LIC lists on stock exchange at Rs 867 with a discount of 8.62%

India’s biggest IPO, LIC has listed its shares on the stock exchange with a cheaper valuation than its initial offerings


The most awaited shares of the Life Insurance Corporation (LIC) of India got listed on the stock exchange today, with a discount of 8.62 per cent on its initial public offering (IPO) issue value of Rs 949, LIC has listed its shares at Rs 867 per share. 

However, the IPO of LIC had received a powerful response from investors as the insurance major’s offer has been subscribed over three times on its second day of subscription. Notably, it received bids for 46.77 crore equity shares against the IPO size of 16.2 crore equity shares.

The quota set aside for policyholders has been subscribed 5.97 times, and its employees bid 4.31 times the allotted quota and retail investors 1.94 times, while the reserved portion of qualified institutional buyers has booked 2.83 times and that of non-institutional investors 2.8 times.

India’s biggest and much-awaited IPO for the LIC was open for subscription till 9th May 2022 and the results were announced on 12th May. The government has brought down the issue size from 5 per cent to 3.5 per cent that is, Rs 21,000 crore.  

Seems to attract more investors

As LIC has listed its shares with a cheaper valuation than its initial offerings, it seems to attract a good number of investors. Commenting on this Yash Gupta, Equity Research Analyst at Angel One Ltd, says, “Looking at the cheap valuations of LIC as compared to other listed players offers comfort and investors with a longer time horizon can hold or buy more,”

However, he feels that the LIC IPO initially may see some selling pressure as all the retail investors have received the allotment.

“Retail investors who have to receive the allotment can hold list for short term to medium term. At current prices, LIC is trading at a P/EV (embedded value) of ~1.08x which is at a significant discount to other listed private life insurance companies like HDFC Life, ICICI Pru Life, and SBI Life,” Gupta explained. 

LIC shares are currently trading at ~5% below its issue price of Rs 949 per share. Retail and LIC policyholders have received a discount of Rs 45 and Rs 60 respectively to the issue price and are marginally in the money.

“As expected given the adverse market conditions listing has been muted for LIC,” he adds. However, cheap valuations as compared to other listed players offer comfort, and investors with a longer time horizon can hold on to their positions while retail traders with a short-term view can exit their positions in case there is any upside movement over the next few days.

As per the reports, this IPO is expected to be a major contributor to the Centre’s disinvestment proceeds in the current fiscal. The proceeds from the LIC issue make up for about a third of the Rs 65,000 crore disinvestment target set for the current fiscal.