LIC lists with 8.62% discount at Rs 867.20 per share

On the NSE, the listing price was Rs 872, indicating a discount of 8.11 per cent from issue price of Rs 949 per share

FPJ Web DeskUpdated: Tuesday, May 17, 2022, 10:29 AM IST
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The QR codes are being put up at Paytm partnered merchant outlets to ensure interested investors can easily apply for the IPO. / Representational image |

The Life Insurance Corporation (LIC) has listed on the BSE at Rs 867.20 per share, a discount of Rs 8.62 percent from its initial public offering (IPO) allotment price of Rs 949.

On the NSE, the listing price was Rs 872, indicating a discount of 8.11 per cent from issue price of Rs 949 per share.

Santosh Meena, Head of Research, Swastika Investmart Ltd. said, "India’s largest insurance company has debuted at Rs. 872 i.e. 7 percent below its issue price. The current market is not conducive for primary issues and LIC being the largest IPO has witnessed a negative listing, the current market volatility has weighed down on the insurance titan’s listing. However, the prospects for the insurance industry in India are good due to the under penetration of insurance and a long runway of growth; hence LIC being the largest player will be the beneficiary in the long term. Insurance is a business of scale, and there is no company to match the scale of LIC, so we suggest investors not be bothered about the negative listing and stay with the company for the long term.  

"Those who applied for listing gains can maintain a stop loss of Rs. 800. New investors can take advantage of the dips to accumulate this share for the long term. Another point to note has that, LIC didn’t pay any dividends in the last financial year, so there are high chances that the company might declare a good dividend this year, thus making it a good dividend play".

Parth Nyati, Founder, Tradingo, said: The insurance behemoth LIC Ltd. has debuted at Rs. 872 i.e. 7 percent below its issue price. The company’s weak listing can be attributed to high volatility in the markets and negative market sentiments. The company is synonymous with insurance in India and enjoys a phenomenal brand recall. We believe India’s highly underpenetrated life insurance space is still at a nascent stage and is attractively positioned to capture the huge growth opportunity.

"LIC enjoys many competitive advantages like strong brand value, extremely large scale of operations, a huge network of agents, and an envious distribution network, further, the company’s issue was priced at a Price to Embedded value of 1.1x, providing a valuation comfort, so we suggest investors to stay with the company for the long term despite the negative listing. Those who applied for listing gains can maintain a stop loss of Rs 800. New investors can take advantage of the dips to accumulate this share for the long term. We would like to add that the company's further downside will be limited due to low float post listing."

Mohit Nigam, Head - PMS, Hem Securities said, "As observed, majority of big IPOs have not given a strong listing debut gains. Considering previous trends, LIC has continued to take the same path with listing at a discount of 8.8 percent from 949 to 872 at NSE on its listing day and is currently trading at 900-905 levels.

"We believe that personal savings and awareness regarding insurance will increase enabling the sector to outperform in the long run and will indirectly benefit LIC as it is the market leader in this sector. We feel long term investors should continue to hold the scrip while short-term investors can wait to enter at a lower price".

LIC had fixed the issue price of its shares at Rs 949 apiece after a successful initial public offering, which fetched Rs 20,557 crore to the government.

LIC policyholders and retail investors have got the shares at a price of Rs 889 and Rs 904 apiece, respectively, after taking into account the discount offered. The shares got listed on the BSE and NSE on Tuesday at a discount of Rs 81.80 and Rs 77 apiece, respectively, over its issue price of Rs 949 a share.

The government sold over 22.13 crore shares or a 3.5 per cent stake in LIC through the IPO. The price band of the issue was Rs 902-949 a share. However, shares were allocated to investors on May 12 at the upper end of the price band.

The LIC IPO -- India's largest to date -- closed with nearly 3 times subscription, predominantly lapped up by retail and institutional buyers, but foreign investor participation remained muted.

So far, the amount mobilised from the Paytm IPO in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

The long-awaited IPO for the LIC was open for subscription till May 9.

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