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New India Assurance Company IPO: Subscribe the issue - IndiaNotes.com
New India Assurance Company IPO: Subscribe the issue
Hem Securities | Published: 31 Oct, 2017  | Source : IndiaNotes.com

Investment Rationale



In Fiscal 2017, co had the largest market share of gross direct premium among general insurers in India (Source: CRISIL Re-port). As of March 31, 2017, co had issued 27.10 million poli-cies across all its product segments, the highest among all gen-eral insurance companies in India (Source: CRISIL Report). As of June 30, 2017, co’s operations were spread across 29 States and seven Union Territories in India and across 28 other coun-tries globally through a number of international branches, agency offices and Subsidiaries including a desk at Lloyd’s, London. As of June 30, 2017, co’s distribution network in India included 68,389 individual agents and 16 corporate agents, bancassurance arrangements with 25 banks in India, and a large number of OEM and automotive dealer arrangements through co’s agent and broker network.In Fiscal 2013, 2014, 2015, 2016 and 2017, despite increasing competition from pri-vate players, co have maintained market leadership in the gen-eral insurance industry in India and was leaders in all seg-ments except crop insurance (Source: CRISIL Report). In Fiscal 2017, co’s gross direct premium from fire, engineering, avia-tion, liability, marine, motor and health insurance represented a market share of 19.1%, 21.9%, 29.6%, 18.2%, 21.0%, 15.1% and 18.4%, respectively, of total gross direct premium in these segments in India, and co was the market leader in each such product segment (Source: CRISIL Report). Co’s solvency ratio as of March 31, 2017 and as of June 30, 2017 was 2.22 and 2.27, respectively, compared to the IRDAI specified control lev-el of 1.5. Co’s claim settlement ratio in Fiscal 2017 was 90.4% (including suit claims) which is the highest among the top 10 multi-product insurers in India (Source: CRISIL Report).


Valuation



Co is bringing the issue at price band of Rs 770-800/share at p/b multiple of 4.34 . Although co is reasonably priced as compare to its peers but declining profitability,negative operating profit in FY16 & FY17 & lower return on equity fails to infuse optimism in fundamentals of company. Hence we recommend only "Long Term Subscribe" on issue.   Read full report Click here to read the full report


About Hem Securities
The Hem Securities is one of the leading broking Network in India. It provides trading platform in all the leading exchanges namely - BSE, NSE, MCX , NCDEX & MCX-SX. Their mission is to build wealth for their investors by offering them best financial services through trading & investment strategies and honoring commitment with ethical & transparent business practices.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.