This week would see the opening of one of the largest IPO's in recent times, that of General Insurance Corporation of India. We are hereby trying to take an objective look at the IPO.

Here is an overview of the company.

IPO-Template-GIC.001

Some key points about the company,

  • Negligible foreign currency exchange risk.
  • Price-to-book value of 1.5-1.6 times, while the price-to-earnings is 24 times as compared to global average of 45 to 50 times.
  • The company has an investment book of Rs 69,134 crore by market value for the year ended March 2017 - 55 % invested in equities and the rest in G-sec securities of the Centre and states.
  • Plans to acquire a reinsurance company that is a member of London’s reinsurance marketplace, Lloyd’s in one year.
  • Indian reinsurance market’s compounded annual growth rate is 11-13 percent, with major business coming from non-life insurance players. For GIC, private vs state owned insurance company % = 60 : 40.
  • GIC writes reinsurance for every non-life and > ½ of life insurance companies in India.
  • Agriculture contributes most to GIC’s business, followed by fire and motor segment.
  • Compared to global peers, it has the lowest net expense ratio of 18.53 % and highest net investment yield of 12.34 % as of 2016-2017.
  • GIC holds fixed deposits worth Rs 7,611 crore for non-Indian business at various overseas financial institutions.

Some key financials of the company.

IPO-Template-GIC.005

Its ranking vis. a vis. global peers.

IPO-Template-GIC.006

The key strengths and weaknesses of the company are as follows.

IPO-Template-GIC.007

Our opinion

  • The IPO is good for listing gains, holding on after listing and also for future accumulation if valuations do not go out of whack post listing.

Please watch the video below for the same explanation in video format,

Standard Disclaimer::The information compiled here is based on freely available information available on the internet.The author does not intend to claim ownership and is just aggregating data from various websites to help bridge the information gap.

Arbind Kumar Roy

About Arbind Kumar Roy

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