SBI Life in modest debut after rich valuations for IPO

Updated: Tue, Oct 03, 2017
01:52 pm
Reuters
RELATED NEWS
Sears chairman prevails in bankruptcy auction for retailer with $5.2 billion bid - sources Sears chairman prevails in bankruptcy auction for retailer with $5.2 billion bid - sources
Goldman dealmakers shine in Solomon's maiden quarter Goldman dealmakers shine in Solomon's maiden quarter
Hyundai, Kia issue new U.S. recall of 168,000 vehicles for fire risks Hyundai, Kia issue new U.S. recall of 168,000 vehicles for fire risks
U.S. lawmakers introduce bipartisan bills targeting China's Huawei and ZTE U.S. lawmakers introduce bipartisan bills targeting China's Huawei and ZTE
Apple plans some hiring reductions after selling fewer iPhones - Bloomberg Apple plans some hiring reductions after selling fewer iPhones - Bloomberg

SBI Life Insurance Co Ltd made just modest gains in its trading debut on Tuesday after its IPO - India`s biggest in seven years - raised $1.3 billion at valuations widely viewed as steep.

Although India could notch up a record-setting year for IPOs with almost $6 billion in deals done so far in 2017, concerns about high valuations have started to emerge with the stock market starting to pull back after a string of record highs.

Shares in India`s biggest private sector life insurer, majority-owned by State Bank of India, were 3.6 percent higher than their IPO price of 700 rupees on the National Stock Exchange in afternoon trade. At one stage they rose as much as 5.7 percent.

Some debuts earlier this year have been much stronger, with Avenue Supermarts, for example, doubling in price on its first day of trade. SBI Life`s gains were, however, in line with ICICI Lombard General Insurance`s performance last week when it ended its maiden day of trade 3 percent higher.

SBI Life`s IPO, which raised funds for its two main shareholders, saw its valuation jump to 700 billion rupees from an estimate 460 billion rupees in December when it sold a small stake to investors including KKR & Co and Temasek.

Vrinda Aditya, an analyst at Asit C. Mehta Investment Interrmediates Ltd, said although the debut had not been particularly strong, she believed SBI Life was an attractive stock to hold long-term given rosy prospects for India`s insurance industry.

"Overall for the insurance industry, it is growing much faster compared to its global peers, so lots to look forward to. But pricing and valuation will remain key in deciding the fate of upcoming IPOs," she said

Insurers are expected to benefit from rising income levels in the world`s second-most populous nation, where comparatively few people currently take out insurance.

IIFL Investment Managers has estimated India`s gross direct premium income, a key metric for insurers, was only 0.77 percent of gross domestic product last year, compared to the global average of 2.81 percent.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

By continuing to use the site, you agree to the use of cookies. You can find out more by clicking this link

Close