Niva Bupa Health IPO: Issue subscribed 1.66 times on Day 3 so far; GMP takes a hit

The initial public offering (IPO) of Niva Bupa Health Insurance Company saw a decent response from the investors during the third day of the bidding process. The issue was overall subscribed 65 per cent on day one and ended day two with 1.17 times subscription.

Delhi-based Niva Bupa Health Insurance is selling its shares in the price band of Rs 70-74 apiece. Investors can apply for a minimum of 200 shares and its multiples thereafter. It is looking to raise Rs 2,200 crore via IPO, which includes a fresh share sale of 800 crore and offer-for-sale (OFS) of up to 189,189,189 equity shares worth Rs 1,400 crore.

According to the data from BSE, the investors made bids for 28,69,30,600 equity shares, or 1.66 times, compared to the 17,28,57,143 equity shares offered for the subscription by 3.00 pm on Monday, November 11. The three-day bidding for the issue, which opened on Thursday, November 7, concludes today.

The allocation for retail investors was subscribed 2.49 per cent, while the portion reserved for qualified institutional bidders (QIBs) saw a subscription of 1.90 times. However, the quota set aside for non-institutional investors (NIIs) saw bids 62 per cent for their allocations as of the same time.

Incorporated in 2008, Niva Bupa Health Insurance Company is a joint venture between the Bupa Group and Fettle Tone LLP that provides insurance in the health sector. It offers a holistic proposition by providing customers access to a comprehensive health ecosystem and service capabilities through its Niva Bupa Health mobile application and website.

Niva Bupa Health Insurance Company is commanding no grey market premium (GMP), suggesting no listing gains for the investors. However, there was almost no activity in the grey market for the first two days of the bidding for the issue but GMP stood at Rs 3 over the weekend.

Brokerages mostly have a positive view on the issue and suggest subscribing for a long term citing rising demand of healthcare products, strong market share and robust growth potential. However, rising competition, inconsistent numbers and aggressive valuations may dent its sentiments.

Niva Bupa Health Insurance growth in overall health GDPI from FY22-24, at 41.37 per cent, is among the highest in the SAHI sector, nearly doubling the industry's average growth rate of 21.42 per cent over the same period, said Bajaj Broking. "Insurance companies experience a sluggish first half with most activities occurring in the second half of the fiscal year," it added with a subscribe for long-term

Niva Bupa Health Insurance Company reported a net loss of Rs 18.82 crore with a revenue of Rs 1,124.90 crore for the quarter ended on June 30. The company clocked a net profit of Rs 81.85 crore with a revenue of Rs 4,118.63 crore for the financial year ended on March 31, 2024. The company will command a total market capitalization of Rs 13,380 crore.

Niva Bupa Health Insurance Company has reserved 75 per cent of the net for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the offer. Remaining 10 per cent of the net offer shall be allocated towards the retail investors.

Niva Bupa Health Insurance has demonstrated solid growth in gross written premium (GWP), with a 33.4 per cent CAGR over the FY22-24 period with focus on building a granular and profitable retail health insurance franchise. It financial reflect the typically slower first half of the fiscal year, said SBI Securities.

"Post issue at the upper price band, the company is valued at an FY24 P/E ratio of 165 times and an FY24 P/BV ratio of 4.7 times. Given the premium valuation, we find the issue overvalued and recommend an 'avoid'. We will revisit our analysis after the stock is listed to assess further opportunities," it said.

ICICI Securities, Morgan Stanley India, Kotak Mahindra Capital, Axis Capital, HDFC Bank and Motilal Oswal Investment Advisors are the book running lead managers of the Niva Bupa Health Insurance IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE on Thursday, November 14.