On the NSE, the insurance behemoth’s listing price was ₹ 872, indicating a discount of 8.11 percent from the issue price of ₹ 949 per share. According to the NSE, the stock was last down 3.61 percent, at ₹ 914.75.

Life Insurance Corporation of India (LIC) shares made a tepid debut on the stock exchanges today, listing at a discount to the IPO price. Shares of the insurance behemoth started trading on BSE and NSE on Tuesday morning at Rs 865 per share or ₹ 81.80, from its initial public offering (IPO) allotment price of ₹ 949per share. It has raised around Rs 21,000 crore from selling a 3.5 percent stake in the state-owned insurer. 

The insurance behemoth’s shares were last trading at ₹ 912, a gain of over 5 percent from its listing price of 867.20 and nearly 4 percent lower than its issue price of ₹ 949 per share.

On the NSE, the insurance behemoth’s listing price was ₹ 872, indicating a discount of 8.11 percent from issue price of ₹ 949 per share. According to the NSE, the stock was last down 3.61 percent, at ₹ 914.75. 

Indian equity benchmarks rose for a second consecutive session on Tuesday, with investors focused on the market debut of state-owned Life Insurance Corp, while the rupee weakened to an all-time low. The listing comes when financial markets have been whiplashed on stagflation worries as major central banks are poised on an aggressive interest rate hike path to combat multi-decade high inflation. Emerging markets assets have taken a beating on foreign capital exodus driven by the dollar’s appeal on a general increase in flight-to-safety trades.

Opinion of Brokerage firms and market analysts.

  1. Meanwhile, brokerage firm Macquarie Securities India has initiated coverage on shares of Life Insurance Corporation of India.

Brokerage firm Macquaire said it has a ‘neutral’ stance on the life insurance company’s stock and a price target of Rs 1,000, which is slightly higher than the IPO price of Rs 949 per share. LIC’s IPO was subscribed nearly three times led by its policyholders and retail investors.

Macquarie Securities’ analyst Suresh Ganapathy noted that LIC has consistently lost market share in the individual business owing to lack of product diversification and excessive focus on single-premium and group business.

Ganapathy also argued that any investor who is investing in LIC is indirectly taking exposure to the domestic equity market given that a large portion of the life insurer’s embedded value consists of marked-to-market unrealized gains from equity investments.

Macquarie noted that a 10 percent correction in the domestic equity market could lead to 7 percent fall in the embedded value of the state-run life insurer as against a 1-2 percent impact for private sector life insurers.

Macquarie said that critical to the company’s performance will be whether it can diversify its product mix to include high-margin non-par products. While Macquarie does not underestimate the 1.3 million strong distribution agent network of LIC, it said that the network will face several challenges in scaling up the non-par business.

2. While Santosh Meena, Head of Research, Swastika Investmart believes, current market is not conducive for primary issues and LIC being the largest IPO has witnessed a negative listing, the current market volatility has weighed down on the insurance titan’s listing. However, the prospects for the insurance industry in India are good due to the under penetration of insurance and a long runway of growth; hence LIC being the largest player will be the beneficiary in the long term. Insurance is a business of scale, and there is no company to match the scale of LIC, so we suggest investors not be bothered about the negative listing and stay with the company for the long term.  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. Another point to note has that, LIC didn’t pay any dividends in the last financial year, so there are high chances that the company might declare a good dividend this year, thus making it a good dividend play.

3. Yash Gupta- Equity Research Analyst, Angel One on LIC says, retail investors who have to receive the allotment can hold list for short term to medium term. LIC will be trading at P/EV (embedded value) of 1.1x at an upper price band of Rs 949 which is at a significant discount to other listed private life insurance companies like HDFC Life, ICICI Pru Life, and SBI Life. LIC IPO initially may see some selling pressure as all the retail investors have received the allotment. Looking at the cheap valuations of LIC as compared to other listed players, it offers comfort, and investors with a longer time horizon can hold or buy more.