LIC IPO GMP, Subscription, and Review; Is This Your Last Chance to Invest Today?

  • May 9, 2022, 12:13 p.m.

LIC IPO: The initial public offering (IPO) of Life Insurance Corporation (LIC) continues to attract retail investors, including employees and policyholders, who are among the top bidders for the issue so far. Despite falling premiums in the grey market, an intense selloff in the global markets, rate hike concerns and inflationary worries, LIC is holding on to its charm.

Today, May 9, is the last day to subscribe to the Rs 21,000 crore LIC IPO. The state-owned insurance behemoth has subscribed 1.79 times till May 8, the fifth day of bidding. The offer has received bids for 29.07 crore equity shares, against an IPO size of 16.2 crore equity shares.

Policyholders remained at the fore as their reserved portion was subscribed 5.04 times, followed by employees who bid 3.79 times the allotted quota, and retail investors who bid 1.59 times. Non-institutional investors have put in bids 1.24 times the portion set aside for them, while the portion reserved for qualified institutional buyers was subscribed 67 times.


However, the current weak market conditions are taking a toll on the flow of primary investments in such a large IPO. Shares of the company are commanding a premium of Rs 36 in the grey market, which has come down from Rs 85 earlier. Market observers said that LIC IPO's GMP today is Rs 36, which is Rs 24 lower than its yesterday’s grey market premium (GMP) of Rs 60. They said that after scaling up to Rs 92 levels, LIC IPO GMP has been continuously decreasing because of the weak stock market sentiments. They said that secondary markets across the world are facing a sell-off and the Indian stock market is not immune to it. So, the grey market was bound to be affected by the global market sentiments.

As per the market observers, LIC IPO GMP today is Rs 36, which means the grey market is expecting LIC IPO listing at around Rs 985 levels (Rs 949 + Rs 36), which is around 3 per cent higher from the LIC IPO price band of Rs 902 to Rs 949 per equity share.

However, stock market experts said that grey market premium is an unofficial data and it has nothing to do with the financials of LIC. They advised bidders to look at the balance sheet of the Life Insurance Corporation (LIC) of India instead of the grey market premium.

Giving a ‘buy’ tag to the LIC IPO, Astha Jain, Senior Research Analyst at Hem Securities, said, "LIC is bringing the issue at a price band of Rs 902-949 per share at a p/ev multiple of 1.1x." LIC is the fifth largest life insurer globally by GWP and the largest player in the fast growing and underpenetrated Indian life insurance sector with a trusted brand and a customer-centric business model. It hasa presence across India through an omni-channel distribution network with an unparalleled agency force. The company, being the largest asset manager in India with an established track record of financial performance and profitable growth, looks like a decent investment avenue. Hence, we recommend "Subscribe" on this issue."

LIC IPO: Should You Subscribe?

Parth Nyati, founder of Tradingo, said: "Even post listing, the government will still be the major shareholder and the key manager." Thus, any future government intervention might be detrimental to shareholders. The company has made plans to address the issues pertaining to 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. LIC is planning to take steps like increasing up-selling and cross-selling; increasing direct sales of their individual products on their website; designing products for the millennials; focusing more on non-par products; protection-based products; and linking products. "Investors must be aware that the business of insurance is long-term in nature; therefore, we recommend this issue for the long-term only."

GEPL Capital said: "The embedded value for LIC is Rs 5,39,686 and its post issue implied market capitalization is Rs 6,00,242 crore, which is 11.2 per cent premium to its IEV." Hence, we believe valuations of LIC, with its majestic size, are priced reasonably.

With its majestic networks and expected double-digit growth, the industry complied with an attractive valuation compared with peers, making the LIC IPO a lucrative investment. We recommend "SUBSCRIBE" to the issue."

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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