Go Digit IPO opens today: Should you subscribe to this Virat Kohli-backed issue?

go digit ipo opens today: should you subscribe to this virat kohli-backed issue?

Go Digit IPO opens today: Should you subscribe to this Virat Kohli-backed issue?

The initial public offering (IPO) of Go Digit General Insurance kicks-off for bidding on Wednesday, May 15. The company is offering its shares in the price band of Rs 258-272. The issue can be subscribed until Friday, May 17 and can bid for a minimum of 55 equity shares and its multiples thereafter.

 

Go Digit General Insurance, backed by Prem Watsa's Fairfax Group, is a general insurance provider, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products. Customers can customize their insurance to meet their needs.

 

Brokerage firms are mostly positive on the issue suggesting investors subscribe to it on the back of companies improving financial, under penetration of insurance products, rising market share and technological advancement. However, they see regulatory obligations, rich valuations and loss-making nature of business as the key risks for the business.

 

Go Digit General Insurance aims to simplify insurance processes through innovation and transparency. The company believes in delivering an effortless customer experience journey in a significant financial product an individual would purchase. It is one of the leading digital full-stack insurance companies, said Anand Rathi Research.

 

"At the upper price band, the company is valued at P/GWP of 3.44 times with a market cap of Rs 24,947.9 crore post issue of equity shares. We believe that the valuation of the company is fairly priced and recommend a 'subscribe' rating to the IPO," it added.

 

The Rs 2,614.65 crore IPO of Go Digit includes a fresh share sale of Rs 1,125 crore and an offer-for-sale (OFS) of up to 5,47,66,392 crore equity shares amounting to Rs 1,489.65 crore. It will utilize the net proceeds to undertake its existing business activities; and general corporate purposes.

 

Go Digit is a digital full-stack insurer and the fastest-growing private non-life insurer by GWP in India. They offer a simplified and customized customer experience, with a strong focus on empowering their distribution partners. Their advanced technology platform and predictive underwriting model position them well for continued innovation and growth, said Swastika Investmart.

 

"Go Digit's financial performance has shown improvement, although they are still navigating operating losses. The insurance industry faces inherent risks, including stringent regulatory requirements. Despite the aggressive valuation and operating losses, its strong technological capabilities and its position in a growing market suggest potential for future," it said with a 'subscribe' tag.

 

Go Digit has currently launched a total of 74 active products across all its business lines. It had about 61,972 partners, including 58,532 POSPs and other agents as of December 31, 2023 It had distribution centers in 24 states and union territories in India with 473 active bots to automate tasks for functions and partners.

 

Go Digit has positioned itself as a leader in the digital-first insurance space, offering innovative products that cater to the evolving needs of the Indian non-life insurance market, said SMIFS. "In light of the robust growth the company has been able to deliver and is expected to deliver coupled with robust industry prospects in India, we recommend to subscribe to the issue," it said.

 

Go Digit reported a net profit of Rs 129.02 crore with a revenue of Rs 130.83 crore for the nine months ended on December 31, 2024. The company's bottomline came in at Rs 35.54 crore with a revenue of Rs 39.19 crore for the financial year ended March 31, 2023, making its first year of profitability.

 

Go Digit intends to maintain a healthy product pipeline focused on continuing innovation, improve its ability to segment risk by increasing the influence of behavioural factors in its underwriting and pricing models and expand its distribution network to increase customer reach and generate new business, said StoxBox which has suggested to 'subscribe' to the issue.

 

Ace Indian cricketer Virat Kohli and his actress wife Anushka Sharma are also shareholders of the company, as per the RHP. In February 2020, Virat Kohli invested Rs 2 crore to buy 2,66,667 equity shares for Rs 75 apiece, whereas Anushka Sharma bought 66,667 equity shares at the same price, investing Rs 50 lakh. Both of them are not participating in the OFS.

 

Go Digit General Insurance is focused on achieving growth in new customer acquisition and deepening existing customer relationships to take advantage of this growing sector and to date, they have exhibited an ability to benefit from growth in its primary market and capture market share, said Master Capital Services.

 

"It intends to expand into new geographies within India and grow its product portfolio to meet the market needs and drive r adoption across its product suite. Go Digit is continuously investing in technology to optimize customer experience and boost operating leverage," it added with a 'subscribe' rating for the IPO, given the huge growth and margin expansion potential.

 

The company has reserved not more than 75 per cent of the net issue for the qualified institutional bidders (QIBs), while non-institutional investors will have not more than 15 per cent of shares allocated towards them. Retail investors will get the remaining 10 per cent of the shares.

 

ICICI Securities, Morgan Stanley India Company, Axis Capital, Nuvama Wealth Management, HDFC Bank and IIFL Securities are the book running lead managers of the Go Digit IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE, with Thursday May 23 as the tentative date of listing.

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