IPO IPO: The IPO of Life Insurance Corporation of India (LIC), the largest in Indian capital market history, is open for subscription today. The government of India aims to earn Rs 21,000 crore at the top end of the price range by liquidating 3.5 percent of its stake in the insurance giant. Of this, LIC raised Rs 5,630 crore from anchor investors on May 2, diluting about 59.3 million shares to 123 investors at Rs 949 each. Marquee investors, domestic mutual funds, domestic insurance companies, corporations and NPS were part of the anchor allotment.
LIC IPO started on Wednesday or May 4 and will remain open until May 9, including Saturday or May 7 and Sunday or May 8. The price range for the LIC IPO is set at Rs 902-949 per share of shares with a par value of Rs 10 each. LIC policyholders are eligible for a discount of Rs 60. A discount of Rs 45 will also be offered to retail investors and employees.
Also read: LIC IPO remains open on Sunday: Investors can bid on India’s largest IPO over weekend | Exclusive
LIC IPO: Subscription Status Day 2
The IPO of the country’s largest life insurance company Life Insurance Corporation of India has subscribed 1.03 and received bids for 16.68 crore shares against an offer of 16.2 crore shares on May 5, the second day of the bidding. . The portion set aside for the policyholder portion subscribed 3.11 times, staff subscribed 2.21 times, and retail investors subscribed 93 percent, while QIBs bid for 40 percent shares of their allotted quota and NII took 47 percent of their share. .
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LIC IPO: main concerns
Motilal Oswal highlighted the risks and concerns of the LIC’s IPO. They said, “Adverse variation in persistence metrics could have a material effect on LIC’s financial performance. Second, a regulatory change could have a negative impact on business.”
It further said that LIC relies heavily on individual agents. LIC’s inability to retain and recruit individual agents in a timely manner and at a reasonable cost could have a material adverse effect on its business.
If the actual perceived claims and other parameters differ from the assumptions used in pricing its products and establishing reserves for its products, it could have a material adverse effect on LIC’s business, the brokerage firm said.
“A significant portion of LIC’s total new business premiums are generated by participating products and single premium products, and any significant regulatory changes or market developments that adversely affect the sale of such products could have a material adverse effect on its business,” it added. them to it.
LIC IPO: GMP
According to market observers, the LIC share price has remained stable in the gray market today. They said shares of LIC are available today at a premium of Rs 65 in the gray market. According to the market observers, the LIC IPO gray market premium (GMP) today is Rs 65, unchanged from last night’s gray market premium. Market observers say key secondary market indices closing around their close on Wednesday could be the possible reason why the insurance giant’s gray market premium remains stable. However, they said that the LIC IPO GMP has fallen from around Rs 90 to Rs 65 in the past three days, which is mainly due to negative sentiment in the secondary market. They expected some upward pressure in gray market sentiment once there is a trend reversal in the Dalal Street trading pattern.
LIC IPO: Should You Subscribe?
Nirmal Bang Institutional Equities, said: “As the share of non-par products increases, we think there is good room for margin expansion, Nirmal Bang Institutional Equities said. If given the opportunity, Indian life insurance NBP is expected to top the list.” will grow at 14-16 percent CAGR over the next decade. In light of LIC’s market positioning and projected product launches, the company is poised to capitalize on this, it said with a subscriber rating.”
“While there are concerns about LIC related to loss of market share in individual insurance businesses and historically lower margins, we believe valuations are factoring in most of the negative factors,” said Angel One.
India’s under-penetration of life insurance, coupled with favorable demographic tailwinds, should fuel multi-decade growth in the life insurance industry, growing 14-16 percent CAGR from FY21-32, Religare Broking said.
“LIC will benefit from its leadership position, combined with its continued focus on diversifying its product mix, strengthening its distribution network and using technology to support growth and achieve operational efficiencies,” it added with a “subscribe ‘ rating to the problem.
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