New India Assurance makes weak debut; lists below issue price

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The New India Assurance Company has listed at Rs 749, 6% below its issue price of Rs 800 per share offered to qualified institutional buyers (QIBs) and non-institutional investors (NIIs). The company issued shares at Rs 770, a discount of Rs 30 on the offer to retail individual investors and eligible employees.

On the National Stock Exchange (NSE), the stock debuted at Rs 750. At 10:04 AM; it was trading at Rs 722 on the BSE after hitting a low of Rs 718. While on the NSE, the scrip was quoting at Rs 725 after hitting a low of Rs 717 in intra-day deals. A combined 893,453 shares changed hands on the counter on the NSE and BSE.

During the initial public offering (IPO), the reserved portion for QIBs was oversubscribed 2.34 times. However, the reserved portion for NIIs (0.12 times), retail investors (0.11 times) and employees (0.21 times) remained undersubscribed, exchange data show.

MUMBAI (Reuters) - State-run New India Assurance Co Ltd's shares fell as much as 10 percent on their trading debut on Monday after a $1.5 billion initial public offering (IPO), as market participants baulked over the insurer's high valuation.

The IPO of the country's biggest non-life insurer by premiums, which saw the government and company raise a combined 96 billion rupees ($1.47 billion), was subscribed 1.2 times the number of shares on offer, indicating low demand compared with other Indian IPOs this year.

India has been enjoying a record year for IPOs with fund-raising so far crossing $11 billion. But high valuations, especially in some recent big IPOs from insurers, have dampened post-listing share price gains.

New India's IPO was the second-biggest in the country this year after state-run General Insurance Corp's initial share sale raised $1.7 billion. New India is the second non-life insurer to go public after the listing of private-sector rival ICICI Lombard General Insurance Co Ltd earlier this year.

The IPO price valued New India at 76 times its earnings per share for the year ended March 2017, compared with ICICI Lombard's 48 times, Mumbai brokerage Angel Broking said in a pre-sale research note. New India's return on equity has lagged ICICI Lombard's in the last five years, the brokerage also said.

By 0520 GMT, New India shares were trading 8.4 percent lower at 732.25 rupees, compared with an IPO issue price of 800 rupees. The benchmark Nifty 50 share price index was down 0.4 percent.

($1 = 65.2850 Indian rupees)

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