Virat Kohli & Anushka Sharma Set to Gain Big from Go Digit IPO

Virat Kohli & Anushka Sharma are poised to reap substantial returns following upcoming listing of insurance startup Go Digit. Having invested total of ₹2.5 Cr in company, their investment is expected to yield remarkable 271% return, translating to notional profit of ₹6.75 Cr. Kohli purchased 266,667 shares at ₹75 each, while Sharma acquired 66,667 shares for ₹50 lakh, both through private placement in January 2020. With Go Digit's IPO slated to hit market next week, IPO details & prospects shed light on potential windfall for celebrity investors.

Go Digit IPO Details

Go Digit IPO consists of fresh issue of shares worth ₹1,125 Cr  & offer for sale (OFS) of 54,766,392 shares. Investors can bid for maximum of 55 equity shares, with IPO allocation divided into 75% for qualified institutional buyers (QIBs), 15% for non-institutional investors, & 10% for retail investors. IPO is set to open for subscription on May 15 & close on May 17, with price band of ₹258 to ₹272 per equity share.

Solvency Ratio & Financial Performance of Go Digit IPO

Go Digit, Post IPO anticipates its solvency ratio to surpass 200%, with chairman Kamesh Goyal expressing confidence in company's strengthened financial position. company aims to maintain its solvency ratio through IPO proceeds, following decline to 160% in April - December 2023 from 190% year earlier. Despite operating losses & rise in loss reserves, Go Digit recorded significant improvement in net profit to ₹ 129  Cr  in April - December 2023 from ₹10  Cr  in previous year. With assets under management reaching ₹ 14,909  Cr  & gross written premium at ₹6,680  Cr , Go Digit's focus on health insurance expansion underscores growth opportunities in sector.

Also Read: All about Go Digit IPO

Objectives of the Go Digit IPO

The Company proposes to utilise the Net Proceeds towards the following objects:
1. To undertake its existing business activities; and
2. To undertake the activities proposed to be funded from Net Proceeds. Further, the Company expects to receive the benefits of listing Equity Shares on the Stock Exchanges, which, company believes, will enhance the visibility and its brand image among its existing and potential customers.

Go Digit General Insurance Limited Financial Information

Analysis & Interpretations 

Analysis & Interpretation of Go Digit General Insurance Limited Financial Information:  

1. Assets
Go Digit's assets have shown consistent upward trend over past four periods, indicating company's growth trajectory & expansion efforts. significant increase from ₹1,874.80  Cr  in March 2021 to ₹3,619.95  Cr  in December 2023 reflects robust asset accumulation, potentially driven by strategic investments & business acquisitions.

2. Revenue
Go Digit has demonstrated remarkable turnaround, despite fluctuations in revenue over periods, from negative figures in March 2022 & March 2021 to positive revenue of ₹130.83  Cr  in December 2023. This positive revenue trend signals improved operational performance & revenue generation capabilities, which could be attributed to enhanced market penetration & product offerings.

3. Profit After Tax (PAT) 
Go Digit's PAT has surged consistently across evaluated periods, with notable increase from ₹35.54  Cr  in March 2023 to ₹129.02  Cr  in December 2023. This substantial growth in profitability underscores company's operational efficiency, cost management strategies, & potentially favorable market conditions. Investors may view this trend positively as it reflects sustained profitability & potential for future earnings growth.

4. Net Worth & Reserves
The company's net worth & reserves have witnessed steady rise, indicating strong financial foundation & prudent capital management. substantial increase in net worth from ₹1,134.57 Cr  in March 2021 to ₹2,459.34  Cr  in December 2023 reflects robust capital accumulation & retained earnings, which could instill investor confidence in company's financial stability & longterm growth prospects.

5. Total Borrowing
While financial data does not provide complete picture of Go Digit's debt profile, absence of total borrowing figures in December 2023 suggests either limited reliance on debt financing or strategic debt management practices. This could be viewed positively by investors concerned about company's leverage levels & debt servicing capabilities.

Investment Considerations 

1. Stable Growth Trajectory
Go Digit's consistent growth in assets, revenue, & profitability signifies stable growth trajectory, indicating company's resilience & potential for sustained expansion.

2. Strong Financial Position
Company's robust net worth, reserves, & surplus underscore its strong financial position & ability to weather economic uncertainties, thereby mitigating investment risks.

3. Positive Turnaround
Turnaround from negative revenue & profit figures in previous periods to positive figures in December 2023 reflects operational improvements & effective business strategies, which could attract investor interest.

4. Limited Debt Exposure
Absence of significant total borrowing indicates prudent debt management practices, reducing company's financial risk & enhancing its overall solvency position.

5. Industry Outlook
Investors should also consider broader insurance industry outlook, regulatory environment, competitive landscape, & market demand trends to assess sector's growth potential & Go Digit's positioning within market.
 

Go Digit IPO Peer Comparison 

Go Digit General Insurance Limited peer comparison with similar listed entities. (As on March 31, 2023)

Metrics Where Go Digit General Insurance Limited Wins

1. Price-to-Book Value (P/BV) Ratio: Go Digit exhibits a lower Price-to-Book Value (P/BV) ratio compared to its peers, indicating that the company's stock is relatively undervalued in relation to its net asset value per share. A lower P/BV ratio suggests that investors may be paying less for each unit of Go Digit's book value, potentially presenting a more attractive investment opportunity in terms of asset valuation.

Metrics Where Go Digit General Insurance Limited Lags

1. Earnings Per Share (EPS): Both basic and diluted EPS figures for Go Digit are significantly lower compared to its peers, such as ICICI Lombard General Insurance Company Ltd and Star Health & Allied Insurance Company Limited. This suggests that Go Digit may have lower earnings efficiency per share, potentially indicating challenges in generating profits relative to its counterparts.

2. Price-to-Earnings (P/E) Ratio: Go Digit demonstrates a notably lower Price-to-Earnings (P/E) ratio compared to The New India Assurance Company Ltd and Star Health & Allied Insurance Company Limited. A lower P/E ratio often indicates that investors are paying less for each unit of earnings, which could imply lower growth expectations or perceived risks associated with the company's earnings prospects.

3. Return on Net Worth (RoNW): Go Digit's Return on Net Worth (RoNW) percentage is considerably lower than that of ICICI Lombard General Insurance Company Ltd and Star Health & Allied Insurance Company Limited. A lower RoNW suggests that Go Digit may be less efficient in generating profits relative to its shareholders' equity, potentially indicating lower profitability or operational efficiency compared to its peers.

Outlook & Growth Strategies

Go Digit's emphasis on enhancing its health insurance business, which constitutes significant portion of its gross written premium, reflects its strategic approach to capitalize on evolving market dynamics. company's commitment to retail & group health insurance segments aligns with its objective of sustained growth. Despite challenges such as higher expenses associated with rapid expansion, Go Digit remains optimistic about its trajectory, buoyed by its robust assets under management & growing market share.

Conclusion

Go Digit's upcoming IPO presents lucrative investment opportunity, with notable celebrity backers like Virat Kohli & Anushka Sharma poised to capitalize on company's growth potential. As IPO subscription window approaches, investors are advised to carefully evaluate Go Digit's financial performance, market positioning, & growth prospects to make informed investment decisions. Go Digit appears to be on growth trajectory with improving financial performance & strong fundamentals. However, investors should conduct further due diligence, consider external factors impacting insurance sector, & evaluate their risk appetite before making investment decisions. While positive trends in revenue, profitability, & financial stability may make Go Digit attractive investment opportunity, thorough research & careful assessment of all relevant factors are essential to making informed investment choices.