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.
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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