Healthy Listing: Niva Bupa Health Shares Make A Debut At Mild Premium From IPO Price On Exchanges; BUY?

Niva Bupa Health Insurance Company Ltd, formerly known as Max Bupa Health Insurance, made its entry into the stock market on November 14, opening at a decent premium, even as experts predicted a subdued listing. On the National Stock Exchange (NSE), Niva Bupa shares debuted at Rs 78.14, reflecting a 5.59% premium over the issue price of Rs 74 per share. On the Bombay Stock Exchange (BSE), the shares saw a slightly higher premium, listing at Rs 78.50 per share, marking a 6.08% increase over the IPO price.

The Rs 2,200-crore initial public offering (IPO) of Niva Bupa Health Insurance attracted decent investor interest, with the IPO getting subscribed 1.8 times by its close on November 11. The offering was split between a fresh issue worth Rs 800 crore and an offer for sale (OFS) amounting to Rs 1,400 crore, priced within a range of Rs 70-74 per share. Niva Bupa garnered backing from institutional investors, mobilizing Rs 990 crore from anchor investors prior to the IPO's official opening. Despite high expectations, the stock showed a restrained performance in the grey market, with a grey market premium (GMP) of just Rs 1 above the issue price. This muted GMP indicated modest expectations, with analysts forecasting a listing around the Rs 75 mark, only slightly above the IPO price.

The IPO received mixed interest across investor categories. The retail portion saw the highest enthusiasm, getting oversubscribed by 2.73 times, while institutional investors or Qualified Institutional Buyers (QIBs) booked shares at 2.06 times the reserved quota. However, the Non-Institutional Investors (NII) segment showed weaker demand, reaching only 0.68 times its reserved portion.

The fresh capital raised from this IPO will primarily be allocated to enhancing Niva Bupa's capital base, which is a strategic move to bolster its solvency ratios in alignment with regulatory requirements. Additionally, a portion of the proceeds is earmarked for general corporate purposes, which may include operational upgrades and expansion initiatives to capture a larger market share. Notably, Niva Bupa is the second standalone health insurer to be publicly listed in India, following Star Health & Allied Insurance Company's IPO.

The path leading up to Niva Bupa's listing involved collaboration with several financial institutions acting as lead managers for the IPO. ICICI Securities, Morgan Stanley India Company Pvt Ltd, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors served as the key book-running lead managers, facilitating the IPO process and managing the investor interest across various channels. The IPO registrar, Kfin Technologies, played a crucial role in overseeing the allotment and listing details.

The journey to the stock market for Niva Bupa began on November 7, when the IPO opened for bidding and spanned five days until November 11. The IPO allotment was subsequently finalized on November 12, with the listing date set for today, November 14. Given the IPO's performance and premium on listing, the broader investor sentiment appears cautiously optimistic.

Overall, Niva Bupa's debut indicates a favourable response, though market experts will continue to watch the stock's performance closely as it adjusts to investor sentiment. The health insurance market in India is at an inflection point, with rising demand for health coverage pushing insurers to expand.