Niva Bupa Health Insurance IPO Good or Bad - Detailed Review

One of India's well-known health Insurance providers, Niva Bupa Health Insurance is going public by kicking off its IPO to list its shares in the Indian Stock Market. This article will provide a comprehensive review of Niva Bupa's IPO. Analyzing its operations, fundamentals, and peer comparisons to help you make a well-informed investment decision.

Niva Bupa Health Insurance IPO: Company Overview

Niva Bupa Health Insurance aims to provide quality health care for all Indians and focuses on health insurance solutions that could cater to different customer needs. It operates in India as a key standalone health insurer, catering to the Indian population by providing comprehensive health insurance plans, wellness benefits, and digital healthcare tools.

Through the "Niva Bupa Health" app, the company provides its customers with a smooth healthcare experience, including all diagnostic services, consultations, annual check-ups, and educational content details. This app also makes submitting claims, policy servicing, and tracking health parameters easy, causing no hassle in the customer's journey.

Niva Bupa is considered one of the fastest-growing key health insurance companies in the country where it has set its operations across the globe. Currently, it caters to over 50 million customers and has business spread across key countries that include prominently in the UK, Australia, Spain, Chile, Poland, New Zealand, Hong Kong SAR, Turkiye, Brazil, Mexico, India, US, Middle East, and Ireland according to Redseer report

Niva Bupa maintains an excellent distribution network consisting of a balance of direct-to-consumer distribution channels and distribution through partners in the form of banking channels, agent and brokerage partnerships. It achieved the agency channel's average policy ticket size to be Rs 25,028.35 for the year 2024.

The company has a considerable market share; as of 2024, it stood at 16.24% in the standalone health insurance space. Niva Bupa has maintained a customer-centric orientation; as of March 2024, it covered 14.73 million active lives insured and had a claims settlement ratio of 91.93%. It has 10,460 hospitals across the network with cashless facilities in place. Special tie-ups have been made with a few hospitals for extra customer convenience.

Niva Bupa Health Insurance IPO: Industry Overview

The Health Insurance industry is one of the prominent branches in the insurance sector which exhibited the highest growth with a CAGR of 19.5% between fiscal 2018 to Fiscal 2024, thereby exceeding the overall nonlife insurance market growth of a CAGR of 11.5% in the same duration. 

Retail health Insurance is one of the most promising segments in the health insurance industry as of March 31, 2024, because of the higher average premium per life, higher renewal rates, and lower combined ratios as compared to group health insurance, Standalone health insurance companies leading the retail health insurance segment by 56% of share in the market.

Niva Bupa Health Insurance IPO: Financial Overview

Here are the important financial metrics that investors should look into and analyze while 

When we look at the financials of the Niva Bupa Health Insurance Company, it exhibits an increase in Retail GWP.  The company’s Retail GWP has been increased from Rs 2,157.3 Crores in FY22 to Rs.3,839.7 Crores in FY24. This indicates an increase in the sale of insurance policies, a good market presence of the company, and improved financial stability. Additionally, the company has transitioned from a loss of Rs.196.5 Crores in FY22 to a net profit of Rs.81.85 Crores in FY24. 

The positive indicator is the expense ratio of the company which has significantly decreased over the past three years where it stood at 45.29% in the year 2022 and has been reduced to 39.74% in the year 2024 depicting better cost management and improved claims management.

Another positive indicator is the increase in the company's solvency ratio, which increased from 1.72 in FY22 to 2.55 in FY24 representing its long-term obligations, especially the claims made by policyholders.

Furthermore, the combined ratio of the company has seen a predominant improvement compared to FY22 which represented 107.41% has been reduced to 98.76% in FY24 indicating its operational efficiency and increased underwriting profit. A combined ratio of above 100% represents the company is paying more for its claims and expenses than its earnings.

Risk Factors in Niva Bupa Health Insurance IPO  

1. Investment Portfolio Risk: Insurers often derive income from investment sources in the portfolio; those may include bonds, equities, and many other assets in the investment mix. The chance of gaining income from investments is always affected by market volatility or declining interest rates.

2. Economic Downturns: Policyholders either cut down on coverage or stop coverage completely in case of an economic downturn. It cuts down the revenues thus affecting the growth and profitability of the insurers.

3. Health Care Cost: The increased health care cost may be passed on to the insurer at the increased cost level and subsequently paid for the higher claims. In this case, it will likely affect profit margins as well as the direct financial performance, taking into account premium increases not balanced by a corresponding increase in cost.

Niva Bupa Health Insurance IPO: Peer Comparison

The following table shows the comparison of Niva Bupa Health Insurance with its listed industry peers:

As we look at the financials of the peers, Niva Bupa Health Insurance is the second largest in terms of retail health insurance GWP of 3839.7 Crores FY24. While the retail health insurance GWP of Star Health and Allied Insurance company for FY24 is Rs.13951.2 Crores, ICICI Lombard General Insurance Company Ltd retail GWP stood at Rs.1244.5 Crores and The New India Assurance Company Ltd Rs.3,098.8 Crores.

Even in gaining market share, Niva Bupa is the second largest company among its peers with a market share of 9.10% for FY24, while  Star Health and Allied Insurance Company Ltd holds the biggest market share of 33.06%, ICICI Lombard General Insurance Company with least 2.95%, and The New India Assurance Company Ltd holds 7.34% during the same year.

Despite having the lowest Market share, ICICI Lombard General Insurance Company is instrumental in gaining Rs.1,918.5 Crores in FY24. While Star Health and Allied Insurance Company Ltd have a net profit of Rs.845 crores, The New India Assurance has a decent net profit of Rs.1091.12 Crores and Niva Bupa turned out as the last company in the race with a net profit of Rs.81.8 Crores during the same period. 

Objectives of Niva Bupa Health Insurance IPO

Niva Bupa  proposes to utilize the Net Proceeds towards the following objects: 

1. Augmentation of its capital base to strengthen solvency levels; 

2. General corporate purposes.

Niva Bupa Health Insurance IPO Details

Niva Bupa IPO Date

Niva Bupa Health Insurance IPO is open to subscription from November 07, 2024, to November 11, 2024. The shares will be allocated to investors on November 12, 2024, and the company will be listed in the NSE and BSE on November 14, 2024.

Niva Bupa IPO Issue Price

Niva Bupa Health Insurance is offering its shares in the price band of Rs.70 to Rs.74 apiece. This means you would require an investment of Rs.14,800 per lot (200 shares) if you are bidding for the IPO at the upper price band.

Niva Bupa IPO Size

Niva Bupa Health Insurance Ltd is offering a total of 29,72,97,297 Shares to its investors which amounts to an aggregate sum of up to Rs. 2,200 Crores. Out of these, 10,81,08,108 shares worth Rs.800 Crores are offered through a fresh issue, and 18,91,89,189 shares worth Rs. 1,400 Crores are offered through an offer for sale.

Niva Bupa IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the Niva Bupa Health Insurance IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Niva Bupa Health Insurance is. Thus, it is important to analyze the details of Niva Bupa Health Insurance before investing in it.

Niva Bupa IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for Niva Bupa Health Insurance IPO

Is Niva Bupa Health Insurance IPO Good or Bad? Final Thoughts

Niva Bupa IPO Review: The IPO shows both strengths and concerns for investors. While the company has grown to become the second-biggest player in health insurance with a strong market position, it makes much less money than its competitors. This gap between its large market share and low profits raises questions about how well the company manages its costs and operations. Although the company has improved over the years and operates in a growing market, investors should think carefully about these factors before investing in the IPO.