Niva Bupa IPO Day 2: Issue booked 1.17x led by retail investors. Check GMP, key details. Should you buy?

Niva Bupa IPO: The initial public offering for Niva Bupa Health Insurance Company Ltd, previously known as Max Bupa Health Insurance Company, opened for subscription on 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

Niva Bupa IPO has been subscribed 1.17 times , on Friday, the second day of the bidding process, as the issue received total bids for 20.27 crore equity shares as against 17.28 crore shares on the offer, as per BSE data.

The retail investors segment has seen a subscription rate of 1.34 times, while the Non Institutional Investors (NII) segment has reached 40%. The Qualified Institutional Buyers (QIBs) portion has been subscribed to at a rate of 1.50 times, according to the data from BSE.

On the first bidding day, Niva Bupa IPO subscription status was 65%. The issue was booked 71% in the retail investors category, and 33% in the NII category. The QIBs portion has been subscribed 79% so far, as per data available on BSE.

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.

Mehta Equities

According to the brokerage, the Niva Bupa Health Insurance Company Ltd IPO presents investors with a chance to invest in one of India's rapidly expanding standalone health insurers, featuring a strong product lineup, strategic innovations, and advancements in digital technology.

Investors should also consider IPOs that have nearly 64% OFS, amounting to Rs. 1400 crores, with a total issue size of Rs. 2200 crores, which raises concerns for new investors. Given its partnership with the Bupa Group, the company benefits from global expertise in healthcare innovation and customer service.

“With a CAGR of 41.27% in GWP from Fiscal 2022-2024, Niva Bupa is strategically positioned to capitalize on India's growing health insurance market. Hence, by looking at all the attributes we recommend investors to “SUBSCRIBE” the Niva Bupa Health Insurance Company IPO for long term perspective only,” the brokerage said.

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.

Considering the grey market activities from the past nine sessions, there has been no significant change in the IPO GMP trend today, and experts from investorgain.com anticipate that this trend will continue until the listing day.

'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.