Go Digit IPO Review 2024

Go Digit IPO Review 2024: Go Digit is facing an IPO issue of Rs. 2,614.65 Cr opens on May 15, 2024. The issue closes on May 17 and will be listed on the exchange on May 23, 2024. In this article, we will analyze the strengths and weaknesses of Go Digit Ltd Limited IPO Review 2024. Keep reading to find out. outside!

Go Digit IPO Review – Company Overview

The company is one of the leading full-stack insurance companies leveraging technology to transform product design, distribution and customer experience for property and casualty insurance products. Full-Stack Insurers are insurance companies that are fully licensed and controlled by regulators and conduct sourcing, underwriting and servicing internally.

Digital full-stack insurers like Go Digit are insurance manufacturing companies focused on integrating technology into their operations. Currently, Go Digit offers auto insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products, which can be customized to suit customers’ needs.

Go Digits, a digital full-stack insurance company, deploys insurance and technology solutions to support enrollment, claims processing, underwriting, policy administration, data insights, and fraud detection.

According to a RedSeer report, Go Digit is the fastest-growing private non-life insurer by gross written premium (GWP) in FY22 and FY23. The RedSeer report was commissioned by Go Digit for the sole purpose of producing this RHP.

As of December 31, 2023, Go Digit has 4.3 Cr customers who have received insurance coverage since the company was founded in 2017. Out of the 4.3 Cr customers, 2.8 Cr were acquired by providing auto insurance, 1.5 Cr were customers by providing health insurance and 5 Cr were acquired for other insurance products.

Go Digit IPO Review – Industry Overview

India has one of the highest proportions of young working age people, with a population in the 15-64 age group reaching 97Cr. This accounts for approximately 68.0% of India’s total population as of 2023, according to Redseer estimates based on data from the Economic and Social Committee. Asia Pacific region (ESCAP).

Indian households are experiencing notable changes in their income and consumption patterns, with high-income households expected to grow the fastest at a CAGR of 7.2% between CY23 and CY28. According to estimates, the number of high-income households is expected to reach 58 million by CY28, accounting for approximately 16% of all households in India, a significant increase from the current 12.1%.

According to the General Insurance Council, the non-life insurance market was worth $33.3 billion in GWP as of FY23. This means that the non-life insurance penetration rate is 1.0%, which means there is a lot of room for improvement.

The global average insurance penetration rate in the world’s major economies has reached 4.0%, with the penetration rates in China and the United States reaching 1.9% and 9.0%, respectively, in 2022.

Additionally, India’s non-life insurance density at US$ 23.00 (based on premiums per capita) in FY23 is the lowest among some of the world’s largest markets, compared to the global average of US$ 499.00 in CY22.

Go Digit IPO Review – Finance

As of FY23, Go Digit Insurance reported total written premiums worth Rs. 7243 Cr, up 38% from Rs. 5268 Cr in FY22. Gross written premiums have grown at a CAGR of 49% since FY21.

On the other hand, net premiums increased at a slightly higher rate of 41.37% from Rs. 4180 Cr in FY22 to Rs. 5909Cr in FY23. This is because the amount of insurance products rewritten by other insurance companies is lower.

Go Digit recorded an operating loss of Rs in FY23. 66.27 Cr, a significant drop from Rs. 375.14 Cr. Meanwhile, the company ultimately recorded a surplus of 50 billion won due to a decrease in provisions. 35.5 Cr in FY23, a loss of Rs. 295.85 Cr in FY22.

The insurance company reported a combined ratio of 107%, down 530 points from last year. Combined ratios are used to measure the profitability of an insurer’s underwriting capabilities. It is calculated as the sum of loss ratio and expense ratio, and if the ratio exceeds 100%, it clearly indicates that the company is paying more in claims and expenses than it is collecting in premiums.

Looking at a company’s commission ratio will tell you how much the company spends on commissions to earn Rs. Insurance premium is 100. As of FY23, Go Digit reported a commission rate of Rs. 2.4. However, in the first nine months of FY24, the commission rate rose to a high of 24.7% compared to 2.3% in the first nine months of FY23.

Go Digit IPO Review – Key Players

Go Digit, a non-life insurance company, falls under the general insurance category whose peers include New India Assurance Company, Star Health & Allied Insurance Company and ICICI Lombard General Insurance Company.

Go Digit is the smallest company with a net worth of only Rs. 2325 Cr as compared to the giant New India with a net worth of Rs. 20,705 Cr. Among its three peers, Star Health has the highest price-to-earnings ratio of 54x and a total price premium of 2.51x.

However, ICICI Lombard has the best return on equity of just under 17% and trades at a price of Rs to gross issue premium. 3.82x.

Company Strengths

1. Simple, personalized customer experience: Customer experience is at the core of what the company does. Go Digit’s focus on simplifying the insurance experience has resulted in high customer satisfaction with a Net Promoter score.
2. Relationships with distributors: The company was committed to freeing up time and money to build relationships with distributors. This includes personal representatives, business representatives, auto insurance providers and brokers.
3. Predictive Underwriting Model: Using the data collected and expertise in selling auto insurance, the company can accurately assess the risks of insurance products and predict losses at a granular level. This helps the company manage costs and pass on lower premiums to customers.
4. Advanced technology platform: The company uses technology to achieve efficient acquisitions. The fully cloud-based platform leverages AI and machine learning and leverages data banks to enable algorithm-driven strategic decisions.

company’s weaknesses

1. Unprofitable performance: The company has not maintained a consistent surplus record over the past three fiscal years, as it only registered a surplus in FY23.
2. The loss reserves maintained are based on estimates. Reserves maintained by insurers are based on estimates of future claims liabilities. This may prove inadequate if a black swan event occurs.
3. Impact of natural disasters: As a general insurance company, your company will always be exposed to catastrophic events such as natural disasters, terrorist attacks, and other incidents. If such an event were to occur to the insured party, their financial position could be damaged.
4. Alerts from regulators include: The company recently received a caution, warning and show-cause notice from IRDAI for non-compliance with regulatory requirements.

Go Digit IPO Review – GMP

Shares of Go Digit were trading at a 19.49% premium in the gray market on May 13, 2024. The stock in Gray Market was trading at Rs 325. This gives a premium of Rs 53 per share to the ceiling price of Rs 272.

Go Digit IPO Review – Key IPO Information

promoter: Kamesh Goyal, Go Digit Infoworks Services Pvt Ltd, Oben Ventures LLP and FAL Corporation

Book Operations Lead Manager: ICICI Securities Ltd, Morgan Stanley India Company Pvt Ltd, Axis Capital Ltd, HDFC Bank Ltd, IIFL Securities Ltd and Nuwama Wealth Management Ltd.

Proposal registered by: Link Intime India Pvt Ltd

purpose of the problem

1. The proceeds received through the IPO will be utilized to maintain the company’s solvency ratio.

Read More: Stocks with High Promoter Commitment in India

conclusion

In conclusion, Go Digit’s upcoming IPO provides an opportunity to invest in one of the fastest growing private non-life insurance companies in India. The company’s focus on leveraging technology, simplifying the customer experience, and building strong relationships with distributors are notable strengths.

However, investors should consider the company’s lack of consistent profitability, reliance on loss reserve estimates, exposure to catastrophic events, and past regulatory warnings as potential weaknesses.

Ultimately, the success of Go Digit’s IPO and the company’s future growth will depend on its ability to maintain a technological edge, effectively manage risk and continue to deliver a superior customer experience in the highly competitive property and casualty insurance market.

Written by Nasir Hussein

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