From the latest news, LIC’s listing is finally here today on both NSE and BSE. As the country’s largest insurer lists itself on the bourses, it debuted on the Indian stock exchanges on a weak note, listing more than 8% off from its base price of ₹949 per share.
You can also note the growth of shares in the market BSE Ltd, which has fallen heavily in value over the past month. On May 18, their cost was ₹742.85. As for the BSE index or SENSEX has lost its position since the beginning of May, but today it has started to grow again.
Note! The S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India.
LIC IPO and Valuation
According to the latest BSE news, LIC’s IPO got a great response from the investors with a 2.95 times subscription. Overall it was a great success as it fetched ₹20,557 crores (Cr) for the government.
Before Life Insurance Corporation of India (LIC), only Paytm, Coal India, and Reliance Power had raised ₹18,300 Cr, ₹15,500 Cr, and ₹11,700 Cr, respectively. It makes LIC’s listing by far the biggest IPO in recent times. Prior to getting into this IPO, LIC had also raised more than ₹5,627 crores from anchor investors.
Post this, the state-owned insurer has become the fifth-largest company in India, with a valuation of more than ₹6 lakh crores. Today, only Reliance Industries, TCS, HDFC Bank, and Infosys have more capitalization than the insurance giant.
Note! All the latest BSE market news can be found at www.bseindia.com.
What led to the LIC IPO?
Last month, LIC decided to cut down its IPO size from a dilution of 5% to 3.5 % due to the prevailing choppy market conditions. The offering price was fixed at ₹949/share for allotment to investors. In contrast, policyholders and retail investors got a share price of ₹889 and ₹904 apiece, respectively (including the discount offered). The government gave a discount of ₹60 per share to the policyholders and Rs 45 per share to retail investors and LIC employees.
The LIC IPO earnings make up about 1/3rd of the ₹65,000 crore disinvestment target set for FY 22-23 by the government. At the same time, it has already raised ₹3,058 Cr from disinvestment in ONGC and ₹211.14 Cr from Pawan Hans Pvt Ltd.
Key takeaways from the LIC listing
Overall the market is not very conducive for primary issues and LIC IPO has witnessed a negative listing as the current market volatility weighed down on the insurance titan. However, the future prospects of the insurance industry in India are great. This is due to the under penetration of the overall insurance subscription, that presents a long runway for growth.
Hence LIC being the most significant player in the Indian Insurance landscape will be a long term beneficiary. Insurance is a business of scale, and no company can match the scale of Life Insurance Corporation of India. Early investors should not be bothered about the negative listings and market volatility.
Is it worth investing in LIC?
For those who want to profit from the listing, the ₹800 stop loss can be maintained, while new investors can take advantage of the dip to build shares long-term. Another point to note is that LIC didn’t pay any dividends in the last FY, so there are high chances that the company might declare a good dividend this year.
Be careful when signing up for an IPO. Research the company, and study its background on the official site to invest in time. Stock advisors can also be an excellent source of information if they have an established history