New India Assurance Stock in Focus After GST Demand Cut from ₹2,298 Cr to ₹110 Cr

Synopsis: The GST issue for this PSU company has been greatly relieved, as the authorities waived Rs 2,187.95 crore out of the demanded Rs 2,298.06 crore for the FY18-FY23 period, and only Rs 110.12 crore has been assessed along with the penalty and interest for the same period. 

The shares of this company, which is a government of India-owned general insurance major with a significant presence in fire, marine, engineering, aviation, and health insurance and also has a global footprint across 25 countries, making it one of India’s largest domestic insurance networks, had its shares in the news following the significant reduction in its GST SCN amount. 

With the market cap of Rs 25,708 crore, the shares of New India Assurance Company Ltd had hit their intraday high at Rs 157.50, gaining about 3 per cent compared to their previous day’s closing price of Rs 152.95. The shares are trading at a PE of 22.1, whereas their industry PE is at 42.2.

About the Reduction in GST SCN

The New India Assurance Company Ltd has got only two GST adjudication orders, significantly reducing the overall risk as compared to the original notice of show cause. Since the original GST of Rs 2,298.06 crore was shown to be due for the period of April 2018 to March 2023, the adjudicating authority has now waived a substantial amount of Rs 2,187.95 crore while confirming only Rs 110.12 crore, along with the payment of interest and penalty. The result shows a substantial reduction of the risk, as there is a minimal amount confirmed under the GST act.

Furthermore, the group has been receiving a separate GST DRC-07 notice of Rs 69.17 crore for FY 21-FY 22 from the tax authorities of Delhi. This is largely connected with Input Tax Credit matters such as proportionate reversal of ITC, excess ITC, as well as ITC arising out of exempt/non-business activities. However, it is a significant relief that the group has intimated there is no operational effect arising from this notice, and efforts are being made to file appeals within the prescribed timelines.

Strategically and investor-wise, the pertinent point to note is that the risk of GST has moderated to a significant extent, and the extent of the demand now will be only a fraction of the originally cited demand. Moreover, New India Assurance Company Ltd stated that they had a robust case on merits, and considering its PSU and size, the amounts in dispute are not significant enough to cause a possible disruption. Overall, although the GST litigation continues to cast a shadow, the present outcome does bring relief to the company.

The revenue from operations for the company stands at Rs 13,450 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 10,786 crores, up by about 25 per cent YoY. However, the net profit stood at Rs 55 crore in Q2 FY26, down from Rs 91 crore in Q2 FY25.

The market share data indicates that New India Assurance has a strong and diversified presence in key general insurance segments, with a total market share of 13.25%. The segments where it has significant strength include Marine with 17.31%, Fire at 16.40%, Health & Personal Accident at 16.54%, and Others at 17.40%, which point toward leading positions in commercial and speciality lines. Meanwhile, Motor lags at 9.63%. It is important to note that without crop insurance in H1FY26, the underlying market share improves to approximately 14.4%, hence reflecting stable core franchise strength.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post New India Assurance Stock in Focus After GST Demand Cut from ₹2,298 Cr to ₹110 Cr appeared first on Trade Brains.