Niva Bupa Health Insurance Company Ltd IPO | News | Overview | Verdict

IPO listed on 14 Nov'24

Niva Bupa Health Insurance Company Ltd

Minimum Investment

₹ 14,800 / 200 shares

Grey market premium

₹ 0

Issue price

₹ 74

Listing price

₹ 78

Listing gains

4.14 (6%)

Listing on

Nov 14, 2024

Our Verdict:

Neutral

Niva Bupa Health Insurance Company Ltd (Niva Bupa) is one of the largest and fastest-growing standalone health insurers in terms of overall health gross direct premium income and ranks as the fourth-largest retail health insurer in India by gross written premium in the health segment.
In terms of valuation, the IPO seems aggressively priced at a Price-to-Earnings ratio of 145x based on FY24 earnings. However, the Bupa Group’s recent acquisition of around a 20% equity stake from Fettle Tone (True North) at the upper IPO price band of Rs 74 per share in January 2024 lends some credibility to the valuation.
Comparatively, this valuation is at a premium to Star Health, the largest player in the retail health insurance market with a 33% share and stronger profitability. Notably, since Star Health’s IPO in December 2021, its stock has nearly halved despite improved profitability over the past two years, raising concerns about the sector's performance.
Given these factors, substantial listing gains are unlikely. Investors with a long-term perspective and an interest in the health insurance sector’s growth potential may want to keep this stock on their radar and consider buying after listing, once its share price stabilizes.

About the company

Founded in

5 Sep'08

Managing director

Krishnan Ramachandran

Niva Bupa is India's fourth-largest retail health insurance provider by gross written premium (GWP) in the health segment, following Star Health, Care Insurance, and HDFC Ergo. The firm primarily focuses on the retail sector, which accounted for 68.5% of its GWP in FY24. In FY24, it held a 5.1% share of the overall health insurance market and a 9.8% share of the retail health insurance market.
The insurer boasts a well-diversified, multi-channel distribution network. As of June 30, 2024, it maintains a network that includes 152,436 individual agents, 77 corporate agents, 486 brokers, 196 Insurance Marketing Firms, 5,500 point of sales personnel, 14 web aggregators, and 210 physical branches.

STRENGTHS

Leading Health Insurer: Niva Bupa ranks among India’s largest and fastest-growing standalone health insurers, with a substantial gross direct premium income of Rs 5,494.4 crore in FY24.
Impressive Growth: Niva Bupa demonstrated significant growth in FY24, with a 43% increase in net premium earned and a notable profit rise from Rs 12.25 crore in FY23 to Rs 81.85 crore in FY24, marking a 553% increase.
Strong AUM Growth: Niva Bupa’s Assets Under Management (AUM) have experienced impressive growth, with a two-year compound annual growth rate (CAGR) of 51%, reaching Rs 5,458 crore by FY24 and further increasing to Rs 5,674 crore by June 2024.
Consistent GWP Growth: Between FY22 and FY24, overall gross written premium (GWP) grew at a CAGR of 41%, with GWP from retail health growing at a CAGR of 33%. From the quarter ending June 30, 2023, to June 30, 2024, the overall GWP grew by 31%, and retail health GWP rose by 32%.
Sector-Leading Growth: Niva Bupa’s growth in overall health gross direct premium income (GDPI) from FY22 to FY24, at 41%, ranks among the highest in the standalone health insurance sector, nearly double the industry's average growth rate of 21% over the same period.

RISK FACTORS

Profitability Concerns: Despite achieving profitability in FY23 and FY24, Niva Bupa reported a loss in the first quarter of FY25.
RoNW Comparison: While Return on Net Worth has improved, it remains low at 5.68%, trailing behind most listed competitors. Additionally, the average RoNW over the past three fiscal years stands negative at -2.58%.
Regulatory Impact: In 2024, a parliamentary panel proposed a composite license allowing insurers to provide life, general, and health insurance within a single entity. If implemented, this could negatively impact Niva Bupa’s business by intensifying market competition.

Issue details

Issue type

Mainstream

Issue size

₹ 2,200 crore

Fresh Issue

₹ 800 crore

OFS

₹ 1,400 crore

Price range

₹ 70 - 74

Lot size

200 shares

Issue Objective

Niva Bupa proposes to utilize the net proceeds from the issue towards:

Augmenting its capital base to enhance solvency levels; and
General corporate purposes.

Dates

Bidding open

7 Nov'24

Bidding close

11 Nov'24

Allotment date

12 Nov'24

Refund date

13 Nov'24

Listing

14 Nov'24

IPO Reservations

Qualified institutional buyers

> 75%

Non-institutional investors

<15%

Retail individual investors

<10%

Read the Offer Document

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.

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