sale, Fettle Tone LLP will divest shares worth ₹1,050 crore, while Bupa Singapore Holdings Pte Ltd will sell shares valued at ₹350 crore. Currently, Bupa Singapore Holdings Pte holds a 62.19 percent stake, and Fettle Tone LLP owns a 26.8% stake in the insurance company.

The firm plans to use the net proceeds from the fresh equity issuance to enhance its capital base and improve solvency levels, with a portion allocated for general corporate needs.

The book-running lead managers for the Niva Bupa Health Insurance IPO include ICICI Securities Ltd, Morgan Stanley India Company Pvt Ltd, Kotak Mahindra Capital Company Ltd, Axis Capital Limited, HDFC Bank Ltd, and Motilal Oswal Investment Advisors Ltd, with Kfin Technologies Ltd serving as the registrar for the offering.

Niva Bupa IPO GMP today

Niva Bupa Health Insurance IPO GMP or grey market premium was ₹0, which meant shares were trading at their issue price of ₹74 with no premium or discount in the grey market, according to stock market observers.

‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.