On the sixth and final day of the bidding process, Life Insurance Corporation of India (LICinitial )’s public offering (IPO) continued to attract bidders on Monday. So far, the issue has been subscribed to more than twice.
According to BSE data, investors bid for 32,78,93,145 equity shares or 2.02 times the number of equity shares available for subscription as of 11.50 a.m.
According to BSE data, all five categories were fully subscribed. The policyholder portion was subscribed to 5.35 times, while the employee quota was subscribed to nearly 4 times.
Quotas were subscribed to 1.71 times, 1.37 times, and 1.14 times for retailers, non-institutional bidders, and qualified institutional investors, respectively.
The issue is entirely an offer for sale of approximately 22.13 crore equity shares by the government of India, which owns a 100% stake in the insurer but will offload only a 3.5% stake.
The company is selling its shares at a price range of Rs 902-949 per share but has given its policyholders a discount of Rs 60 per share. Eligible employees and retail bidders will each receive a Rs 45 per share discount.
The company has set aside 50% of the net issue for qualified institutional bidders (QIB), while non-institutional bidders (NIIs) will receive 15%. The remaining 35% share has been allocated to retail bidders.
The Life Insurance Corporation of India is worth Rs 6 lakh crore, or approximately 1.12 times its embedded value (EV) of Rs 5.4 lakh crore. According to brokerages, it is quite reasonable in comparison to its listed peers.
LIC’s AUM increased by about 10% to Rs 37,46,404.47 at the end of the fiscal year 2021, up from Rs 34,14,174.57 the previous year. The company’s net profit increased to Rs 2,974.14 crore from Rs 2,710.48 crore.
LIC had a total AUM of Rs 40,90,786.78 crore as of December 31, 2021, and reported a net profit of Rs 1,715.31 crore.
The majority of brokerages are bullish on the LIC IPO and have recommended subscribing to it. However, some have expressed concern about its declining market share and the government’s future stake sales.
“We believe LIC’s listing will broaden the investable universe and increase the sector’s relevance in investors’ portfolios,” said Jefferies, a global brokerage.
“As LIC disclosures become more common, it will also assist investors in better tracking sector dynamics. Prior to the listing, LIC has re-calibrated its par and non-par products “it was added
According to Ashika Stock Broking, which has a subscribe rating on the stock, LIC will likely strengthen its omnichannel distribution network for individual products and increase productivity.
“Clearly, there is room for every industry player to grow without resorting to cannibalism. The issue is valued at a significant discount to private sector valuations at the upper price band of Rs 949 “He continued.
The LIC network consists of 2048 branches, 113 divisional offices, and 1,554 satellite offices. It has offices in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, the United Arab Emirates, Bahrain, Qatar, Kuwait, and the United Kingdom.
LIC has raised over Rs 5,627 crore from anchor investors by allocating 5.92 crore shares at Rs 949 per share, according to a filing to exchanges. 4.2 crore shares were distributed to 15 domestic mutual funds.
