State-run New India Assurance Co Ltd's shares fell as much as 10 per cent on their trading debut on Monday after a $1.5 billion initial public offering (IPO), as market participants baulked over the insurer's high valuation.

The IPO of the country's biggest non-life insurer by premium, which saw the government and company raise a combined Rs 9,600 crore ($1.47 billion), was subscribed 1.2 times the number of shares on offer, indicating low demand compared with other Indian IPOs this year.

India has been enjoying a record year for IPOs with fund-raising so far crossing $11 billion. But high valuations, especially in some recent big IPOs from insurers, have dampened post-listing share price gains.

New India's IPO was the second-biggest in the country this year after state-run General Insurance Corp's initial share sale raised $1.7 billion. New India is the second non-life insurer to go public after the listing of private-sector rival ICICI Lombard General Insurance Co Ltd earlier this year.

The IPO price valued New India at 76 times its earnings per share for the year ended March 2017, compared with ICICI Lombard's 48 times, Mumbai brokerage Angel Broking said in a pre-sale research note. New India's return on equity has lagged ICICI Lombard's in the last five years, the brokerage also said.

By 0520 GMT, New India shares were trading 8.4 percent lower at 732.25 rupees, compared with an IPO issue price of 800 rupees. The benchmark Nifty 50 share price index was down 0.4 percent. ($1 = 65.2850 Indian rupees)

For New India Assurance, the largest general insurance company in India and a leader across segments, growing business over the next couple of years will not be a challenge.

The company’s diverse product portfolio, wide distribution network and strong relationship with large corporates are key positives that will help it benefit from the growing opportunities in the general insurance space.

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