IPO IPO: The shares of insurance wholesaler LIC will make their market debut on Tuesday 17 May. LIC’s IPO, which was open for subscription between May 4 and May 9, received positive response from the market. After listing, the state insurer becomes the fifth largest company in the country with a valuation of over Rs 6 lakh crore. However, the company’s gray market premium (GMP) points to a lackluster listing, likely to occur on May 17. The share allotment for LIC’s IPO was completed on May 12.
LIC GMP today
LIC’s privately held shares traded on Sunday at Rs 936 apiece, Rs 13 below the upper end of the IPO price band, according to the latest GMP price available on chanakyanipothi.com. This was the fourth consecutive day that the LIC IPO GMP is in negative territory. The price range for the LIC IPO was set at Rs 902-Rs 949 per share of the share.
However, the current gray market premium (GMP) of minus Rs 13 is better than the minus Rs 25 recorded last week.
LIC IPO: What does LIC GMP mean for investors?
Gray market is an unofficial market where individuals buy/sell IPO stocks before they officially come on the exchanges. GPM is a premium amount at which IPO stocks trade on the gray market and reflects how the IPO is likely to react on the day of listing. Trade analysts believe the not-so-encouraging response the IPO received from foreign and institutional investors is the main reason for its waning gray market appeal. The deterioration in the Indian and global markets further added to the selling pressure in the unofficial market.
However, stock market experts said the gray market premium is not an ideal indicator of the success or failure of a public issue. They said that GMP is an unofficial data, which is also unregulated. Thus, one should look at the company’s balance sheet rather than gray market sentiment, as the company’s financials provide a better and more concrete fundamental picture of the company.
LIC IPO: Should You Make Listing Gains?
As of now, it seems difficult to make a profit for investors who got IPO shares with no discount. The GMP has remained in the negative zone for the past few days. Policyholders and employees, however, could gain a potential listing gain from being allocated shares at a discount.
Analysts at Axis Securities said market volatility is likely to weigh on LIC’s trading-day performance. They expect LIC to debut at a discount, and investors are unlikely to see any listing gains. The analysts further said that the discount offered to policyholders and retail investors could give them a marginal gain on the listing.
LIC’s initial public offering (IPO) received 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.
Eligible investors are expected to see the shares credited on May 16 and the company likely to see the stock market listing on May 17.
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