This post on New India Assurance IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on New India Assurance IPO and shall be updated continuously till the closure of the issue. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to New India Assurance IPO or not.
Related Post: New India Assurance Company Limited IPO Review
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Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on New India Assurance IPO .
Angel Broking: “At the upper price band of `800 the issue is offered at 5x FY2017 book value and 76x FY2017 EPS. Its listed peer ICICI Lombard is trading at 8x FY2017 book value and 48 times FY2017 EPS. ICICI Lombard reported decent ROE of 17% and average ROE for last 5 years is 19%, while NIA reported subdued ROE of 7% for FY2017 and average ROE of 9%. NIA’s combined ratio is consistently higher than 115%, which is impacting the profitability of the company. Considering the subdued ROE, inconsistent PAT and higher combined ratio, we recommend NEUTRAL rating on the issue. “
Ashika Direct:“Its FY17 EPS is Rs.10.72 and 3 year average EPS is Rs.13.48. At the upper price band of Rs.800, P/E and works out to be 75x; based on last 3 years restated EPS of Rs.13.48, P/E ratio works out to be 59x. Its P/B including fair change account is 1.6x and excluding fair change account is 4.3x. Its only listed peer ICICI Lombard is quoting at a P/E of 38x and at a P/B of 7.2x including fair change account and 7.5x excluding fair change account. Thus, the issue appears to be fully priced. The sector looks attractive going forward. CRISIL forecasts the gross direct premium for general insurers to grow at a CAGR of 15-20% over the next 5 years. Considering all these aspects, we recommend our investors to “SUBSCRIBE” the issue from a long term perspective, as the company justifies premium valuation given its market leadership in general insurance category and bright prospects of the overall general insurance sector in the future.”
Capital Market: ” Score 47/100, The company is the second general insurance company to list on the exchanges, after ICICI Lombard General Insurance Company listed in September 2017. ICICI Lombard General Insurance Company is currently trading at 7.9 times its book value and is available at PE multiple of 36.1 times. The incurred claim ratio of ICICI Lombard General Insurance at 80.64% and combined ratio at 104.1% for FY2017 is better than New India assurance incurred claim ratio at 92.2% and combined ratio at 119.7%.”
Choice Broking:“ Going forward, due to its dominant market position, the company would benefit from the growth in the industry and favorable government policies. Improvement in the operating performance of the health and motor insurance will be one of the key factors which will be keenly watched by the investors. However, it would take some time to materialize. Thus considering the above observations, we assign a “Subscribe with Caution” rating for the issue. “
ICICI securities: “At the IPO upper price band of | 800, the stock is available at a P/B multiple of 4.3x FY17 (post issue) networth excluding fair value change. Post issue market capitalisation is at ~| 64000 crore at the upper band. Being slightly expensive with high combined ratios, we believe one should subscribe only from a longer term view and not for the purpose of accruing listing gains.”
Motilal Oswal: “NIA is the largest general insurance company in India in terms of key metrics which are net worth, domestic gross direct premium, Profit after tax and number of branches. The company has delivered strong Gross Premium Income growth of 17% in FY14-17. We remain positive on the company due to 1) Longstanding global footprint and successful international operations, 2) Diversified product offering and innovation capability, 3) Multi-channel distribution network and 4) strong solvency ratio. At upper price band, the issue is priced at P/B of 5.1x post issue (and 5x FY17 pre issue). We recommend SUBSCRIBE for long term investment.“
SMC : “Rating 3.5/5 On the lower end of the price band of Rs.770 the stock is priced at pre issue P/E of 71.81x on its FY17 EPS of Rs. 10.72.Post issue, the stock is priced at a P/E of 73.96x on its EPS of Rs. 10.41. Looking at the P/B ratio at Rs. 770, the stock is priced at P/B ratio of 4.81x on the pre issue book value of Rs. 160.22 and on the post issue book value of Rs. 178.86, the P/B comes out to 4.31x.”
SP Tulsiyan website: “Although sector growth and market leadership position favour the company, depleting market share, lower return ratio and poor profitability go against it. Drawing parallels from PSU banks, New India also lacks the hunger for growth, which is demonstrated by its private sector peers, which is what investors are looking out for today.To cut a long story short, weak fundamentals and unattractive pricing make this IPO an avoid”
Reliance Securities Ltd: “Given the undisputed leadership position in India, NIA is expected to continue its robust performance, as general insurance market is expected to witness ~20% CAGR over the next few years vs. 17% CAGR through FY12-17. NIA has been successfully maintaining its leadership position in non-life insurers through various cycles of industry evolution. Looking ahead, we expect NIA to deliver strong performance on the back of lower general insurance penetration in India. At the higher price band of Rs800, the Issue is priced at 32.1x 1QFY18 annualised earnings and 4.4x post issue P/B compared to 37.1x P/E and 7.5x P/B of only comparable listed peer ICICI Lombard. We recommend SUBSCRIBE to the Issue, as it provides a healthy investment opportunity for the long-term investors”