Go Digit IPO Makes Muted D-Street Debut, Listing at a 5% Premium Over Issue Price

Shares of Go Digit General Insurance made a quiet debut on Dalal Street on Thursday, May 23, opening at ₹286 on the NSE, a 5.15% premium over its issue price of ₹272 per share. Similarly, the stock commenced trading on the BSE at ₹281.10, reflecting a 3.34% premium over the issue price.

Market Reaction

The listing has been considered underwhelming compared to market expectations. Shreyansh V Shah of StoxBox anticipated a stronger debut, predicting shares to open around ₹300, suggesting an upside of approximately 10%. Shah advised investors to hold the stock for the long term despite the modest listing gains.

“Although the IPO valuation may seem aggressive compared to recent earnings, Go Digit’s strong technological edge and presence in a rapidly growing Indian insurance market offer long-term potential for profitability,” said Shivani Nyati of Swastika Investmart.

IPO Performance and Use of Proceeds

The Go Digit IPO saw robust demand, being oversubscribed nearly 10 times, driven by strong interest from retail and institutional buyers. The insurtech start-up raised approximately ₹1,176 crore from anchor investors, including Fidelity Investments, Abu Dhabi Investment Authority (ADIA), Goldman Sachs, and hedge fund Bay Pond Partners.

The IPO included a fresh issue of shares worth ₹1,125 crore and an offer-for-sale (OFS) component of up to 5.47 crore equity shares. The proceeds will support current business operations and finance planned activities.

Company Background and Financials

Go Digit Insurance, backed by Canada-based Fairfax Financial Holdings and renowned Indian celebrities Virat Kohli and Anushka Sharma, aims to enhance its visibility and brand image through the listing. Despite promoter Go Digit Infoworks and other shareholders offloading stakes, Kohli and Sharma will remain investors. Kohli invested ₹2 crore for 2.66 lakh shares in 2020, while Sharma invested ₹50 lakh through a private placement.

Fairfax Financial Holdings owns 45.3% of Go Digit’s parent company, Go Digit Info Works Services (GDISPL), with founder Kamesh Goyal and Oben Ventures LLP holding 14.96% and 39.79%, respectively.

Financial Performance

Go Digit’s net loss widened to ₹295 crore in FY22, compared to ₹122 crore in FY21, with total income standing at ₹3,841 crore for FY22. Premium income grew by 62% from FY21 to FY22. The company provides a range of general insurance products, including health, travel, property, marine, and liability insurance, and boasts a valuation of over $1 billion.

Conclusion

Go Digit’s IPO debut may not have met lofty expectations, but the company’s strong technological foundation and strategic market positioning suggest potential for long-term growth. Investors are advised to monitor its performance closely as it navigates the dynamic insurance sector.

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