The (LIC) Life Insurance Corporation of India will make its debut on the stock markets today after a long-awaited initial public offering (IPO) that attracted overwhelming investor response and raised Rs 21,000 crore for the government. Though, on Monday, a discount of Rs 20 was given on this stock, due to which the experts are expecting that the listing of this stock can disappoint the investors.
The share price of Rs 949 for LIC has been fixed by the government. The policyholders will get the shares at the rate of Rs 889, whereas the employees will get them at Rs 904. The LIC’s IPO was closed on 9 May, and its shares were allotted to the bidders on May 12. The government has offered more than 22.13 crore shares (3.5 percent) of LIC through IPO.
The listing comes at a time when the stock markets are volatile amid accelerating inflation and rising interest rates. With shares in the state-owned giant in the demat accounts of successful bidders, investors face the question of what do with the stock – whether to exit at the time of listing if it lists at a premium, hold it for the short terms or treat it as a long-term investment.
Life Insurance Corporation’s IPO, the country’s biggest public offer, was subscribed 2.95 times on the last day of offer period on Monday, helping the government mobilise about Rs 21,000 crore. The domestic investors actively participated in the LIC’s IPO this. The Qualified Institutional Buyers (QIBs) category was subscribed 2.83 times. As many as 11.20 crore bids were received for the 3.95 crore shares earmarked for the segment. However, foreign investors did not show much interest. This is the biggest IPO of the country till date.
As per the experts, the LIC IPO from GEPL Capital is expected to be listed at a nominal premium. Investors are being advised to invest for long term. On the other hand, Prashant Taapsee, Research Analyst and Vice President of Mehta Equities, expects the IPO to be listed at the normal rates. He said, those who could not invest, can also do it on the day of listing.
“Due to increased inflation statistics, FII (foreign institutional investment) outflows, currency weakness, geopolitical and rate hike-related worries, markets are experiencing extraordinary volatility which has caused sell-offs in equity markets all over the world,” said Aayush Agrawal, senior analyst at Swastika Investmart Ltd.
Meanwhile, Asif Iqbal, Research Head at Escorts Security, believes that LIC’s stock will turn out to be beneficial in long term. He says that whether this share be listed with premium or not, but it would be better if the investors stick with it. Buying it at a level below Rs 1000 would give good benefits in the long term.
Whereas, according to Axis Securities, market volatility is likely to weigh on the listing day performance of LIC. It expects the stock to debut at a discount, which will make it unlikely for investors to book any listing gains. Even so, owing to the discount offered to policyholders and retail investors, they could end up making a marginal gain on listing.