The biggest public offer in India, the initial public offering (IPO) of the country’s insurance behemoth Life Insurance Corporation (LIC), is open this weekend, and the issue will go live for Day 4 of bidding soon. The LIC IPO will be up for subscription for as many as six days, in contrast to other issues which are usually open for three days, and will also be live on Saturday and Sunday — days when stock markets are closed. This has been done to attract the maximum bid for the LIC IPO, which has already been oversubscribed.
LIC IPO Price and Discount
The mega LIC IPO went live on May 4, Wednesday, and will remain open till May 5. The government looks to meet its disinvestment targets for the fiscal year by garnering Rs 21,000 crore through the LIC IPO at the upper end of the price band by liquidating 3.5 per cent of its stake in the company. The price band for the LIC IPO has been fixed at Rs 902 to Rs 949 per equity share. However, there is a discount of Rs 60 for LIC policyholders and Rs 45 each for retail individuals and employee categories.
The LIC IPO, which is the biggest in India, has been subscribed 1.38 times as of Day 3 of the issue. This means that it has received bids for 22.37 crore equity shares against an offer size of 16.2 crore equity shares on May 6, Thursday, as per data from the National Stock Exchange (NSE). The portion set aside for policyholders has been subscribed to 4.01 times, while LIC employees’ quota was subscribed to 3.06 times. On the other hand, retail investors subscribed 1.23 times, while QIBs lapped up 56 per cent of their allotted quota and NII bid for 76 per cent of their portion.
LIC IPO GMP Today
As per IPO Watch, the unlisted shares of LIC were fetching a premium of Rs 50 on the grey market, as of closing time on Friday. This means that LIC IPO GMP is at Rs 50, which is down by Rs 15 from the previous close. Market observers said the LIC IPO GMP has come down from around Rs 90 to Rs 50 levels in the last few days, which market observers said is mainly because of the negative secondary market sentiments.
LIC IPO: Should You Subscribe?
"Despite LIC writing millions of insurance policies, the insurance premium-to-GDP ratio in India is at 3.7 percent, well below the global average of 7.2 percent. "The IPO is valued at a price-embedded value of 1.1x on the higher band on its 2QFY22 EV," said Reliance Research in its IPO note.
"The company is well-placed owing to its omni-channel distribution network comprising of 1.33 million agents, several partners and alternate channels, its trusted "LIC" brand value, and 65 years of lineage. Moreover, LIC is backed by its strong financial track record and experienced management team. "In view of the giant market share, largest assets under management, strong brand, diverse portfolio of products, and valuation comfort, we recommend SUBSCRIBE to the issue," said the brokerage house on the LIC IPO.