LIC IPO: The initial public offering (IPO) of Life Insurance Corporation (LIC) continues to attract retail investors, including employees and policyholders, who are among the top bidders for the issue so far. Despite falling premium in the grey market, an intense selloff in the global markets, rate hike concerns and inflationary worries, LIC is holding its charm.
Today, May 9, is the last day to subscribe to the Rs 21,000 crore LIC IPO, the state-owned insurance behemoth, has subscribed 1.79 times till May 8, the fifth day of bidding. The offer has received bids for 29.07 crore equity shares against IPO size of 16.2 crore equity shares.
Policyholders remained at the fore as their reserved portion was subscribed 5.04 times, followed by employees who bid 3.79 times the allotted quota, and retail investors 1.59 times. Non-institutional investors have put in bids 1.24 times the portion set aside for them, while the portion reserved for qualified institutional buyers was subscribed 67 times.
LIC IPO GMP Today
However, the current weak market condition is taking a toll on the flow of primary investments in such a large IPO. Shares of the company are commanding a premium of Rs 36 in the grey market, which has come down from Rs 85 earlier. Market observers said that LIC IPO GMP today is Rs 36, which is Rs 24 lower from its yesterday’s grey market premium (GMP) of Rs 60. They said that after scaling up to Rs 92 levels, LIC IPO GMP has been continuously decreasing because of teh weak stock market sentiments. They said that secondary market across world is facing a sell-off and the Indian stock market is not immune to it. So, the grey market was bound to get affected by the global market sentiments.
As per the market observers, LIC IPO GMP today is Rs 36, which means grey market is expecting LIC IPO listing around Rs 985 levels ( Rs 949 + Rs 36), which is around 3 per cent higher from LIC IPO price band of Rs 902 to Rs 949 per equity share.
However, stock market experts said that grey market premium is an unofficial data and it has nothing to do with the financials of LIC. They advised bidders to look at the balance sheet of Life Insurance Corporation (LIC) of India instead of grey market premium.
Giving ‘buy’ tag to LIC IPO, Astha Jain, Senior Research Analyst at Hem Securities said, “LIC is bringing the issue at price band of Rs 902-949 per share at p/ev multiple of 1.1x. LIC being the Fifth largest life insurer globally by GWP and the largest player in the fast growing and underpenetrated Indian life insurance sector is trusted brand and a customer-centric business model. has presence across India through an omni-channel distribution network with an unparalleled agency force. Company being largest asset manager in India with an established track record of financial performance and profitable growth looks decent investment avenue. Hence we recommend “Subscribe” on issue.”
LIC IPO: Should You Subscribe?
Parth Nyati, founder, Tradingo, said: “Even post listing, the government will still be the major shareholder and the key manager. Thus any future government intervention might be detrimental to shareholders. The company has made plans to address the issues pertaining to the company like losing market share to private players, lower profitability and revenue growth, compared to private players, lower VNB margins, and short-term persistency ratios. LIC is planning to take steps like increasing up-selling and cross-selling, increasing direct sales of their individual products on their website, designing products for the millennials, focusing more on non-par products, and protection-based products, and linked products. Investors must be aware that the business of insurance is long-term in nature; therefore, we recommend this issue for the long-term only.”
GEPL Capital said: “The Embedded value for LIC is Rs 5,39,686 and its post issue implied market capitalization is Rs 6,00,242 crore which is 11.2 per cent premium to its IEV. The Mcap to EV ratio for its listed peers it in the range of 1.5x to 2.5x, Hence we believe Valuations of LIC with its majestic size are priced reasonably.
With its majestic Networks and expected double-digit growth, the industry complied with an attractive valuation compared with peers makes LIC IPO a lucrative Investment. We recommend “SUBSCRIBE” to the issue.”
LIC IPO Listing
The tentative LIC IPO allotment date is May 12, 2022, whereas the most likely LIC IPO listing date is May 17, 2022.
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