Despite the reduction in the pre-IPO valuation of LIC, the scrip has still listed at a discount on the bourses which is in tandem with the diminution in insurance companies’ valuation and softness in the markets due to macro-economic constraints. However, given the attractive fundamentals, stability in operating metrics and expected recovery in the markets, we can potentially see some buying interest from investors'
India's biggest-ever IPO, LIC finally listed its shares at a discounted rate of over 8% i.e., Rs 77 on the BSE and the NSE. This discount reduces the break-even prices for employees and retailers which stand at Rs 904 and policyholders at Rs 889.
Hold on to your shares from a medium- to long-term perspective. In fact, in case you are planning to buy today, you should accumulate by taking volatility as an opportunity. LIC is trading at a discounted rate and you might be able to accumulate more as the Mcap/EV ratio of 1.1x becomes more attractive than what it was in the primary market. We must be aware that the business of insurance in itself is long-term in nature and therefore I recommend staying vested.
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The subdued listing of LIC is in-line with expectations in context to the drop in market dynamics from the opening of the IPO to the listing date. The listing price has fallen in tandem with the fall of insurance sector valuations, maintaining the discount of about 70% to the industry’s average. Positively, the stock was brought at the dip. We believe that LIC is a decent investment opportunity in the short to medium-term considering its strong market presence, improvement in future profitability due to the changes in surplus distribution norms and strong sector growth outlook. LIC can perform well when we have a bounce in the market and positive performance in the insurance sector.
The subdued listing of LIC is in-line with expectations in context to the drop in market dynamics from the opening of the IPO to the listing date. The listing price has fallen in tandem with the fall of insurance sector valuations, maintaining the discount of about 70% to the industry’s average. Positively, the stock was brought at the dip. We believe that LIC is a decent investment opportunity in the short to medium-term considering its strong market presence, improvement in future profitability due to the changes in surplus distribution norms and strong sector growth outlook. LIC can perform well when we have a bounce in the market and positive performance in the insurance sector
While LIC debuted at a slight discount to its issue price, investors should not look to exit at current levels and hold the stock from a medium to long-term perspective. We believe LIC continues to be a solid bet in the long run as it is a play on the growth story of the under-penetrated life insurance industry. Its sustained market leadership position, robust pan-India distribution network, and shifting focus towards profitable products, thus supporting margins and improving persistency ratios, will collectively make LIC an attractive pick from a long-term perspective.
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The 8% lower debut of LIC shares is a commentary on the current state of global markets rather than the company itself. In terms of subscription, the LIC IPO was extremely successful given the fact that it was the biggest IPO of India. LIC has a solid business, trusted brand, and market leadership in an underpenetrated insurance market. In FY-21, LIC’s market share was about 75% for individual policies and 81% for group policies. It is the top life insurance company by a wide margin. The insurance industry in India is growing at an annual rate of about 15% and the growth is expected to sustain over a long period of time given that insurance penetration in India is a meagre 3.2% which tends to be more than 8% for developed economies and it is about 5% in China. LIC is a typical blue-chip company which is expected to give steady returns over a long period of time and therefore returns over a day is not relevant. It is expected to remain quite attractive for investors.
