All you need to know about New India Assurance IPO | Should you subscribe for New India Assurance IPO | IndiaNotes.com



Industry  overviewWith  total  gross  premium  of  Rs.  1.3  trillion  in  fiscal  2017,  India  is  amongst  the  top  15  general insurance markets in the world and one of the fastest growing markets.   India’s general insurance  penetration  (i.e.,  gross  insurance  premiums  as  a  percentage  of  GDP)  stood  at  0.8%  in  2016,  compared  with 0.6%  in  2007.  In  comparison,  the  global  general  insurance  industry’s  penetration  stood  at  2.81%  as  of  2016.  Among  the  comparable  Asian  counterparts  also,  India’s  general  insurance penetration pales; the  corresponding numbers for  China, Thailand, Singapore and Malaysia were at 1.8%,  1.7%,  1.7%,  and  1.6%  respectively  as  of  2016.  This  suggests  the  enormous  untapped  potential of the  Indian  general insurance  market. With economic growth gradually picking up and structural drivers in place (rise in healthcare costs, growth in retail auto sector , agricultural reforms  and schemes), the  growth trajectory  of the  general insurance  sector is  expected to  remain strong in  the  next  five  years.

Valuation

Considering the  P/E  valuation  on  the  upper  end  of  the  price  band  of  Rs. 800,  the  stock  is  priced  at  pre  issue  P/E  of  74.60x  on  its  FY17  EPS  of  Rs.  10.72.  Post  issue,  the  stock  is  priced  at  a  P/E  of  76.84  x  on  its    EPS of Rs. 10.41.   Looking at the  P/B ratio  at Rs. 800 the  stock is  priced at P/B ratio  of   4.99x 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  4.47x.  
       
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.
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