HDFC Life IPO opens today: Should you invest?

IPO, IPOs

Valuations are high, but subscribe for the long term, advise analysts


LATEST NEWS : HDFC Standard Life Insurance, one of the top three private life insurers in profitability, on Tuesday launched its Rs 8,695-crore initial public offering (IPO), the biggest so far in the country’s life insurance sector.

The price band for the offer has been fixed at Rs 275-290 a share. The public issue comprises sale of 191,246,050 equity shares by HDFC, amounting to a 9.55% stake, and up to 108,581,768 shares, or 5.42% holding, by Standard Life Mauritius.

While the company raised Rs 2,322 crore from anchor investors on Monday, should you put your money in the offer as a retail investor, especially given that that valuation is on the higher side? ‘Subscribe’, but with a long-term horizon, suggest most analysts.


At present, HDFC holds 61.41% and Standard Life 34.86% in HDFC Standard Life, while the remaining shares are owned by employees and PremjiInvest.

Here is what broking firms are saying about the issue:

Motilal Oswal Securities

We are positive on HDFC Life for the long term as the life insurance sector in India provides huge opportunities for growth. HDFC Life has delivered premium income/PAT growth of 14%/19% in FY13-17. Further, the company has consistently delivered strong ROEs in excess of 21% for last 5 years. At the upper price band, the issue is priced at a price-to-book-value (P/BV) of 15.2x and price-to-embedded-value (P/EV) of 4.1x (FY17) after the issue.

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