As Life Insurance Corporation (LIC) saw its discounted debut in the stock markets on Tuesday, its market capitalization (m-cap) has fallen by about Rs 47,000 crore to Rs 5.53 lakh crore compared to the valuation of more than Rs 6 lakh crore at the issue price . However, the company is still the fifth largest in India in terms of market capitalization at its current share price.
The company’s shares closed on Tuesday at Rs 73.55, or 7.75 percent, lower to Rs 875.45 compared to the issue price of Rs 949 per scrip.
With the current market cap of Rs 5,53,721.92 lakh crore, Life Insurance Corporation is the fifth largest company in terms of valuation. In the ranking of top 10 companies, Reliance Industries (Rs 17,12,023.67 crore) remained the most valued company, followed by Tata Consultancy Services (Rs 12,63,177.71 crore), HDFC Bank (Rs 7,29,464.56 crore). ), Infosys (Rs 6,38,869.36 crore), and LIC (Rs 5,53,721.92 crore).
The market capitalization of Hindustan Unilever is currently in sixth position with a valuation of Rs 5,27530.23 crore, followed by ICICI Bank (Rs 4,93,752.60 crore), State Bank of India (Rs 4,17,091.72 crore), HDFC (Rs 3,97,233.71 crore) and Bharti Airtel (Rs 3,88,588.39 crore).
Shares of LIC opened on Tuesday at a discount of 8.61 percent to Rs 867.20 each on the BSE. It hit a low of Rs 860.10 during early trading before swinging back to hit the high of Rs 920 a share for the day. Finally, the company ended the day at Rs 875.45 per share, which was 7.75 percent lower than the issue price of Rs 949 per scrip.
“LIC listed at a discount as suspicious. 2 crore shares, about 10 percent of the issue, were sold and bought in the first 15 minutes. It may be a sponsored purchase. The actual value is less than half of the issue price. It looks like LIC stocks are moving towards the right valuation,” former Treasury Secretary Subhash Chandra Garg said in a tweet on Tuesday.
LIC’s Initial Public Offering (IPO) received a good response from participants as it had 2.95 bids on the last day of bidding, with the section reserved for Qualified Institutional Buyers (QIBs) being fully booked.
The bids received were 47.83 crore against the bid of 16.21 crore. The price range of the LIC IPO was set at Rs 902-949 per share and the company offered a discount of Rs 60 per share to its policyholders and Rs 45 each to retail investors and LIC employees.
Vinod Nair, head of (research) at Geojit Financial Services, said: “LIC’s moderate listing is in line with expectations in the context of the decline in market dynamics from the initiation of the IPO to the listing date. the decline in insurance industry valuations has declined, maintaining the discount of about 70 percent from the industry average.”
He added that the stock has plunged and that LIC is a decent investment opportunity in the short to medium term, given its strong presence in the market, improvement in future profitability due to changes in surplus distribution standards and the strong growth prospects for the sector. “LIC can perform well if we have a resilient market and positive insurance industry performance.”
What brokers say?
Narendra Solanki, head of (basic research and investment services) at Anand Rathi, said: “Given the market environment at the moment, I think the LIC listing is reasonable. Those who bought the shares of LIC for the long term should continue to hold the shares.”
Brokerage firm Macquaire issued a “neutral” stance on the shares of Life Insurance Corporation on Tuesday with a target price of Rs 1,000, which is slightly above the IPO price of Rs 949 per share. LIC’s IPO was subscribed almost three times, led by policyholders and private investors.
Macquarie Securities’ analyst Suresh Ganapathy noted that LIC has consistently lost market share in the individual business due to the lack of product diversification and excessive focus on single-premium and group businesses.
Ganapathy also argued that any investor who invests in LIC takes indirect exposure to the domestic stock market, as much of the life insurer’s embedded value consists of unrealized market gains from equity investments.
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