Niva Bupa IPO opens today: Invest or wait? Check GMP, & Brokerages' views

The Rs 2,200-crore IPO of Niva Bupa Health Insurance Company opens for subscription today and will close on Monday, November 11, 2024

Niva Bupa IPO opens today: The initial public offering (IPO) of health insurance services provider, Niva Bupa Health Insurance Company, opens for public subscription today. The company aims to raise Rs 2,200 crore at the upper end of the IPO price range. Niva Bupa has announced that it has already raised Rs 990 crore from anchor investors in a bidding concluded on November 6, 2024.

 

Niva Bupa’s IPO comprises a fresh issue of 108,108,108 shares and an offer for sale of 189,189,189 shares with a face value of Rs 10 apiece. The company has set the IPO price band at Rs 70-74, with a lot size of 200 shares. Accordingly, investors can bid for a minimum of 200 shares and in multiples thereof. A retail investor would need a minimum of Rs 14,800 to bid for one lot of Niva Bupa IPO.

 

 

Meanwhile, the unlisted shares of Niva Bupa were trading flat in grey markets ahead of its IPO launch, according to sources tracking grey market activity. As a result, the company's grey market premium (GMP) remained at zero in the unlisted market. 

 

The three-day subscription window for Niva Bupa's public offering is expected to close on Monday, November 11, 2024. Subsequently, the basis of allotment for Niva Bupa IPO shares is likely to be finalised on Tuesday, November 12, 2024, with shares expected to be credited to investors’ demat accounts by Wednesday, November 13, 2024.

 

Shares of Niva Bupa are expected to debut on the BSE and NSE on Thursday, November 14, 2024.

 

Kfin Technologies is the registrar for the Niva Bupa IPO. Morgan Stanley India Company, ICICI Securities, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors are the book-running lead managers.

 

In its Red Herring Prospectus, Niva Bupa stated that it proposes to utilise the net proceeds from the fresh issue, as per IRDAI regulations, towards augmenting its capital base to maintain and strengthen solvency levels by investing in instruments and in the manner prescribed under the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024 (IRDAI AFIF Regulations). The company will also use the proceeds for general corporate purposes.

 

Each of the selling shareholders will be entitled to their respective portion of the proceeds from the offer for sale in proportion to the equity shares they offer.

 

Should you subscribe to the Niva Bupa IPO?

  Anand Rathi Reserach Team - Subscribe for long-term  

Analysts at Anand Rathi’s research team have recommended that investors subscribe to the Niva Bupa IPO with a long-term perspective. They cited the company's goal to build a comprehensive, customer-focused health insurance platform and healthcare ecosystem, offering services like wellness programs, doctor consultations, diagnostics, and medicine delivery.

 

"They plan to continue investing in expanding their health insurance ecosystem through initiatives like health assessment tools and wellness content, as well as partnerships for services like digital consultations and home medicine delivery," said the analysts in a research note.

 

At the upper price band, the company is valued at a P/BV of 6.1x, with a market cap of Rs 13,520 crore post-issue. Analysts believe the issue is fully priced and have given it a ‘Subscribe – Long Term’ rating.

 

Swastika Investmart- May subscribe 

Brokerage firm Swastika Investmart has recommended the IPO only for high-risk investors. They noted that although the company is a leading player in India’s health insurance market and one of the fastest-growing in the sector, its earnings were positive in FY23, but the first quarter of the current fiscal year showed negative results. According to Swastika Investmart, the IPO pricing appears aggressive.

 

Bajaj Broking- Subscribe for long-term  

Analysts at Bajaj Broking have also recommended the IPO for long-term investors. They highlighted that over the last three fiscal years, NBHICL has reported an average earnings per share (EPS) of Rs 0.05 and an average return on net worth (RoNW) of -2.58 per cent. The issue is priced at a P/BV of 6.19 based on 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 cap).

 

"If we annualise FY25 earnings to the post-IPO fully diluted equity base, the asking price results in a negative price-to-earnings (P/E) ratio. Based on FY24 earnings, the P/E ratio stands at 642.22. Consequently, the issue appears to be aggressively priced," said the analysts in their report.

 

About Niva Bupa Health Insurance

A joint venture between the Bupa Group and Fettle Tone LLP, Niva Bupa Health Insurance Company is a leading health insurance provider in India. It aims to offer a comprehensive range of health insurance products and services to support customers in their healthcare journeys and provide access to an extensive health ecosystem.