On 04 May 2022, Finally after a long wait LIC IPO is here, we are witnessing the biggest Initial Public Offering (IPO) in Indian History. LIC IPO is open for all retail investors for subscription.
Life Insurance Corporation, LIC is the largest financial Institution in India Why I am saying this is because of the huge amount of money it manages i.e. more than ₹ 40 lakh Crore and believe me the competitors are not anywhere near to this figure.
LIC IPO date
The LIC IPO has window for 6 days opening today 4th May 2022 and will be closed on 9th May 2022. Interested people can subscribe to the IPO with their brokers before the last date.
Price Band at which LIC IPO is launched
The Price band for the LIC IPO is set at ₹ 902 to ₹ 949 per equity share. It is advisable that those who are interested in this IPO should bid at upper price band i.e. ₹ 949. This will increase your chance of getting this IPO
Discount Price Offer by LIC
Retail investors will be given 35% of the total available shares in IPO and there is a discount of ₹45 per share from the IPO price for the retail Investors
There is a Discount of ₹ 60 per share from the IPO price for the LIC Policy Holders but for those Policy Holders who have linked their PAN card with their policy before 28th Feb 2022 are eligible for Policy Holders discount.
Note: Policy Holders who want discount will have to apply under Policy Holder section for LIC IPO.
The Central Government has planned to raise ₹ 21008.48 crore from this IPO. This much huge amount from IPO has never been seen in Indian history, we all are witnessing this for the first time.
Investors who are willing to subscribe LIC IPO can place their bid in a lot size of 15 equity shares at upper price band
Allotment and Listing Date
Share Allotment is likely to be declared on 12th May 2022 and the shares are likely to be listed on Indian stock exchanges (NSE and BSE) on 17th May 2022
As per latest data from NSE website on 5th May shows that LIC IPO was subscribed 1.03 times.
|Policy Holders segment||3.11|
|Qualified Institutional Buyers||0.40|
|Non Institutional Investors||0.47|
Is the Valuation Attractive
For looking on Valuations, first of all we should know the parameter on which Insurance companies are valued i.e. Price / Embedded Value(EV)
As per Investopedia.com, “EV is used by life insurance companies outside of North America to estimate the consolidated value of shareholder’s interest in an insurance company. It’s calculated by adding the present value of future profits of a firm to the net asset value (NAV) of the firm’s capital and surplus.”
At the offer band LIC IPO is valued at a Price/Embedded Value (P/EV) of 1.06 -to- 1.1 on its September EV of ₹ 5,39,686, where as the competitors like HDFC Life Insurance has P/EV of 3.9, SBI Life has P/EV ratio of 3.2 and ICICI Pru Life has P/EV ratio of 2.5 on their respective Embedded Values of December 2021.
So after looking above P/EV data it is crystal clear that LIC offering is at very lucrative price because it is cheaper than other listed Insurance companies in the market.
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Many Experts belief that LIC has huge inherit unlocked potential, as its a giant which has 60% market share of Indian Insurance Sector and still there are business categories where LIC is not present on the business front which means there are lots of scope for LIC to explore and grow. The revised Valuations of the IPO is really lucrative and can attract many investors.
One thing to keep in mind that the Market is not in a mad bull run like many newbie’s has seen in previous IPO’s so for those who are subscribing the IPO just for Listing gains should restrict themselves. In my eyes there might not be any huge listing gains, If you are thinking to hold the stock for Mid or long term duration them you can go for it as the company has lots of potential which is still unlocked.
Disclaimer: This article is not a buying advice to its reader, its just for the educational purpose and to increase the knowledge of its readers. TheRedSwan.in is not responsible for any profit or loss if any reader buys or sells just after reading the article. It is advisable for the readers to do their own research and/or consult to their SEBI registered Advisors before making any decision.