New India Assurance Company Ltd (NACL) is the largest general insurance company in India in terms of net worth, domestic gross direct premium, and profit after tax and number of branches as of FY17. The Company has been in operation for almost a century. In FY17, the company had the largest market share of gross direct premium (GDP) among all general insurers in India. As on FY17, the company has issued 27.1mn policies across all product segments, the highest among all general insurance companies in India. As on Q1 FY18, the company’s operations were spread across 29 States and 7 Union Territories in India and across 28 other countries globally through a number of international branches, agency offices and Subsidiaries including a desk at Lloyd’s, London.
· Market leadership and established brand
· Sustainable business model driven by customer satisfaction
· Multi-Channel Distribution Network
Outlook & Valuation
NACL is the largest general insurance company in India which has gained market share marginally from ~14.7% in FY12 to 15% in FY17. The company’s premium has grown at a CAGR of ~17% over FY14-17. We believe low penetration, increasing awareness for insurance, rising income levels, multi channel distribution network, focus on product innovation and improved underwriting profitability will help the insurer to improve its Roe going ahead (in the range of 7-13% over the last 3 years vs. ICICI Lombard Roe in excess of 16% over last 5 years). At the upper price band of INR 800 per share, the issue is valued at 3.2x FY17 P/BV (incl. fair value changes) and 80x FY17 P/E. We recommend SUBSCRIBE to the issue as a good long term investment.
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SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.
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