The LIC stock has a Lukewarm Market Debut!

Date:

Shares of the state-owned Life Insurance Corporation (LIC) debuted on the market today at an 8.62 percent discount to the IPO issue price. The company’s shares were priced between Rs 902 and Rs 949. The stock was floated on the BSE at Rs 867.20. LIC’s market capitalization was Rs 5.48 lakh crore.

On the BSE, 1.5 lakh shares of the company changed hands, resulting in a turnover of Rs 13.03 crore. The stock was launched on the NSE for Rs 872, 8.11 percent cheaper than the IPO price. The company’s market capitalization was Rs 5.51 lakh crore. On the NSE, 44.20 lakh shares of the company changed hands, resulting in a turnover of Rs 385.4 crore.The LIC IPO’s grey market premium (GMP) was minus Rs 12, indicating a listing at a discount to the issue price today. LIC’s GMP has dropped from Rs 85 on May 3 to Rs 75 today. The IPO began on May 4 and ended on May 9.

On the last day, the IPO was subscribed to 2.95 times (May 9). The share offer got bids for more than 47.83 crore (47,83,67,010) shares, with a total issue size of more than 16.20 crore (16,20,78,067) shares. While the amount intended for policyholders was subscribed to 6.1 times, the piece intended for employees was booked 4.4 times.

The insurer received Rs 5,620 crore from anchor investors a day before the share sale on May 2 (as the market was closed on May 3), indicating substantial interest. The anchor book’s subscribers included the Norwegian wealth fund Norges Bank Investment Management and the Singapore government.

In addition to other global funds, domestic mutual fund firms such as HDFC Mutual Fund, SBI, ICICI, and Kotak participated in the LIC anchor issue. According to estimates, over 20 investors have showed interest in subscribing to the anchor book. Anchor investors are institutional investors who buy into an IPO before it becomes public. Anchor investors typically invest in an issue the day before the IPO. They must bid on the shares within the price range set for the IPO. During the offering, each anchor investor must contribute a minimum of Rs 10 crore.

Meanwhile, the IPO raised Rs 20,557 crore for the government. Through the IPO, it sold a 3.5 percent stake in the insurance, or 22,13,74,920 shares. The government’s stake, which stood at 100% prior to the IPO, has been reduced to 96.50% following the IPO. At 10:49 a.m., LIC was trading at Rs 900.55, down Rs 48.45, or 5.11 percent. It reached an intraday high of Rs 920 and a low of Rs 860.10.


MAY 17, 2022 / 10:55 AM IST
Mohit Nigam, Head of PMS at Hem Securities, comments on the LIC listing:As has been noticed, the bulk of large IPOs have not provided high listing debut gains. Considering recent trends, LIC has remained on the same road, listing at an 8.8 percent discount from 949 to 872 on the NSE on its listing day and is currently trading at Rs 900-905 levels. We anticipate that personal savings and insurance knowledge will rise, allowing the sector to succeed in the long run and benefiting LIC indirectly as the market leader in this area. Long-term investors should continue to hold the stock, while short-term investors should wait for a lower price to enter.MAY 17, 2022 / 10:46 AM IST
LIC was selling at Rs 900.55, down Rs 48.45, or 5.11 percent, at the time of writing. It reached an intraday high of Rs 920 and a low of Rs 860.10.

MAY 17, 2022 / 10:41 AM IST
Parth Nyati, Founder of Tradingo, comments on LIC listing:

The company’s poor listing can be ascribed to market volatility and unfavourable market sentiment. In India, the corporation is connected with insurance and has a remarkable brand recall. We believe India’s highly underserved life insurance market is still in its infancy and is well positioned to capitalise on the enormous growth opportunities. LIC has many competitive advantages, such as a strong brand value, an extremely large scale of operations, a massive network of agents, and an enviable distribution network. Additionally, the company’s issue was priced at a Price to Embedded value of 1.1x, providing valuation comfort, so we recommend investors stay with the company for the long term, despite the negative listing. Those who applied for listing gains can keep a Rs. 800 stop loss. New investors might take advantage of price drops to buy this stock for the long term. We’d like to point out that the company’s additional fall will be constrained due to the minimal float after listing.

MAY 17, 2022 / 10:33 AM IST
Motilal Oswal Financial Services’ Hemang Jani, Head of Equity Strategy, Broking, and Distribution:

Though the LIC listing has been below the issue price of Rs 949, given the excellent values and market stability, we anticipate some purchasing interest in the shares from both retail and institutional investors. Because a considerable quantity of money has been released following the listing of LIC, some of this money may be redirected into equity markets.

MAY 17, 2022 / 10:18 AM IST
Swastika Investmart’s Head of Research, Santosh Meena:

The current market is not conducive to primary issues, and LIC, the largest IPO, has seen a negative listing as a result of the current market volatility. However, the prospects for the insurance market in India are promising due to low insurance penetration and a long growth runway; thus, LIC, as the largest participant, will benefit in the long run. Insurance is a scale business, and there is no company with the scale of LIC, thus investors should ignore the unfavourable listing and stick with the company for the long term. Those who applied for listing gains can keep a Rs 800 stop loss. New investors might take advantage of price drops to buy this stock for the long term. Another thing to keep in mind is that LIC did not pay any dividends in the previous fiscal year, so there is a significant probability that the firm would declare a good payout this year, making it a good dividend play.

MAY 17, 2022 / 09:35 AM IST
Dipam Secretary on LIC: LIC embedded value will be made available to investors on a regular basis. Our website’s response time for allocation was less than 10 milliseconds. To facilitate allotment, phone centres answered 16500 calls.

MAY 17, 2022 / 09:30 AM IST
LIC: Yash Gupta, Equity Research Analyst at Angel One:

LIC shares will be launched today, and retail investors who must obtain the allotment can hold the list for the short to medium term. LIC will trade at a P/EV (embedded value) ratio of 1.1x at an upper price band of Rs 949, a significant discount to other listed private life insurance companies such as HDFC Life, ICICI Pru Life, and SBI Life. Because all retail investors have been allotted shares in the LIC IPO, there may be some selling pressure at first. Given LIC’s low values in comparison to other publicly traded companies, investors with a longer time horizon can hold or buy more.

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