Virat Kohli, Anushka Sharma are among the investors in Go Digit. They are not selling any share in the IPO. Should You Invest?
The insurance company, backed by the Indian cricketer Virat Kohli and his wife and a leading Bollywood actor, Anushka Sharma, whose initial public offering (IPO) opened on Wednesday, got subscribed 1.44 times by the end of the first day of its book-building process on Wednesday, according to data released by the stock exchanges.
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Go Digit Subscription Status
As per the Go Digit IPO subscription status after day one of bidding, the public issue worth Rs 1489.65 crore has been booked 0.36 times.
According to the data available on the stock exchanges, the issue received bids of 1,88,97,835 shares against the offered 5,28,69,677 equity shares at a price band of Rs 258 to Rs 272. The Retail Portion and Non-Institutional Investors Portion were subscribed 1.44 times and 0.34 times, respectively, whereas the Qualified Institutional Buyer Portion is still to see traction.
Go Digit IPO: Subscription Dates, Allotment Date, Listing Date
The Go Digit IPO will remain open between May 15 and May 17. Its allotment will likely be finalised on May 21, while its listing will take place on both BSE and NSE on May 23.
Go Digit IPO Price and Lot Size
The price of the Go Digit IPO has been fixed at a price band of Rs 258-272 per share.
Investors need to apply for a minimum of 55 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,190 (55 (lot size) x Rs 258 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,960.
Go Digit IPO: Category-Wise Quota
The issue has been reserved up to 75 per cent for qualified institutional buyers (QIBs), 15 per cent for non-institutional buyers, and 10 per cent for retail investors.
Go Digit IPO: Risks
1) Go Digit has a track record of reporting losses.
2) The company has received warnings and show-cause notices from the insurance regulator IRDAI for alleged non-compliance with various regulatory prescriptions in the past.
3) Its revenues and profitability heavily depend on motor vehicle insurance products.
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Go Digit IPO: More Details
Go Digit’s IPO comprises fresh issuance of equity shares worth Rs 1,125 crore and an Offer-for-Sale (OFS) of 5.47 crore equity shares by promoter Go Digit Infoworks Services and existing shareholders worth Rs 1,490 crore. This takes the total IPO size to Rs 2,615 crore at the upper end of the price band.
At present, Go Digit Infoworks Services owns 83.3 per cent stake in the company. Proceeds from the fresh issuance have been proposed to be utilised for the augmentation of the company’s capital base and maintenance of solvency levels and general corporate purposes.
Cricketer Virat Kohli and his wife and actor Anushka Sharma are among the investors in the firm. They are not selling any share in the IPO. About 75 per cent of the issue size has been reserved for qualified institutional investors, 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors. Investors can bid for a minimum of 55 equity shares and in multiples of 55 equity shares thereafter.
Go Digit offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products, to meet the needs of the customers. It is one of the first non-life insurers in India to be fully-operated on the cloud and has developed application programming interface (API) integrations with several channel partners.
In March, Go Digit secured the approval from the Securities and Exchange Board of India (Sebi) to float the IPO. The company had first filed the draft red herring prospectus (DRHP) with the Sebi in August 2022, to raise funds through an initial share sale.
However, it was thwarted primarily due to certain compliance requirements pertaining to the employee stock appreciation rights scheme. Sebi returned Go Digit’s draft IPO papers on January 30, 2023 and asked the company to refile the documents with certain updates. Following this, the company again filed the preliminary IPO papers with Sebi in April 2023.
ICICI Securities, Morgan Stanley India Company, Axis Capital, HDFC Bank, Nuvama Wealth Management and IIFL Securities are book running lead managers to Go Digit’s IPO.
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GMP Today
The book build issue is gaining strength in the grey market as well. As per the market observers, Go Digit General Insurance Limited shares are available at a premium of Rs 46 in the grey market today. Market observers said that Go Digit IPO GMP has remained steady despite the Indian stock market snapping a three-day winning streak, which is a good sign. They expected further upside in the grey market sentiments once the secondary market gains momentum.
Go Digit IPO: Should You Subscribe?
Anticipating a promising debut of Go Digit shares on Dalal Street, VLA Ambala, Founder of Stock Market Today, remarked, “Go Digit General Insurance Limited has demonstrated remarkable growth, with a 113.35% surge in revenue and a 112.01% rise in PAT between March 31, 2022, and March 31, 2023. The company’s assets also expanded from Rs.1,874.80 crore in 2021 to Rs.3,346.75 crore in 2023 and reported a net profit of Rs.35.54 crore for the first time. With reserves and surplus amounting to Rs.2,391.97 crore and total borrowings of Rs.200 crore, it appears to be in a sound financial position. However, its IPO seems to be priced aggressively based on its FY24 annualized earnings. According to analysis, its listing might be subdued or at a moderate 5-15% premium.”
Giving a ‘Subscribe long-term’ rating to the IPO, Astha Jain, research analyst at Hem Securities, said, “We are giving long-term subscription recommendation. Listing gain may or may not be there, based on the market conditions.”
Go Digit is digital full-time tech insurance firm. These are the companies that are controlled and licensed by regulatory authorities. However, they integrate technologies in their operations like claims management, underwriting. This company has a big market share among digital tech insurance companies, 82 per cent on the basis of gross premium.
“This company looks fine but the pricing is overvalued. It’s only due to this higher pricing that our recommendation is ‘subscribe’ but for long term. Listing gain may or may not happen.”
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