Wednesday, September 13, 2017

ICICI Lombard IPO - Details and review

About the company -
Image result for icici lombard ipo proceeds of the issue








ICICI Lombard IPO - Maiden IPO by Non-life Insurer

#ICICI Lombard is the largest private-sector non-life insurer in India based on gross direct premium income in fiscal 2017,  being one of the first few private-sector companies to commence operations in the sector in fiscal 2002, according to the CRISIL Report. They have well-diversified range of products, including motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance, through multiple distribution channels. They were founded as a joint venture between ICICI Bank Limited, India’s largest private-sector bank and Fairfax Financial Holdings Limited, a Canadian based holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management with US$43.38 billion of total assets at December 31, 2016.


In fiscal 2017, 87.5% of their new policies were initiated electronically, either by our distributors or  customers. No. of policies grew at a CAGR of 13.1% between fiscal 2015 – 2017. Their per employee productivity, measured in terms of gross direct premium income per employee, increased from Rs. 114 lakh in 2015 to Rs. 166 lakh in 2017, representing a cumulative annual growth rate of 20.7%.

It enjoys a diverse customer profile base including large and mid-sized corporates, MSME, central and state governments, and individuals. In fiscal 2017, our retail (including SME), corporate and government business groups contributed 60.4%, 17.5% and 22.1% of our GDPI, respectively. For the three months ended June 30, 2017, our retail (including SME), corporate and government business groups contributed 54.3%, 23.2% and 22.5% of our GDPI, respectively.

Financial Performance
In Rs. Crore               
Financial
FY 17
FY 16
FY 15
FY 14
FY 13
Total Assets
48,885.8
35,445.0
32,414.2
25,070.8
20,290.5
Revenue
7180.49
5804.25
5044.81
5028.41
4487.39
Profit
667.01
481.96
558.40
412.82
302.65
%NPA
9.2%
8.2%
10.1%
8.11%
6.7%

Industry Overview
The Indian non-life insurance sector offers different products such as motor, health, crop, fire, marine, liability, travel, aviation and home insurance aimed at meeting different protection needs of retail customers, government as well as corporate customers.
According to CRISIL Report, The size of the Indian non-life insurance sector was Rs. 1.28 trillion on a GDPI basis as of 31st March 2017. Indian non-life insurance sector GDPI grew at a CAGR of 17.4% between fiscal 2001 and fiscal 2017. According to Swiss Re, India was fifteenth largest market in the world and the fourth largest market in Asia in 2016, behind China, Japan and South Korea. India was also amongst the fastest growing non-life insurance markets over 2011-2016, growing at 14.5% (as per Swiss Re). Despite its size and growth profile, India continues to be an underpenetrated market with a non-life insurance penetration of 0.77% in 2016, as compared to 1.81% in China, 1.70% in Thailand, 1.67% in Singapore and 1.62% in Malaysia and a global average of 2.81% in 2016. At US$13.2 in 2016, insurance density also remains significantly lower as compared to other developed and emerging market economies.
ICICI lOMBARD ALLOTMENT, lOMBARD ALLOTMENT STATUS, ICICI Lombard IPO
Multi-Product Insurers:
Four public sector companies offering multiple products – National Insurance Company Limited (“National Insurance”), The New India Assurance Company Limited (“New India”), The Oriental Insurance Company Limited (“Oriental Insurance”) and United India Insurance Company Limited (“United India”)
o 18 private sector companies offering multiple products – including ICICI Lombard General Insurance Company Limited (“ICICI Lombard”), Bajaj Allianz General Insurance Company Limited (“Bajaj Allianz”), HDFC ERGO General Insurance Company Limited (“HDFC Ergo”), IFFCO Tokio General Insurance Company (“IFFCO Tokio”) and TATA AIG General Insurance Company (“Tata AIG”). There are also single product insurers.
Besides these 30 companies, the state owned General Insurance Corporation of India (“GIC”) operates as the main Indian reinsurer.

About the Issue 

With the IPO, ICICI Lombard likely to mobilise upto Rs. 5700 crore, offering 8.62 crore equity shares in a price band of Rs. 651 to Rs. 661.

IPO Opening and closing date – Sep 15 – Sep 19, 2017

Face value -  Rs. 10

Lot size – 22

Allotment portion
Percentage
QIB
Upto 47%
NII
14% and above
Reserved for ICICI Bank shareholders
4%
Retail
33% and above
Shareholding pattern of promoters post IPO







IPO Proceeds to be used in – #ICICI Lombard is the non-life Insurance company to offer IPO. Promoters to dilute 19% in ICICI Lombard's Rs 5,700-cr IPO. IPO proceeds are not going to the insurers. It is a pure stake sale by the promoters

Mymoneystreets Take on the IPO

The company’s has registered revenue growth of 25% over last five years. Its profits have grown at a CAGR of 65% over last five years. On the upper price band of Rs 661 for FY17, its PE is at 46 times. IPO proceeds are not going to the insurers. It is a pure stake sale by the promoters. The pricing of IPO looks high.
The brand is promising, however, there are no competitor listed on the bourse. Highly under-penetrated sector likely to see a robust growth over long term. Subscribe this IPO only if you have a long term view.

ICICI lOMBARD ALLOTMENT, lOMBARD ALLOTMENT STATUS, ICICI Lombard IPO