The initial public offering (IPO) of Go Digit General Insurance managed to sail through on the third and final day of the bidding thanks to participation from QIB and non-institutional investors. The issue was booked 35 per cent on day one and ended day two with about 70 per cent subscription.
saw a muted response from the investors during the second day of the bidding process. After getting bids for about 35 per cent on day one, the issue barely crossed the halfway mark, thanks to aggressive bidding from the retail investors.
The Pune-based Go Digit General Insurance is selling its shares in the price band of Rs 278-272 apiece. Investors can apply for a minimum of 55 shares and its multiples thereafter. It is looking to raise Rs 2,614.65 rore via IPO, which includes a fresh share sale of Rs 1,125 crore and an offer-for-sale (OFS) of 5,47,66,392 equity shares.
According to the data, the investors made bids for 8,83,05,635 equity shares, or 1.67 times, compared to the 5,28,69,677 equity shares offered for the subscription by 12.35 pm on Friday, May 17. The three-day bidding for the issue, which had opened on Wednesday, May 15, concludes today.
The allocation for retail investors was subscribed 3.22 times, while the portion reserved for non-institutional investors saw a subscription of 1.79 times. However, the quota set aside for qualified institutional bidders (QIBs) attract bids for 1.09 times of their quota as of the same time.
The grey market premium of Go Digit has seen a sharp correction after a dull response to the issue. Last heard, the company was commanding a premium of Rs 14-15 in the unofficial market, suggesting a listing pop of merely 6 per cent for the investors. However, the premium in the grey market stood around Rs 48-50 levels, before the bidding opened for the issue.
Backed by Prem Watsa's Fairfax Group, Go Digit General Insurance is a general insurance provider, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products. Customers can customize their insurance to meet their needs.
Brokerage firms are mostly positive on the issue suggesting investors subscribe to it on the back of companies improving financial, under penetration of insurance products, rising market share and technological advancement. However, they see regulatory obligations, rich valuations and loss-making nature of business as the key risks for the business.
Go Digit is going to list at a P/B of 5.68 times with a market cap of Rs 24,948 crore , whereas its peers namely New India Assurance Company, Star Health and Allied Insurance Company, ICICI Lombard General Insurance Company are trading at a P/B of 1.33 times, 4.66 times, 6.66 times, said Marwadi Financial Services.
"We assign a 'subscribe' rating to this IPO as the company has an advanced technology platform along with predictive underwriting models. Also, it is available at reasonable valuation as compared to its peers," it added.
Go Digit reported a net profit of Rs 129.02 crore with a revenue of Rs 130.83 crore for the nine months ended on December 31, 2024. The company's bottomline came in at Rs 35.54 crore with a revenue of Rs 39.19 crore for the financial year ended March 31, 2023, making its first year of profitability.
Go Digit is a digital full stack insurance company, leveraging technology to power an innovative approach to product design, distribution and customer experience for non-life insurance products. Full-Stack Insurers are firms that are fully licensed and controlled by a regulatory authority and perform sourcing, underwriting and servicing all in-house, said Hem Securities.
"The company is bringing the issue at a P/GWP multiple of 3.44 times on annualized nine-months ended FY24 basis. It has strong distribution partners. with predictive underwriting models & advanced technology platforms. It with its scale of products, number of policies and profitability and being 6 years old is having strong prospects in long run," it said with a 'subscribe' tag on the issue.
The company has reserved not more than 75 per cent of the net issue for the qualified institutional bidders (QIBs), while non-institutional investors will have not more than 15 per cent of shares allocated towards them. Retail investors will get the remaining 10 per cent of the shares.
ICICI Securities, Morgan Stanley India Company, Axis Capital, Nuvama Wealth Management, HDFC Bank and IIFL Securities are the book running lead managers of the Go Digit IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE, with Thursday May 23 as the tentative date of listing.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.