The initial public offering (IPO) of Niva Bupa Health Insurance has received a strong response, with the overall subscription reaching 1.80 times by the final day. This IPO marks the second standalone health insurance (SAHI) listing in recent years, following Star Health. Niva Bupa operates in a rapidly expanding sector, which provides promising long-term growth potential for investors. However, the valuation comes at a premium, putting the onus of growth on investors at current levels.
For the fiscal year 2024, Niva Bupa reported a profit after tax (PAT) of ₹82 crore. At the upper price band of the IPO, the company’s valuation stands at approximately ₹13,520 crore, translating to a price-to-earnings (PE) multiple of 165 times, which is significantly higher than Star Health’s PE of 33 times. This elevated PE multiple reflects Niva Bupa’s status as a relatively new player with lower profitability, though the price-to-book ratio remains comparable to industry standards at 4.5 times, similar to Star Health’s 4.4 times.
The IPO comprises a fresh issue of ₹800 crore and an offer-for-sale (OFS) component of ₹1,400 crore from the promoters, Bupa Singapore and Fettle Tone (True North). For prospective investors, it may be prudent to closely monitor the company’s profitability expansion trajectory in the coming years to assess potential returns.
Subscription Details:
- Qualified Institutional Buyers (QIBs): Subscribed 2.06 times, with notable interest from foreign institutional investors.
- Non-Institutional Investors (NIIs): Subscribed 0.68 times.
- Retail Individual Investors (RIIs): Demonstrated strong interest with a 2.73 times subscription.
This high subscription rate underscores investor confidence in Niva Bupa’s growth potential in India’s health insurance market, although the elevated valuation suggests that profitability improvements will be key to sustaining investor interest over the long term.
