The initial public offering (IPO) of Go Digit General Insurance 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 2,77,31,330 equity shares, or 52 per cent, compared to the 5,28,69,677 equity shares offered for the subscription by 1.05 pm on Thursday, May 16. The three-day bidding for the issue will conclude on Friday, May 17.
The allocation for retail investors was subscribed 2.12 times, while the portion reserved for non-institutional investors saw a subscription of 51 per cent. However, the quota set aside for qualified institutional bidders (QIBs) was yet to attract any bids 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 8-10 in the unofficial market, suggesting a listing pop of merely 3 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 focused on simplifying its insurance documentation and has taken pioneer innovations to do so. The company increased the market share among the overall general insurers, in terms of total GWP. The company plans to form new distribution partnerships to expand customer reach, said Hensex Securities.
"The company has a distribution footprint across 24 of the 36 total states and union territories in India as of December 31, 2023. We suggest investors to 'subscribe' to the issue with a long term investment perspective," it said.
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 valued at a P/B multiple of 4.3 times of its upper price band based on 9MFY24 earnings on post-issue capital while on P/E, the company is valued at 145 times of its upper price band base. The company is a market leader (6% market share) in incremental growth in motor insurance, said SBICap Securities.
"The company has been slowly gaining strength in the other insurance products & the overall market share of the company is at 3 per cent. Going ahead, we expect the company to do well as the scope of general insurance is huge due to low penetration in India. We recommend Subscribe for the long term," it said.
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.
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