LIC IPO subscription: The LIC IPO, which started Wednesday, will remain open until May 9, including Saturday, a notice on the National Stock Exchange of India Ltd said. The LIC IPO would remain open Saturday (May 7) between 10 a.m. and 7 p.m. This unusual move comes at a time when the government is looking to attract investors, including private buyers, to the country’s largest share sale.
The IPO anchor book of 59.2 million shares closed on May 2 with 42.1 million units held for domestic mutual funds. About 99 mutual funds invested Rs 4,001 crore and bought shares at the high end of the IPO price band of Rs 902-949 each. Foreign portfolio investors (FPIs), pension funds, corporations and other insurers also participated in the anchor investment.
LIC has reserved 10 percent of the issuance for policyholders and five percent for employees. The IPO will have a Rs 60 per share discount for policyholders. The company has reserved up to 35 percent of the IPO for private investors.
The mega LIC IPO opened for subscription to retail and institutional investors on Wednesday. The government hopes to raise Rs 21,000 crore from the issue. The offering consists of 22.13 crore shares of which 5.92 crore shares have been allocated to anchor investors for Rs 5,627 crore. The price band is set at Rs 902-949 per share of the share. A discount of Rs 45 per share for the Retail and Eligible Employees categories and Rs 60 per share for the policyholders category will also be offered.
LKP Research said that “India’s life insurance industry is expected to grow rapidly, thanks to a relatively impenetrable market and growing awareness, providing a multi-year growth opportunity. LIC has been providing life insurance in India for over 65 years and is the largest life insurer in the country, with significant brand advantage. There are concerns about the loss of market share to private players and lower profitability and revenue growth compared to private players.”
“However, we believe that LIC’s distribution advantage, its increasing sales mix from direct and corporate channels, and a gradual shift to high-margin non-participating products could be potential drivers for LIC’s future growth, with growth rates lower than those seen in the sector to be negated. In the upper price bracket, the stock is priced at 1.1x of its 2QFY22 Indian Embedded value (market cap/embedded value: 6 trillion/₹5.39 trillion), offering a significant discount to its publicly traded counterparts. Currently, publicly traded insurance companies trade at a market cap/EV multiple of ~2.8x. LIC has a large list of investors and we recommend subscribing to LIC’s IPO,” the brokerage firm said.
Anand Rathi Research said in its IPO note: “At the highest price levels, the LIC has valued the IPO at 1.11 times its embedded value with a market cap of Rs.6.002 billion, which we believe is quite lower compared to the three listed companies. comparable companies like HDFC Life Insurance Co, SBI Life Insurance Co. and ICICI Prudential Life Insurance Co. where the average embedded value was Rs 3,105 billion and the average market capitalization-to-embedded value ratio was 3.4 times. “Looks attractive to investors. Given the largest size of the IPO company’s well-diversified product portfolio, and financial track records and good prospects going forward, we recommend a “Subscribe” rating for this IPO.”
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