IPO
Representational imageIBT Raghavendra N

The central government-backed General Insurance Corporation of India's (GIC Re) initial public offer (IPO) opens today for subscription at the primary market and different brokerages already gave positive recommendations.

Through the IPO of the company, at the upper end of the price band, the government is likely to raise around Rs 11,370 crore. The company has set a price range of Rs 855 to Rs 912 per share for its IPO.

In terms of valuation, the IPO would be the country's third biggest after Coal India's 15,200 crore and Reliance Power's Rs 11,700 crore issues.

The IPO consist of an offer for sale (OFS) where the reinsurance company will dilute 10.75 crore share and also a fresh issue of 1.72 crore shares.

The company earlier said that the amount raised from the fresh issue will be used to increase the firm's capital base and to maintain current solvency levels. At the upper price band, the company will garner worth around Rs 1,569 crore from the fresh issue offer.

GIC Re is the largest reinsurance company in India in terms of gross premiums accepted in financial year 2017.

Here are some of the brokerages views of the issue:

Angel Broking

The brokerage has given a subscribe recommendation citing well-managed investment book, robust balance sheet, but cautioned the investors that the firm's financials may get affected adversely if India witnesses bad monsoon.

CENTRUM BROKING

The brokerage believes that issue is fairly priced considering a return ratio of 16 percent RoE and gives buy recommendations, Business Standard reported. In the light of the company's full valuation and size of the issue, the stock is expected to give returns only in the long term, it added.

Reliance Securities

Reliance Securities expects company's business to grow further owing to policies like Fasal Bima Yojana. The brokerage gives buy recommendation as it thinks that the firm is fairly valued at 4 times price to book based.