General Insurance Corporation of India IPO - Should you subscribe?

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GIC Re (General Insurance Corporation of India) IPO is the biggest IPO of 2017 and third biggest in the history of Indian capital market. The President of India, acting through the Ministry of Finance holds 99.99% shareholding in the company. Out of that, 10,75,00,000 shares shall be sold by him. It is a mix of offer for sale and fresh issue. Fresh 1,72,00,000 shares shall be issued. So, total number of shares available in this IPO are 12,47,00,000 shares. Out of that 35% is reserved for Retail Investors

The company shall not receive any money received through offer for sale. The company proposes to utilise the Net Proceeds from the Fresh issue towards (i) augmenting the capital base of the company to support the growth of its business and to maintain current solvency levels; and (ii) General corporate purposes, subject to applicable law.
The IPO is opening on October 11, 2017 and closing on October 13,2017. Minimum application lot size is 16 shares.

Why should you subscribe?

The company has set price range between Rs. 855 - Rs. 912. The company has offer Rs. 45 discount to Retail investors and employees. So, for them price has gone down to Rs. 810 - 867 per share. The consolidated EPS (Dilluted) as on March 31,2017 was Rs. 36.52. Taking lower and higher price band, PE Multiple comes to 22.18 - 23.74. The consolidated NAV as on June 30,2017 was Rs. 234.22 per share which brings P/B (NAV to Offer price) 3.46 times to 3.70 times. There is no core peer of GIC Re. However, if we compare with recently launched ICICI Lombard, GIC Re is share is much cheaper. ICICI Lombard as on October 9,2017 was trading at 48 PE and 8.33 times of its NAV.

 Conclusion:

I've written very short review. The company's financials are  very strong. It may not give a big listing gain but surely the share is good for long term investment.

Thank you for reading...Jai hind

CA Prashant Seta

(Disclaimer: I've opined based on my knowledge and understanding. Investors should do their own research before applying)

Comments

  1. Cherry Blackwa28 May 2018 at 21:58

    Fabulous Blog! If you want to purchase shares best insurance corporation. Compass Claims company can help you.

    ReplyDelete

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