Most brokerages advise subscribing to the initial public offering (IPO) of ICICI Prudential Life Insurance Company due to rising penetration of the insurance sector and the company’s strong business profile.
The Rs 6,000-crore IPO, which will hit the market on September 19 and close on September 21, would be the first by an insurer in India. The price band has been set at Rs 300-334.
On Friday, the company had raised Rs 1,635 crore through allotment of 4.9 crore shares to anchor investors at the upper end of the price band. Here’s what brokerages have to say about the IPO:
Anand Rathi (Rating: Subscribe)
The brokerage said it is a good investment opportunity in a sector that is opening up for retail participation.
Although it is demanding a premium valuation, the IPO is attractive given the growth prospects of the life insurance industry in India, the company’s leadership position in the private life insurance space and its cost efficiency.
Ajcon Global (Rating: Subscribe)
The rating is due to the insurer’s high persistency ratio, sustainable business model, strong solvency ratio of over 300%, healthy dividend payment track record and significant under penetration of insurance.
Considering the multiple for HDFC Life-Max Life merger, there is a potential upside to the issue price of Rs 334 at the upper end of the price band.
Angel Broking (Rating: Neutral)
At the given price band, the issue is being offered at 3.1x and 3.4x its FY16 embedded value. The brokerage said the company has enough scope for business growth going ahead but the issue is fully priced in.
Hem Securities (Rating: Subscribe)
The brokerage advises subscribing to the issue as it finds the company’s fundamentals strong. It is a well-known brand and strong parentage also make it an attractive destination, the brokerage said in a pre-IPO note.
Quant Capital (Rating: Subscribe)
The brokerage says business momentum is healthy . At the upper end of the band, it is valued at Rs 47,720 crore.
The valuation is reasonable considering that the Max Life-HDFC Life merger quoted HDFC Life Insurance’s value at Rs 47,000 crore with market share of 7.6% against ICICI Prudential Life’s market share of 11.3%.