New India Assurance Company IPO Details and Review

October 31, 2017

About New India Assurance Co. Ltd.
Business Operations of New India Assurance Co. Ltd.
Key Strengths of New India Assurance Co. Ltd.
Promoters of New India Assurance Co. Ltd.
Financial Performance of New India Assurance Co.Ltd
New India Assurance Co. Ltd. IPO Details
Objective of IPO
Risks for investors in New India Assurance Co. Ltd.

new india assurance

About New India Assurance Co. Ltd.

The New India Assurance Co. Ltd. is general insurance company that is wholly owned by government of India based in Mumbai, Maharashtra (India). The company was founded by Sir Dorabji Tata in the year 1919 and was nationalized in the year of 1973. Earlier this company was a subsidiary of General Insurance Corporation of India (GIC). In 2014, CRISIL rated New India Assurance as AAA/Stable showing that it has the maximum degree of financial strength to fulfill its obligations towards its policy holders. In 2007, AM BEST Company rated A- (Excellent) making New India Assurance as the only direct insurer in India.

On the basis of gross premium collection including foreign operation, The New India Assurance Co. Ltd. is popularly known to be one of the largest general insurance companies in India.

Business Operations of New India Assurance Co. Ltd.

New India Assurance has main business operations in General Insurance with its 31 regional offices, 6 large corporate offices, 447 divisional office, 578 branches, 27 direct agent branches, 1239 micro offices, 1 auto hub, 2 centralized legal hub totaling to 2329 offices.

The company generates revenue from retail heath sector, technology based products in cyber liability, insurance of assets that are immovable, and miscellaneous commercial segments.

The products of New India Assurance Co. Ltd. are Personal insurance, Commercial insurance, Industrial insurance, Social insurance, Liability insurance catering majorly in Indian markets along with 28 countries across the Globe. The global business value of New India Assurance Co. Ltd. crossed Rs. 22270 Crores in March 2017 including the Indian business value of 19100 crores. The company has been operating in Non-life business since +40 years.

Key Strengths of New India Assurance Co. Ltd.

• Strongly established company with a solid infrastructure support to its business operation since 4 decades.
• Market leader in General Insurance business segment.
• AAA/Stable rating by CRISIL in 2014, A- (Excellent) rating by AM Best Company in 2007.
• The company shows a robust financial position with strong IT infrastructure support .
• The company has diversified portfolio of products catering to Indian and Global market reducing its dependency on Indian Market.
• Sustainable business model of the company making it a leading General Insurance company in India.
• In last 5 years, the company has demonstrated strong Revenue growth of 16% CAGR.

Promoters of New India Assurance Co. Ltd.

The NIA promoter is the President of India, acting through the MoF.

Financial Performance of New India Assurance Co. Ltd.

The following table gives a summary of key financial highlights of New India Assurance Co. Ltd. over the period of 2015 – 2017.

financial performance of new india assurance

The above table illustrates increase in Total Asset over the period 2016 to 2017 where the Total Revenue also significantly increases over the same period of years. It is also observed that and Profit after tax has significantly decreased over the time period 2015 to 2017.

New India Assurance Co. Ltd. IPO Details

Objective of IPO –New India Assurance Co. Ltd. shall not get any proceeds from the offer as company shall get all the proceeds by selling shareholders .The objective of New India Assurance Co. Ltd.are following –
1. To drive the advantages of listing the Equity Shares on the Stock Exchanges and
2. For the Offer for Sale

Issue Open Dates1st November, 2017 (Tuesday) – 3rd November, 2017 (Thursday)
Face ValueRs 5 per Equity Share
Issue PriceRs 770 – Rs 800 per Equity share
Market Lot Size18 Shares
1 Lot Investment RangeRs. 13,860 – Rs. 14,400
Listing atBSE and NSE
Type of the IssueBook Built Issue IPO
Size of Issue120,000,000 Equity Shares of Rs 5 aggregating up to Rs 9,600.00Cr
• Fresh Issue of 24,000,000 Equity Shares of Rs 5
• Offer for Sale of 96,000,000 Equity Shares of Rs 5
Key Business Segments for RevenueGeneral Insurance
Promoter of New India AssurancePromoter is the President of India, acting through the MoF
Finalization of Basis of Allotment (Tentative)08th November, 2017
Initiation of Refunds (Tentative)09th November, 2017
Credit of Shares to DEMAT Account (Tentative)10th November, 2017
Commencement of Trading (Tentative)13th November, 2017

Risks for investors in New India Assurance Co. Ltd.

Following are some the risks stated by the brokerage houses –
• New India Assurance Co. Ltd. has earned 4% lowered margins for the year 2017 that would significantly lower the profit of the shareholder.
• The company is highly dependent on the operations and performance of the client companies.
• The company’s operations are highly dependent on regulatory framework. Any changes in regulations may lead to an adverse impact over the business of the company.
• Catastrophic events and natural disasters might impact the operations of the company.

Should you Invest in this New India Assurance Co. Ltd

The upper price band of Rs.800 in Financial year 17 EPS of 10.25. The price earning ratio come around 78x. Last three year EPS of 11.88 comes around price earning ratio of 67x. PE ratio anything above 40 is over valued. So We feel this IPO investment is not recommended.

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