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| Niva Bupa IPO opens today, offering investors a chance to subscribe to the health insurance provider's shares at a price band of Rs 70-74. The company aims to raise Rs 2,200 crore through this public offering |
The Niva Bupa IPO opens for public subscription today, marking a significant milestone for the health insurance services provider. Niva Bupa Health Insurance Company, a joint venture between the Bupa Group and Fettle Tone LLP, aims to raise up to Rs 2,200 crore at the upper end of the price band. The company has already raised Rs 990 crore from anchor investors following a successful bidding process concluded on November 6, 2024.
The Niva Bupa IPO consists of a fresh issue of 108,108,108 shares and an offer for sale of 189,189,189 shares, each with a face value of Rs 10. The IPO has set a price band of Rs 70-74 per share, with a minimum lot size of 200 shares. This means that investors will need a minimum of Rs 14,800 to apply for one lot of the Niva Bupa IPO.
Ahead of the Niva Bupa IPO launch, the company’s shares were seen trading flat in the grey market, with sources indicating that the IPO GMP today remains at zero. The grey market premium, or GMP, reflects the lack of significant movement in the unlisted shares, which can be a crucial indicator of investor sentiment.
The three-day subscription window for the Niva Bupa IPO will close on Monday, November 11, 2024. Afterward, the allotment process will begin, with the final basis of allotment expected to be announced on Tuesday, November 12, 2024. The shares will likely be credited to investors’ demat accounts by Wednesday, November 13, 2024. Following this, Niva Bupa’s shares are scheduled to debut on the BSE and NSE on Thursday, November 14, 2024.
Key IPO Details:
- Issue Type: Fresh issue of shares and offer for sale
- Price Band: Rs 70-74 per share
- Lot Size: 200 shares (minimum investment Rs 14,800)
- Subscription Period: November 7–11, 2024
- Listing Date: November 14, 2024
The registrar for the Niva Bupa IPO is Kfin Technologies, and the book-running lead managers include Morgan Stanley India Company, ICICI Securities, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors.
Use of Proceeds: As stated in its Red Herring Prospectus, Niva Bupa plans to utilize the net proceeds from the fresh issue to strengthen its solvency levels by investing in prescribed instruments under the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations. Additionally, the company will use the funds for general corporate purposes.
Should You Subscribe to the Niva Bupa IPO?
- Analysts at Anand Rathi suggest subscribing to the Niva Bupa IPO with a long-term investment view. The company is poised to build a comprehensive, customer-centric health insurance platform, offering services such as wellness programs, doctor consultations, diagnostics, and medicine delivery. The company plans to expand its offerings, including digital consultations and home medicine delivery.
- At the upper price band, the company is valued at a price-to-book value (P/BV) of 6.1x, with a market cap of Rs 13,520 crore post-issue. Anand Rathi analysts have given a ‘Subscribe – Long Term’ rating to the IPO.
- Swastika Investmart has a more cautious stance, recommending the IPO only for high-risk investors. While Niva Bupa is a leading player in India’s growing health insurance market, its first-quarter earnings for FY24 showed negative results, which has raised concerns. The analysts also noted that the IPO pricing appears aggressive given the company's financials.
- Bajaj Broking also recommends subscribing to the Niva Bupa IPO for long-term investors. They pointed out that the company has reported average earnings per share (EPS) of Rs 0.05 over the last three years, but its pricing appears aggressive, especially based on the post-IPO P/E ratio, which could be negative when annualized.