By Vivek Kumar M
(Reuters) -India’s Canara HSBC Life Insurance made a muted debut on the bourses on Friday, as unappealing pricing and a crowded IPO market clouded the insurer’s prospects.
Its stock was trading at 108.9 rupees, as of 10:50 a.m. IST, up 2.7% from its issue and listing price of 106 rupees, yielding the insurer a valuation of 105.15 billion rupees ($1.20 billion).
Peers SBI Life Insurance and HDFC Life Insurance are valued around $21 billion and $18 billion, respectively.
Canara HSBC Life Insurance, which is a joint venture between Canara Bank and HSBC Insurance (Asia-Pacific) Holdings, struggled to garner bids from retail and non-institutional investors earlier this week. Retail investors subscribed 42% of their quota, while high-net-worth individuals subscribed a third of their shares in the $283 million IPO. Thanks to qualified institutional buyers, the issue was subscribed 2.29 times, which was still lower than most other IPOs that opened in the last couple of weeks. For instance, another Canara Bank-promoted entity, Canara Robeco Asset Management, received bids worth nearly 10-fold and closed 13% higher in its debut on Thursday. Choice Broking said the insurer’s valuation appeared to be fully priced, with price-to-enterprise value multiple, a stock valuation metric, of 1.6x, while industry averaged 2.4x. “High dependence on bancassurance (where banks sell insurance) and relatively lower VNB (value of new business) margins compared to peers is expected to keep valuation multiples at a discount to peers,” ICICI Direct said.
The insurer got 87% of its new business premium in fiscal year 2024-25 through bancassurance, with Canara Bank contributing 70.6% of this.The listing caps a busy week for the Indian IPO market, which saw five stock debuts, including a blockbuster listing from LG Electronics India and a muted start from the country’s largest IPO of the year, Tata Capital.($1 = 87.8387 Indian rupees)
(Reporting by Vivek Kumar M; Editing by Sumana Nandy and Harikrishnan Nair)
