LIC shares to list today: What should investors do?

Shares of Life Insurance Corporation (LIC) are likely to make a muted market debut today amid high volatility in the market. Shares of the insurer have been priced at the upper end of the IPO price range. They were available in a price band of Rs 902 to Rs 949 per share. The stock has attracted a lot of investor interest with the retail portion of the share sale subscribed 1.99 times.

Retail individual investors applied for 13.77 crore shares as against 6.9 crore shares on offer for the segment. The IPO was open from May 4 to May 9.

With shares of India’s largest life insurer available for investors on bourses today, here’s a look at what analysts say one should do if they were allotted shares or are planning to buy the stock post the market debut.

Yash Gupta- Equity Research Analyst, Angel One said, “While there are concerns over LIC regarding market share loss in the individual insurance businesses and historically lower margins, we believe that valuations factor in most of the negatives. Expected improvements in product mix and greater transfer of surplus to shareholders' accounts over the coming years are expected to drive profits from current low levels. Given the adverse market conditions, listed gains are expected to be muted. However, cheap valuations as compared to other listed players offer comfort, and investors with a longer time horizon can hold on to their positions while retail traders with a short-term view can exit their positions in case of any listing gains.”

Prashanth Tapse, Vice President (Research), Mehta Equities said, “Despite gloomy market sentiments, LIC offer successfully managed to sail out with better than expected subscriptions figures led by strong demand from retail policyholders, retail investors and employees of the insurer. Unofficial grey premium is trading down into negative territory mainly on the back of depressed global markets which are in the bearish zone since the Russia – Ukraine war. Selling pressure continued in domestic markets wherein FIIs have remained net sellers in this financial year. Till date FIIs sold equities worth Rs 70,000 cr. Considering all the parameters, we expect soft listing between plus or minus 5 percent of the offer price. Moreover, the LIC offer has never been considered as a listing gain candidate; rather it should be looked at only long term. Given the market sentiments are still alarming and volatile following the global headlines, LIC may also trade in a muted mood. Hence, we advise allotted investors not to panic and hold it for medium to long term. Those who are planning to buy on a listing day should accumulate by taking volatility as an opportunity”.

Aayush Agrawal, Senior Analyst, Swastika Investmart said, “We anticipate that LIC might have a flat listing today, based on the current market situation. Due to increased inflation statistics, FII outflows, currency weakness, geopolitical and rate hike-related worries, present markets are experiencing extraordinary volatility. This has caused sell-offs in equity markets all over the world. According to recent grey market patterns, the company's unlisted shares were selling at Rs 936 per share on Saturday (May 16), a discount of Rs 13 to the IPO price band's upper range. However, the stock's modest float may limit the stock's post-listing decline. LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value and huge network of agents. However, there are concerns with the company like losing market share to private players, lower profitability and revenue growth compared to private players, lower VNB margins and short-term persistency ratios, but the valuation at price to embedded value of 1.1 had discounted the above concerns. Nevertheless, investors must be aware that the business of insurance is long term in nature. Therefore, we recommend investors to stay with the company for the long term even if the company lists at a discount.” 

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