LIC IPO shares listing Live Updates: India’s insurance sector giant Life Insurance Corporation of India (LIC) will be listing its shares on the stock exchanges on Tuesday.
The Rs 21,000 crore blockbuster initial public offering (IPO) of LIC had witnessed a good response from the investors getting subscribed 2.95 times after a marathon 6-day subscription period from May 4-9.
The shares which are to be allocated for the qualified institutional buyers (QIBs) were subscribed 2.83 times, while those of noninstitutional investors were subscribed 2.91 times and that of retail individual investors (RIIs) were subscribed 1.99 times.
Apart from these, the policyholder’s portion was subscribed 6.12 times while the employee’s segment was subscribed 4.40 times.
The issue price of LIC was fixed at Rs 949 apiece for allotment to investors. All policyholders and retail investors got the shares for Rs 889 and Rs 904 apiece, respectively, after taking into account the discount offered.
The government had offered a discount of Rs 60 per share for its policyholders and Rs 45 apiece for retail investors and LIC employees.
The listing comes at a time when the stock markets are volatile amid accelerating inflation and rising interest rates. With shares in the state-owned giant in the Demat accounts of successful bidders, investors face the question of what to do with the stock.
Whether to exit at the time of listing if it lists at a premium, hold it for the short term, or treat it as a long-term investment.
Market experts are expecting a tepid listing for LIC because of the current upheaval in global equity markets, blamed on Russia’s February 24 invasion of neighboring Ukraine, supply-chain disruptions caused by the war, and interest rate increases by the US Federal Reserve and other central banks that have ended years of easy money.
GMP in Red
According to market analysts, the GMP of LIC doesn’t look impressive as the IPO didn’t get a significant response from foreign and institutional investors. This, as the market experts pointed out, could be the primary reason behind falling GMP.
LIC got a mixed response during IPO despite attractively priced valuations on account of subdued market conditions.
The initial share sale of the state-run insurer closed on May 9. The shares were allocated to bidders on May 12. The central government has diluted a 3.5 percent stake (about 22.13 crore shares) in the LIC via the IPO at a price band of Rs 902-949 apiece.
The retail investors and eligible employees of LIC were offered a discount of Rs 45 per equity share over the issue price. The policyholders got a discount of Rs 60 per share.
Other details
LIC is the biggest player in India’s life insurance industry, commanding 61.4 percent and 61.6 percent market share in new business premium and gross premium, respectively.
According to a report by CRISIL, the gross premium of India’s life insurance industry is expected to clock 14-15 percent CAGR over FY21-FY26. Hence, analysts believe that the huge market opportunity bodes well for this insurance behemoth.
“LIC is primed to benefit from upcoming growth opportunities given its entrenched branding, large agency workforce, and new strategic roadmap aimed at increasing bancassurance, product-mix, and foray into cross-sales,” said analysts at BOB Capital Markets.
Ajit Mishra of Religare Broking, too, added that with over 25 crore LIC policyholders and 4-5 times growth in Demat account holders, the insurance behemoth is primed to gain in the long-term horizon. Hence, we suggest investors remain patient.
