LIC IPO: Policyholders and retail portion oversubscribed on Day 1

Life Insurance Corporation of India (LIC) policyholders’ quota has been oversubscribed at 1.90 times with retail portion receiving bid 1.11 times on Day 1. The total issue has been subscribed 0.65 times with employees quota been subscribed 0.57 times. The insurance behemoth has fixed a price band of Rs 902-949 for the public issue and offered a special discount of Rs 60 for policyholders and Rs 45 per share to retail investors and employees of LIC.  

According to statistics, the largest insurance company has currently around 29 crore policyholders, 2 lakh plus employees and 13 lakh agents covering 91 per cent districts of the country. It manages Asset under management (AUM) of 39 lakh crore, which is more than GDP of 150 countries and total AUM managed by mutual fund industry which is around 38 lakh core.  

Most of the broking houses have given positive rating to the IPO given its fair valuation.  

Sharekhan gave it attractive valuation stating Sharekhan believes that LIC’s IPO should be structurally positive for life insurance, in the long run, considering its size and scale, which may also lead to higher awareness about insurance products benefitting across the sector. At the IPO price band of Rs 902-949, the offer is valued at 1.06-1.11 times its embedded value, which is lower than both domestic and global listed insurers’ average valuation. Hence, the valuation looks attractive given its leading market share in many parameters and highest RoE amongst its global peers. 

FundsIndia also gave the IPO attractive valuation stating, “There will be a lot of first-time investors, especially from the tier 2 and 3 markets to participate in this IPO. This IPO is expected to be a milestone event in the capital markets not just with the issue size but also with the number of demat accounts that will be opened during this period. What the investors would look for before investing in the LIC IPO would be penetration of LIC in markets untouched by the private insurance players, being a first mover in the insurance play in India. LIC has this upper hand and it continues to lead the space with its far reach of the network both through agents and branches. The price at which LIC is coming with an IPO seems attractive on the valuation front,” the brokerage house said. 

Proficient Equities said to subscribe with long term objective, “LIC is a strong brand to the people and its listing is part of a long-term strategic vision of the government and is meant for long-term value creation for shareholders. Our take is that we won’t be able to determine the true value in the case of LIC as it is a very big entity in itself. There are two ways to look at one in the present case where everyone is buying in policies to safeguard themselves from uncertainties which happened in the past which might be a good opportunity to tap in for LIC going with its brand in long term. Second is due to huge buying power in hands of consumers the margins might reduce in coming terms. One can subscribe with a long-term perspective.” 

Also Read: Pfizer sets up Asia's first global drug development centre in Chennai

Also Read: Udaan’s electronics business registers 60% growth in 2022 in new brand partnerships