Here are the Brokerage recommendations of "GIC Reinsurance"
SPA Financial Adviser Analyst Siddhesh Mhatre said,
At the upper price band of INR 855-912 the issue is priced at 1.6x FY17 P/BV( incl. fair value change a/c). Lower penetration levels (0.8% in 2016); high reinsurance premium growth (11-14% CAGR projected for next 5 years) and 15-18% expected ROE supports
high valuation of 1.6x P/BV against the peer group (1-1.3x). We recommend subscribe to the issue as a good long term investment.
Umang Shah of Emkay Global Said,
We believe the valuations are reasonable given the average ROEs of 18.5% during FY14-17. While the PAT CAGR has been slower at ~9% during the same period, the profitability could improve with improving operating ratios. We believe the company can offer steady compounding returns and hence we recommend “SUBSCRIBE” to the issue for the Long Term.
Asit C Mehta is of the following opinion.
With diversified product portfolio, superior investment yield coupled with the first-mover advantage, under penetrated nature of overall insurance sector augur well for GIC Re in the long run. Globally, Reinsurance Company’s stock trades in a range of 1.1x -1.4x its Price/Book Value. At the upper price band of Rs 912/-, the company’s stock trades at 1.56x its FY17 P/B Value of Rs 581.4/-, which is fairly priced. Hence, we recommend to SUBSCRIBE to the issue on long-term basis.
Joindre Capital has the following review,
We are confident that GIC will deliver consistent performance and provide an excellent investment opportunity for investors with a long term horizon Hence this is a great issue for genuine long term investors who are looking for a leader in a sector which has a business model which has been proven globally for decades with longevity of growth. Hence we recommend SUBSCRIBE for long term investment
Sachin Damani & Rajiv Mehta of IIFL Wealth Management said,
Gross premium growth for GIC Re should remain sturdy in the coming years owing to a) sustained brisk growth in Indian non‐life insurance industry b) expanding reinsurance market in India and c) tapping of new global markets including the largest ones. The potent combo of likely inroads into global market along with better pricing in domestic market should further improve the combined ratio in the medium term, save for any untoward loss. At the IPO price of Rs912, GIC Re is reasonably valued at 3.6x P/BV on a post money basis. The valuation, inclusive of Fair Value Change Account (FVCA), drops to 1.5x P/BV. We recommend Subscribe.
Dineshkumar Gupta of Dalmia Securities said,
At the price band of INR 855-912 the asking valuations for the issue are ~24.0-25.5x its FY17 diluted EPS of INR 35.8/- & ~4.1x P/BV for FY17, which seems to be attractively priced. We believe insurance sector can witness high growth as awareness of risk cover as well as shift of savings to financial assets accelerates over the next decade. Hence we recommend to SUBCRIBE the issue from a long-term perspective.
Vidhi Shah of Prabhudas Liladhar Securities said,
The promoters are coming out with an offer for sale of around Rs98bn and fresh issue of Rs15.7bn with dilution of 14.2% at a price range of Rs885‐912. At the upper band of Rs912, the company trades at 27.4x Mar‐17 EPS which we believe is fairly priced, but given the liquidity in the markets and company’s performance in the recent past, we recommend to Subscribe for long term gains.
Krishna Rana of Sushil Finance Said,
Given the dominant position of the company and the positive outlook for the growth of the insurance, and hence the reinsurance sector in India, we suggest the investors to subscribe for this issue and stay invested for the medium to long term.
Arihant Capital Research Team has a 4.0/5.0 rating with the following view,
The issue has been offered in a price band of Rs 855-912 per equity share. At the upper price band of Rs 912 the stock is available at P/BV of 1.6(x) and P/E of 23(x) based on FY17 EPS. There are no listed reinsurance companies in India. Accordingly, it is not possible to provide an industry comon in relation to the Corporation. Based on qualitative pointers, robust past growth and future potential, above mentioned strengths and management quality we have “4 star” rating for the issue.
Angel Broking Analyst Jaikishan Parmar said,
However, the financials of the company may get affected adversely if India witnesses bad monsoon or successive poor monsoon seasons, drought, flooding or other catastrophic events impacting the Indian agriculture industry. Nonetheless, positives such as leadership position, well managed investment book, robust balance sheet and reasonable valuations provide comfort, hence, we recommend SUBSCRIBE on this Issue.
Disclaimer: We have subscribed to the issue in retail category in all names of family members.
