LIC IPO opens May 4, primary market timing prolonged; Should you subscribe or stay away from this challenge?

LIC IPO: This week will mark the start of the much-awaited Life Insurance Corporation of India (LIC) IPO (Initial Public Offering). The LIC IPO will open for traders to bid on later this week on May 4 and shut on May 9. Investors might be allowed to bid for the general public challenge within the fastened value band of Rs 902-949 per share, which interprets to Rs 21,008 crore on the higher finish of the value band, nevertheless, LIC has provided varied reductions to traders, which makes the web challenge measurement to Rs 20,558 crore. The public challenge of LIC would be the greatest ever witnessed by Dalal Street. Just forward of the LIC IPO opening, the timing for the IPO market has been elevated from 10 AM until 7 PM for all the times. 

The IPO is solely a suggestion on the market (OFS) by the federal government of India, the place 22.1 crore shares have been provided to traders. 50% of the problem is reserved for certified institutional patrons whereas 35% of the problem has been stored for retail traders. 50% of your entire challenge is for non-institutional traders. Investors can bid for the LIC IPO in a variety of 15 fairness shares and multiples thereafter. Retail class traders will get a Rs 45 per share low cost within the LIC IPO and so will LIC Employees. Meanwhile, LIC Policyholders will get a Rs 60 per share low cost.

Geojit Financial Services: Subscribe

“At the upper price band of Rs.949, LIC is available at P/EVPS (Embedded Value Per Share) of 1.1x which is at a discount of 65% compared to the average valuation of private life insurance players,” analysts at Geojit Financial Services stated. Analysts added that the present valuation is engaging contemplating its sturdy market presence, enchancment in profitability because of modifications in surplus distribution norms and powerful sector development outlook. High competitors from non-public insurance coverage gamers and decrease quick time period persistence metrics are a few of the issues surrounding the LIC IPO.

ICICI Direct: Unrated

LIC is a market chief within the Indian life insurance coverage business with a robust distribution community and diversified product suite, stated analysts at ICICI Direct. “Embedded value for LIC as of September 30, 2021 was at Rs 5.396 lakh crore. At the upper end of the price band, the company is valued at ~1.1x EV as on September 30, 2021,” they added whereas assigning the ‘Unrated’ ranking. The authorities of India is offloading 3.5% stake within the insurance coverage company, bringing the post-issue promoter shareholding to 96.5% from the present 100%.

Nirmal Bang: Subscribe

LIC is an insurance coverage behemoth, the most important life insurance coverage company in India and the only real public sector participant. The company enjoys a market share of 64% (when it comes to premium) and has AUM of Rs 396tn, >3.3x of all non-public gamers mixed, Nirmal Bang stated. “At the upper-price band of Rs949, the issue is valued at 1.1x EV (Sep ‘21) which is at a significant discount to private sector valuations,” analysts added. 

Analysts at Nirmal Bang, on the finish of December final year, particular person business accounted for 70% of the full APE in comparison with 70.8% as of FY21 and 73.6% as of FY20. A Subscribe ranking has been assigned to the IPO.

Ventura Securities: Subscribe

Ventura Securities too has a Subscribe ranking on the LIC IPO. “LIC is a part insurance and part investment products company. Their plans are a combination of insurance and investment with a guaranteed return,” they stated. On profitable completion of its IPO, LIC would be a part of friends similar to SBI Life Insurance Company, HDFC Life Insurance Company, and ICICI Prudential Life Insurance Company. 

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