Niva Bupa shares list at 6% premium over IPO price

Niva Bupa Health Insurance Company Ltd made a muted debut on the domestic bourses on Thursday, with the shares listing at 6% premium over initial public offering (IPO) price. The share price of the health insurer debuted at ₹78.14 on the NSE, up 5.6% over the issue price of ₹74 apiece.

Niva Bupa is the fourth mainboard company to list on the exchanges this week, with food delivery company Swiggy and renewable energy company Acme Solar Holdings debuting on Wednesday and Sagility India joining the bourses on Tuesday.

Post listing, Niva Bupa shares gained as much as 9.5% to ₹81, while it touched a low of ₹76 in the early trade. At the time of reporting, the insurance stock was trading at 76.90, with a market capitalisation of ₹14,050 crore.

The listing of Niva Bupa Health Insurance Company was better than Street expectations as the stock was commanding a grey market premium of ₹1 in the unlisted market, indicating flat debut on the stock exchanges.

“This performance was slightly better than expected,” says Shivani Nyati, Head of Wealth at Swastika Investmart Ltd. “The IPO, which was moderately subscribed 1.9 times, reflected a cautious investor sentiment, potentially influenced by the company's recent negative quarterly earnings. While Niva Bupa has shown strong growth and a positive turnaround in recent years, the short-term performance concerns and the IPO's pricing seemed to have tempered investor enthusiasm.”

Nyati advised investors, who participated in the IPO, to consider holding their shares, but recommended them to closely monitor the company's performance and the broader market conditions. “New investors may want to wait for a clearer picture of the company's future trajectory before investing,” she adds.

The company, formerly Max Bupa Health Insurance Company, raised ₹2,200 crore via IPO, offered at a price band of ₹70-74 per share between November 7-11. The IPO received 1.9 times bidding, with the issue receiving maximum responses from retail investors and qualified institutional buyers (QIB) as the quota reserved for them were subscribed 2.87 times and 2.17 times, respectively. The non-institutional investors (NIIs) segment was not fully subscribed as the portion set aside for them was booked 0.71 times.

The company had reserved 75% of the issue for QIBs, 15% for NIIs, and remaining 10% for the retail investors. The lot size of the IPO was 200 equity shares and in multiples thereafter and the minimum application amount for retail investors was ₹14,800 for 1 lot, while the maximum was ₹192,400 for 13 lots.

Niva Bupa’ IPO was a combination of fresh issue of 10.81 crore shares worth ₹800 crore and offer for sale of 18.92 crore shares aggregating to ₹1,400 crore. Under the OFS, Bupa Singapore Holdings Pte. Ltd and Fettle Tone LLP. pared their stake in the company. The company intends to utilise the net proceeds from the fresh issuance towards augmentation of its capital base to strengthen solvency levels and for general corporate purposes.

Ahead of the IPO, the company raised around ₹990 crore from anchor investors by allocating 13,37,83,783 equity shares at the upper end of the price band at ₹74 per share to 32 anchor investors. Out of the total allocation, 27.78% were allocated to 6 domestic mutual funds. The anchor book saw participation from foreign and domestic institutions, including some marquee investors such as Amansha Holdings, Zulia Investments, A91 Emerging Fund II LLP, Nippon Life, Tata Balance Advantage Fund, Axis Mutual Fund, Morgan Stanley Investment Fund.

Niva Bupa is the second standalone health insurer (SAHI) to eye at the Indian bourses through IPO, after Star Health & Allied Insurance Company. From fiscal 2022 to fiscal 2024, Niva Bupa's overall gross written premium (GWP) increased at a CAGR of 41.27%, while its retail health GWP grew at a CAGR of 33.41%. The company's overall health GDPI growth of 41.37% during this period is one of the highest among SAHIs and nearly double the industry's average growth rate of 21.42%, as reported by Redseer.

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