IPO listed on 23 May'24
Go Digit General Insurance Ltd
Minimum Investment
₹ 14,960 / 55 shares
Grey market premium
₹ 35 (13% premium)
Issue price
₹ 272
Listing price
₹ 286
Listing gains
14 (5%)
Listing on
May 23, 2024
Our Verdict:
Avoid
- Although Go Digit saw a turnaround in financials in fiscal year 2023, it continues to face operating losses. Its limited operating history makes it difficult to accurately evaluate future business prospects.
- Moreover, the firm has received warnings and show-cause notices from the IRDAI due to alleged non-compliance with various regulatory prescriptions in the past. IRDAI has also imposed penalties in certain cases, and it may be subject to such regulatory actions in the future.
- The IPO is priced at a Price-to-Earnings (P/E) ratio of 145x based on projected FY24 earnings post-IPO, which seems steep given its past financial performance.
- Given these considerations, it might be prudent for investors to refrain from participating in the IPO, as the potential risks outweigh the rewards. Investors should wait and monitor the firm’s financial performance in the ensuing quarters before making investment commitments.
About the company
Founded in
7 Dec'16
Managing director
Jasleen Kohli
- Go Digit General Insurance Ltd (Go Digit) is an insurer offering a variety of customizable insurance policies including health, liability, property, marine, travel, and auto insurance, among others. Presently, the company has 74 active products across its various business segments.
- As of December 31, 2023, Go Digit has served 43.26 million customers, representing the total number of individuals who have benefited from its insurance policies since the company began its operations in 2017.
STRENGTHS
- Market Leadership: Go Digit stands out as the fastest-growing private non-life insurer by Gross Written Premium (GWP) between Financial Year 2022 and 2023, with a growth rate of approximately 37.5%, significantly outpacing the industry's average growth of about 20.1% during the same period.
- Extensive Distribution Network: As of December 31, 2023, Go Digit boasts a widespread distribution network across 24 states and union territories in India. The company collaborates with roughly 61,972 Key Distribution Partners, including about 58,532 POSPs (Point of Sales Persons), alongside individual and corporate agents, brokers, and others.
- Robust AUM Growth: The company's Assets Under Management (AUM) have seen remarkable growth, with a compound annual growth rate (CAGR) of 51% over the past two years, reaching Rs 12,668 crore by FY23 and further rising to Rs 14,909 crore by December 2023.
RISK FACTORS
- Inconsistent Financial Performance: Although Go Digit reported a profit after tax for the nine months ending December 31, 2023, and for FY23, it previously experienced net losses of Rs 295.85 crore in FY22 and Rs 122.76 crore in FY21. Its short operating history complicates the evaluation of its long-term business potential.
- Negative Financial Indicators: Over the past three fiscal years, Go Digit has reported an average negative Earnings Per Share (EPS) of Rs (1.23) and a negative average Return on Net Worth (RoNW) of (6.32)%.
- Product Concentration Risk: Go Digit's reliance on motor vehicle insurance products, which constitute 61% of its Gross Written Premium (GWP), poses a risk. Changes in regulations, consumer preferences, or an inability to sustain a profitable mix of products could adversely affect the company.
- High Valuation: Go Digit's valuation at 9.7x Price to Book Value (P/BV) appears steep, especially when compared to its peers like ICICI Lombard at 7.95x P/BV and New India Assurance at 1.4x P/BV.
- Legal Risks: There are various ongoing legal proceedings against the company, its directors, and promoters, involving potential liabilities of Rs 292.91 crore. Any adverse decisions could significantly impact the company’s operations and financial health.
Issue details
Issue type
Mainstream
Issue size
₹ 2,614.65 crore
Fresh Issue
₹ 1,125 crore
OFS
₹ 1,489.65 crore
Price range
₹ 258 - 272
Lot size
55 shares
Issue Objective
The net proceeds from the fresh issue are intended to be utilised towards maintenance of the firm’s solvency ratio.
Dates
Bidding open
15 May'24
Bidding close
17 May'24
Allotment date
21 May'24
Refund date
22 May'24
Listing
23 May'24
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.