Niva Bupa Health Insurance IPO Day 3: Check latest subscription, GMP

The initial public offering (IPO) of Niva Bupa Health Insurance Company saw moderate interest from investors on the final day of its bidding process. The IPO, which began with 65% subscription on Day 1, ended Day 2 with a total subscription of 1.17 times.
The Niva Bupa Health Insurance IPO was subscribed 1.90 times as of November 11, 2024, 5:47 PM, t. In specific categories, the retail segment saw the strongest interest, with a subscription rate of 2.88 times, while qualified institutional buyers (QIB) subscribed 2.17 times, and non-institutional investors (NII) subscribed 0.71 times.
Niva Bupa Health Insurance, based in Delhi, offered its shares in a price band of Rs 70-74 per share. Investors are required to apply for a minimum lot of 200 shares. The IPO aims to raise Rs 2,200 crore, including Rs 800 crore through a fresh issue and Rs 1,400 crore through an offer-for-sale (OFS).
Founded in 2008, Niva Bupa Health Insurance is a joint venture between the Bupa Group and Fettle Tone LLP, focusing on the health insurance sector. The company provides a broad health service ecosystem, with access to health-related services available through its Niva Bupa Health mobile app and website.
The grey market premium (GMP) for Niva Bupa Health Insurance shares stood at Rs 0 as of November 11, 2024, 3:54 PM.
Given the top-end price band of Rs 74, the estimated listing price is expected to be Rs 74 per share, implying no gain or loss at this rate.
Most brokerage firms have a positive view on Niva Bupa Health Insurance’s IPO, recommending it as a long-term investment. Analysts highlight the rising demand for healthcare products, strong market share, and the company’s growth potential. However, some are concerned about the competition in the sector, inconsistent financial performance, and high valuation.
Bajaj Broking commented on Niva Bupa’s growth, noting that its gross direct premium income (GDPI) grew 41.37% between FY22 and FY24, nearly double the average industry growth rate of 21.42% during the same period. They mentioned that insurance companies generally see slower growth in the first half of the fiscal year, with a busier second half, and gave a long-term subscribe rating.
For the quarter ending June 30, 2024, Niva Bupa Health Insurance reported a net loss of Rs 18.82 crore and revenue of Rs 1,124.90 crore. For the financial year ending March 31, 2024, the company recorded a net profit of Rs 81.85 crore with revenue totalling Rs 4,118.63 crore. After the IPO, Niva Bupa Health Insurance’s estimated market capitalisation will be Rs 13,380 crore.
Niva Bupa Health Insurance has allocated 75% of the shares to qualified institutional buyers (QIBs), while non-institutional investors (NIIs) have been assigned 15% of the offer. Retail investors will receive the remaining 10% of the offer.
The company has shown solid growth in its gross written premium (GWP), with a compound annual growth rate (CAGR) of 33.4% from FY22 to FY24. This growth reflects Niva Bupa’s strategy to build a profitable retail health insurance base, according to SBI Securities.
However, SBI Securities expressed concerns over the IPO’s pricing, stating that at the upper end of the price band, the stock is valued at a FY24 price-to-earnings (P/E) ratio of 165 times and a price-to-book value (P/BV) ratio of 4.7 times. Due to these high valuations, they recommend avoiding the IPO for now and suggest re-evaluating after listing.
ICICI Securities, Morgan Stanley India, Kotak Mahindra Capital, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors are leading the IPO as book-running managers. Kfin Technologies is serving as the IPO’s registrar.
The allotment for the Niva Bupa Health Insurance IPO is likely to be finalised on Tuesday, November 12, 2024. The shares are expected to list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Thursday, November 14.
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