Day 2 of the Go Digit IPO: Verify Subscription, GMP, and Additional Information; Should You Purchase?

According to data released by the stock exchanges, the insurance company, which is supported by Indian cricketer Virat Kohli and his wife, prominent Bollywood actress Anushka Sharma, whose initial public offering (IPO) opened on Wednesday, received 1.44 subscriptions by the end of the first day of its book-building process on Wednesday.

Status of Go Digit Subscription

After the first day of bidding, the public offering worth Rs 1489.65 crore has been booked 0.36 times, according to the Go Digit IPO subscription status.

The offering got bids of 1,88,97,835 shares against the offered 5,28,69,677 equity shares at a price range of Rs 258 to Rs 272, per data accessible on stock markets. While the Qualified Institutional Buyer Portion is still lacking momentum, the Retail Portion and Non-Institutional Investors Portion saw 1.44 and 0.34 times, respectively, of subscriptions.

Go Digit IPO: Dates of Subscription, Allocation, and Listing

The period of availability for the Go Digit IPO is May 15–May 17. Its final allocation is expected to occur on May 21, and on May 23, it will be listed on the BSE and NSE.

Go Digit IPO Cost and Lot Dimensions

A price range of Rs 258–272 per share has been set for the Go Digit IPO.

Investors must submit applications for multiples of at least 55 equity shares. Retail investors would thus need to spend a minimum of Rs 14,190 (55 (lot size) x Rs 258 (lowest price band)). At the top end, bids will be placed up to Rs 14,960.

Go Digit IPO: Quota Based on Category

Up to 75% of the issuance is designated for qualified institutional buyers (QIBs), 15% is set aside for non-institutional purchasers, and 10% is allocated to retail investors.

Go Digit IPO: Dangers

1) Go Digit has a history of disclosing losses.

2) The insurance regulator IRDAI has already issued warnings and show-cause letters to the corporation for apparent non-compliance with numerous regulatory prescriptions.

3) Motor vehicle insurance products are a major source of income and profitability for the company.

Go Digit: Additional Information

In addition to an Offer-for-Sale (OFS) of 5.47 crore equity shares by promoter Go Digit Infoworks Services and current shareholders valued at Rs 1,490 crore, Go Digit’s IPO consists of a new issue of equity shares valued at Rs 1,125 crore. At the high end of the pricing range, this brings the total amount of the IPO to Rs 2,615 crore.

Go Digit Infoworks Services now has an 83.3% ownership position in the business. It has been suggested that the corporation use the proceeds from the new issue for general corporate objectives, capital base expansion, and solvency maintenance.

Among the company’s investors are actress Anushka Sharma and cricketer Virat Kohli. They are not offering any IPO shares for sale. 10% is allocated to individual investors, 15% to non-institutional investors, and about 75% of the issue size has been set aside for eligible institutional investors. Investors may place bids in multiples of 55 equity shares, following the minimum of 55 equity shares.

To fulfill the demands of its clients, Go Digit provides liability insurance, health insurance, travel insurance, property insurance, marine insurance, and other insurance products. It is among the first non-life insurance companies in India to run entirely on the cloud, and it has integrated several channel partners using application programming interfaces (APIs).

The Securities and Exchange Board of India (Sebi) gave Go Digit permission to list the IPO in March. In August 2022, the firm submitted a draft red herring prospectus (DRHP) to Sebi in an attempt to obtain money via an initial share offering.

But the main reason it was defeated was because of certain compliance requirements related to the system for employee stock appreciation rights. On January 30, 2023, Sebi returned Go Digit’s draft IPO filings and requested that the firm refile them with the necessary revisions. After that, in April 2023, the business once again submitted its preliminary IPO paperwork to Sebi.

The book-running lead managers for Go Digit’s IPO are ICICI Securities, Morgan Stanley India Company, Axis Capital, HDFC Bank, Nuvama Wealth Management, and IIFL Securities.

GMP Currently

In the gray market, the book-building problem is also becoming more prevalent. Go Digit General Insurance Limited shares are now available on the gray market for a premium of Rs 46, according to market watchers. Despite the Indian stock market ending a three-day winning run, market experts noted that the Go Digit IPO GMP has been stable, which is encouraging. Once the secondary market picks up steam, they anticipate further upside in the emotions of the gray market.

Think You Should Subscribe to Go Digit IPO?

VLA Ambala, Founder of Stock Market Today, expressed optimism about the successful launch of Go Digit shares on Dalal Street, saying, “Go Digit General Insurance Limited has shown amazing growth, with a 113.35% increase in revenue and a 112.01% rise in PAT between March 31, 2022, and March 31, 2023. In 2023, the company’s assets increased from Rs. 1,874.80 crore in 2021 to Rs. 3,346.75 crore, and it recorded its first-ever net profit of Rs. 35.54 crore. It seems to be in a good financial condition, with reserves and surplus of Rs. 2,391.97 crore and total borrowings of Rs. 200 crore. However, considering its FY24 annualized profits, its IPO seems to be priced aggressively. Analysis suggests that its listing might be modest or at a 5–15% premium.

Astha Jain, a research analyst at Hem Securities, rated the IPO as “Subscribe long-term” and said, “We are giving long-term subscription recommendation.” Depending on the state of the market, listing gain could exist or not.

Go Digit is a full-time, digital tech insurance company. These are the businesses that regulatory bodies oversee and authorize. On the other hand, they incorporate technology into their underwriting and claims management processes. Among digital tech insurance providers, this firm has a significant market share of 82% based on gross premium.

“This company appears to be well-run, but the prices are excessive.” Our advise is to “subscribe,” but for a longer duration, just because of this increased cost. Listing gain might occur or not.