HDFC Standard Life Insurance Co. Ltd’s shares soared as much as 27 percent in their trading debut on Friday after its IPO raised $1.3 billion last week, bucking a trend of lacklustre market debuts by Indian insurers on valuation worries.
By 05.18 GMT, HDFC Life shares were trading at 352.0 rupees, below an earlier high of 369 rupees and compared to the IPO issue price of 290 rupees. The gains were aided by an upgrade of India’s sovereign bond rating by Moody’s, which lifted the main Mumbai market index up 1.14 percent.
India has seen a record year for IPOs with initial share sales topping $11 billion so far in 2017. But high valuations, especially for some recent big insurers, have led to weak trading debuts.
HDFC Life’s IPO was the fourth billion-dollar plus IPO this year. State-run General Insurance Corp, which listed on Oct. 25 after a $1.7 billion IPO that was the biggest this year, is trading 11.6 percent lower than its IPO price of 912 rupees.
And New India Assurance Co Ltd, the biggest non-life insurer and whose IPO raised $1.5 billion, fell around 9 percent this week.
HDFC Life’s rival SBI Life has also shed 6.4 percent since its listing last month after a $1.3 billion IPO.
HDFC Life was priced at 4.7 times its 2017/18 embedded value versus SBI Life’s 3.9 times and ICICI Prudential’s 3.4 times, brokerage Centrum said in a pre-IPO note.
HDFC Life’s two main shareholders – Housing Development Finance Corp and Standard Life – sold a combined 15 percent stake in the insurer’s IPO which was subscribed nearly five times.
While institutional investors had lapped up the IPO, the portion reserved for retail shareholders was not fully subscribed, reflecting the concerns over high valuations.