Niva Bupa Health Insurance IPO: Should you bid?

Niva Bupa Health Insurance Company, formerly Max Bupa, has launched its IPO to raise Rs 2,200 crore, aiming to support its capital base, strengthen solvency, and fund corporate needs. The IPO, open from November 7 to November 11, is priced between Rs 70 and Rs 74 per share, marking the second public offering by a standalone health insurer after Star Health & Allied Insurance.

The company has shown impressive profitability, reporting a net profit of Rs 81.8 crore in FY24, a jump of 552 per cent over the previous fiscal year. This financial improvement reflects the firm’s enhanced claims management and diverse health-focused offerings, ranging from wellness programs to digital consultations and medicine delivery.

However, the IPO valuation has raised eyebrows. Analysts at Bajaj Broking highlight that the issue’s price-to-earnings (P/E) ratio based on FY24 earnings stands at a substantial 642.22, indicating an aggressive pricing strategy. While the brokerage has issued a ‘Subscribe’ rating for long-term investors, it has also pointed out potential risks tied to accurate medical expense estimation and possible regulatory scrutiny by the IRDAI.

The IPO includes a mix of fresh issuance and an offer for sale, with major stakeholders Fettle Tone LLP and Bupa Singapore Holdings planning to offload shares worth Rs 1,050 crore and Rs 350 crore, respectively. With anchor investors contributing Rs 990 crore, the company is well-positioned for a solid market debut. Share allotment is expected by November 12, and listing on the stock exchange is slated for November 14.