Go Digit share price gains 7% post moderate listing . Should you Buy, Sell or Hold the stock?
Stock market today: Go Digit General Insurance share price listed with slight 5% premium over the issue price on the NSE at ₹286 , in line with the analyst expectations and the GMP. The stock however gained almost 7% post listing Should you But, Sell or Hold the stock? Here's what experts say-
Stock Market Today: Go Digit General Insurance share price listed with slight premium of 3.34% on the BSE at ₹281.10 and with 5.1% premium on the NSE at ₹286. The Go Digit General Insurance share price thereafter saw highs of ₹305.80 on the NSE indicating gains of up to 7%.
Listing in line with expectations of analysts and as indicated by GMP
The listing was broadly in line with the expectations. The issue that opened for subscription on Wednesday 15 May and closed on Friday 17 May had received a reasonable response, with issue being subscribed 9.6 times and retail portion 4.27 times. The Grey Market premium that was at ₹ 26 on Tuesday however had slipped to ₹4 on Thursday indicating that the Go Digit shares were trading just ₹4 higher that their issue price of ₹272 apiece, in the grey market. This also indicated towards marginal 1.47% listing gains for Go Digit shares at ₹276. The fall in grey market premium had been attributed to volatility in the markets ahead of Lok Sabha elections 2024 results , that also to a moderate subscription compared to higher subscriptions that had been seen for earlier mainboard IPOs.
The Go Digit General Insurance issue was also looked at fairly valued.
The valuations of the Go Digit General Insurance company at the time of IPO had been considered fairly priced by analysts Anand Rathi. At the upper price band of the IPO Go Digit General Insurance was valued at P/GWP (Gross Written Premium) of 3.44 times with a market cap of ₹24947. 9 crore post issue of equity shares.
Analysts cautious views post Listing -
Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers had expected the opening price for the IPO to be in the range of Rs290-310 based on the business model, financial growth and its innovate approach to make the product portfolio simpler.
Solanki said that the company has a track record of reporting losses till FY22. Thus, its limited operating history makes it difficult to evaluate future business prospects. Therefore, on listing day, investors might take an advantage of some listing gains to book some profit, said Solanki. From a longer term perspective, investors should monitor the financial performance on sequential basis and wait for some correction to take a position in the stock, added Solanki
Shivani Nyati, Head of Wealth, Swastika Investmart Ltd said that the Go Digit, the fast-growing general insurance company, witnessed a moderate debut on the stock exchanges which falls short of pre-listing expectations and the grey market premium (GMP) which suggested a potential gain of around 10%.
Go Digit's moderate listing necessitates a balanced approach from investors as per Nyati. While the company possesses strong long-term potential, careful consideration of the valuation and competitive landscape is crucial. Investors may hold their position by keeping a stoploss at the issue price.
Go Digit Business model with an edge
The positives looked by the analysts includes Go Digit General Insurance approach to use transparency and innovation to streamline the insurance application process through the combination of insurance and technological solutions Go Digit General Insurance helps with enrollment, processing insurance claims, underwriting, policy administration, data insights, and fraud detection. Go Digit General Insurance provides a full-stack insurance companies, fulfill most of the customer needs of motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products.
As per Nyati, Go Digit's position as the fastest-growing private non-life insurer by GWP in India positions it for continued success in the dynamic insurance market. The company's advanced technology platform and focus on innovation bode well for its future.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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