Life Insurance Corporation of India (LIC) will list on the stock exchanges tomorrow, following the initial public offer (IPO) which was oversubscribed nearly three times the issue size.
The government has fixed the issue price of LIC shares at Rs 949 apiece, the upper end of the IPO price band, fetching the exchequer around Rs 20,557 crore.
According to recent grey market patterns, the LIC`s unlisted shares were selling at Rs 936 per share on Saturday, a discount of Rs 13 to the IPO price band`s upper range.
However, as per today's GMP position, the LIC shares are selling at a discount of Rs 19.
Aayush Agrawal, Senior Analyst, Swastika Investmart Ltd. on LIC IPO., said, "We anticipate that LIC might have a flat listing tomorrow (May 17) , based on the current market situation. Due to increased inflation statistics, FII outflows, currency weakness, geopolitical and rate hike-related worries, present markets are experiencing extraordinary volatility, this has caused sell-offs in equity markets all over the world.
According to recent grey market patterns, the company's unlisted shares were selling at Rs 936 per share on Saturday (May 16), a discount of Rs 13 to the IPO price band's upper range. However, the stock's modest float may limit the stock's post-listing decline.
LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value and huge network of agents. However, there are concerns with the company like losing market share to private players, lower profitability & revenue growth compared to private players, lower VNB margins and short-term persistency ratios, but the valuation at Price to Embedded Value of 1.1 had discounted the above concerns. Nevertheless, investors must be aware that the business of insurance is long term in nature; therefore we recommend investors to stay with the company for the long term even if the company lists at a discount.
