Shares of Niva Bupa Health Insurance, a recent entrant on Dalal Street, extended their winning streak for the third consecutive trading session on Thursday, December 5. The stock surged by another 11.2 per cent to reach a fresh record high of ₹109.34 per share, bringing its three-day cumulative gain to an impressive 47 per cent.
What triggered the rally?
The rally was fueled by reports suggesting a potential reduction in the Goods and Services Tax (GST) rate on health and life insurance policies. According to a PTI report, Finance Minister Nirmala Sitharaman stated on Monday that the cost of insurance for policyholders is likely to decrease if the GST Council recommends a rate cut for health and life insurance policies.
In a written reply in the Lok Sabha, she said the GST Council, in its September 9 meeting, had recommended constituting a Group of Ministers (GoM) to holistically look into the issues pertaining to GST on life insurance and health insurance, the news agency reported.
Currently, an 18 per cent GST is levied on premiums paid for life and health insurance policies. The GST Council, chaired by Sitharaman and comprising her state counterparts, is slated to meet on December 21, where the GoM report on the reduction of GST on life and health insurance is expected to be discussed.
Despite the market buzz, the company clarified that it has not received any official communication from the government regarding a change in GST rates on health insurance premiums. “The company is not aware of any such developments, except for reports appearing in the media. Therefore, we cannot verify or confirm the news,” it stated in an exchange filing on Wednesday.
Niva Bupa Health Insurance is a joint venture between the Bupa Group and Fettle Tone LLP, specialising in health insurance. The company delivers an all-encompassing approach, enabling customers to access a broad health ecosystem and service capabilities via its Niva Bupa Health mobile app and website.
For the quarter ended September 2024 (Q2FY25), the company reported a net profit of ₹13 crore, marking a significant turnaround from a net loss of ₹8 crore in the same period last year. Total income for the quarter stood at ₹1,360 crore, up from ₹992 crore in the corresponding quarter of the previous year, reflecting robust growth.
The company’s shares made a decent debut on the stock exchanges on Thursday, November 14, listing at ₹78.14 on the NSE, a 5.5% premium over the issue price of ₹74. The initial public offering (IPO), valued at ₹2,200 crore, was open for subscription between November 7 and November 11.
The IPO witnessed strong investor interest, receiving bids for 31.13 crore shares against the 16.3 crore shares on offer, achieving an overall subscription of 1.9 times.
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