SBI Life IPO: Should You Bet On The Largest Insurance IPO?

At a time when insurance IPOs are making rounds in the capital markets, it's a general view that these issues are priced at a premium but seeing the huge potential the sector offers together with the unpenetrated masses that still need to be tapped, brokers are positive on these IPOs.

Look at how good the SBI IPO issue fares:

Issue Details: The joint venture company between SBI and BNP Paribas Cardif (BNPPC) the insurance holding company of France, has hit the market with one of the biggest issues worth Rs. 8400 crore. The price band for the IPO has been fixed at Rs 685-700 per share

The IPO will remain open for three days. The initial share sale offer will open on September 20 and close on September 22 and will see promoters offloading up to 12 crore shares of face value of Rs 10 each through the offer of sale route. There is no issue of fresh equity.

An employee discount of Rs 68 will be offered per share to eligible employees in the IPO according to the BSE filing, SBI said.

Issue managers Citi Bank, Deutsche Bank, Axis Capital, BNP Paribas, JM Financial, ICICI Securities, Kotak Investment Banking and SBI Capital Markets are the book running lead managers to the issue.

Financials: For the financial year, the new business of the company totaled to Rs 1037 crore while annualised premium stood at Rs 6727 crore.

Valuations: At a price value of Rs. 685- 700, the issue is available at a P/E multiple of 73.33* FY17 considering the upper price band of Rs. 700

Conclusion: The valuation of the stock is said to be fair in view of the leadership position of the company, under penetrated markets and huge growth potential. Nearly, all brokerage houses have given a thumbs up to the issue on long term perspective.

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