accelerating inflating statistics, and an ongoing global war have dampened the euphoria around the listing of mega IPO.
The government offloaded 3.5 per cent of its stake in the insurance behemoth to raise Rs 21,000 crore from the share sale. LIC IPO opened for subscription from May 4-9 with a price band of Rs 902-949 per share. For LIC employees and retail investors, there was a discount of Rs 45 per equity share. LIC policyholders were eligible for a discount of Rs 60 per share.
“As observed, the majority of big IPOs have not given strong listing debut gains. Considering previous trends, LIC has continued to take the same path with listing at a discount,” said Mohit Nigam, head – PMS, Hem Securities.
“We believe that personal savings and awareness regarding insurance will increase enabling the sector to outperform in the long run and will indirectly benefit LIC as it is the market leader in this sector,” he further mentioned.
On LIC IPO valuation, Yash Gupta, Equity Research Analyst, Angel One Ltd said, “At the upper end of the price band the LIC IPO is priced at P/EV (embedded value) of 1.1x which is at a significant discount to other listed private life insurance companies line HDFC Life, ICICI Pru Life and SBI Life.
For LIC investors, Parth Nyati, founder, Tradingo, said, “LIC enjoys many competitive advantages like strong brand value, extremely large scale of operations, a huge network of agents, and an envious distribution network, further, the company’s issue was priced at a Price to Embedded value of 1.1x, providing a valuation comfort, so we suggest investors to stay with the company for the long term despite the negative listing. Those who applied for listing gains can maintain a stop loss of Rs. 800. New investors can take advantage of the dips to accumulate this share for the long term. We would like to add that the company’s further downside will be limited due to low float post listing.”
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