India’s biggest reinsurer, General Insurance Corp of India (GIC Re) Rs 11,370 crore IPO which opened for subscription today is India’s second biggest IPO ever after Coal India’s Rs 15,200 crore issue. The company has set a price range for the issue between Rs 855 to Rs 912 per equity share. The public offer will remain open for three days starting from 11 October to 13 October. At the upper end of the price range, the company is expected to raise Rs 11,372.64 crore. General Insurance Corporation is first of the five state-run non-life insurance firms to initiate a stake sale and listing process. Here’s what top research firms are recommending.
Angel Broking says has a subscribe rating on the issue, given the strengths of the company. “The agriculture GP (Gross Premium) has grown aggressively over the last 3 years largely due to the initiatives taken by the Government and it contributed 29% of GP in FY-2017 (4% in FY2014). However, the financials of the company may get affected adversely if India witnesses bad monsoon or successive poor monsoon seasons, drought, flooding or other catastrophic events impacting the Indian agriculture industry. Nonetheless, positives such as leadership position, well managed investment book, robust balance sheet and reasonable valuations provide comfort, hence, we recommend subscribe on this Issue,” the research firm observed in a report. GIC had reported a rise of in most of the premiums earned across various business segments. The consolidated fire insurance business premium rose 20.67% to Rs 5,595.89 crore for the financial year 2017-2017 as compared to Rs 4,637.2 crore; marine insurance business and life insurance business premiums slightly fell to Rs 910.39 crore and 239.14 crore, respectively for the corresponding period.
Samco Securities says that the issue is fairly priced, and can be subscribed to given its long-term prospects. “GIC being a monopoly business should be subscribed to given that the issue is fairly priced. The stock must be held with ultra long term perspective for superior returns,” Samco said in a note.
According to CRISIL Research, GIC Re has a market share of 60 per cent and is poised to benefit as reinsurance premiums in India are expected to grow 11-14 per cent between FY17 and FY22 to Rs 70,000 crore from estimated Rs 38,800 crore in FY17. Further, Crisil Research, said that GIC Re was ranked as the 12th largest global reinsurer in 2016 and the third largest Asian reinsurer in 2015, in terms of gross premiums accepted.
(First published : 10th October 2017 on www.financialexpress.com)