New Delhi: (LIC) made a less-than-expected debut on exchanges as the stock was quoted at a discount, hurting all categories of IPO investors. LIC shares are listed at Rs 867.20, a 9 percent discount, on BSE.
The offer price of
was unprofitable for all categories of investors, including policyholders, who were allocated shares at Rs 889 each after a discount of Rs 60 per share, while employees and retailers were issued shares at Rs 904.
However, the counter quickly recovered and reached Rs 920 on BSE before making some profits to trade below the Rs 900 level in the early hours.
However, despite the poor listing, most market analysts are positive about LIC and advise investors to hold them for the long term.
Ajit Mishra, VP of Research,
Brokering, despite reasonable valuations, said LIC shares were listed at a steep discount because existing market conditions were not conducive to the major insurance company.
“This is a solid opportunity for investors looking to re-entry or add more stocks if they have an investment horizon of more than a year,” he added. “LIC will likely prove to be a wealth creator in the long run.”
LIC IPO: How Investors Have Reacted to the Biggest IPOs of the Past on Listing
Mega-problems
NEW DELHI: Before LIC, the top five IPOs in issue size had a mixed debut, with three of them, namely One97 Communications, General Insurance Corporation of India, and SBI Card, witnessing an offering at a discounted issue price. Here’s what happened to the five biggest past IPOs:
Pay | Rs 18,300 crores
One97 Communications was listed on November 18, 2021. The script had a rather lukewarm listing as it debuted for Rs 1,950 each on NSE, a 9.3 percent discount off the issue price of Rs 2,150. On BSE, the scrip was quoted at Rs 1,955. The Rs 18,300 crore IPO, the second largest to date (and the largest when it came), had seen 1.89 times bids, led by QIBs and retail investors. As things stand, the stock is trading 72.48 percent below the issue price of Rs 2,150.
Coal India | Rs 15,475 crore
The PSU was the largest IPO ever in 2010. The IPO was sold between October 18 and October 21 of that year. It generated bids worth $53 billion, which was more than the GDP of 140 countries as of FY10. It was nearly ten times India’s health budget for 2010-11, five times India’s education budget, and a quarter of the Union’s budget. The issue was listed on November 4, 2010, at Rs 291 on NSE, an increase of 18.77 percent from the issue price of Rs 245. On BSE, the scrip debuted at Rs 287.75, an increase of 17.44 percent.
Power of Trust| Rs 11563.20 crore
This IPO was sold between January 15 and January 18, 2008, and was subscribed to approximately 70 times. Before Coal India, this IPO was the ‘largest IPO ever’. But the issue of Rs 11,560 crore had another distinction. It was subscribed within the first few minutes of the book-building process. In fact, by the end of day 1 of the bidding process, the issue had subscribed more than ten times. The IPO was listed on February 11, 2008. The share price opened at Rs 547.80 on BSE, up 21.73 percent from the issue price of Rs 450. However, they remained below the issue price at Rs 372.50 each.
Basic insurance | Rs 11,372.64 crores
General Insurance Corporation of India (GIC Re) was the third-largest IPO in 2017. The issue ran from October 11 to October 13 of that year and was sold in Rs 855-Rs 912. The case received 1.38 subscriptions and sailed mainly thanks to QIB purchases. Other investor categories were signed. GIC Re is the only reinsurance in the domestic market. It provides reinsurance to direct non-life insurance companies in the Indian market. The script was listed on both BSE and NSE on October 25, 2017. the scrip opened at a discount of 6.8 percent off the issue price of Rs 912.
Insurance is a company of scale, and no company can match the scale of LIC, said Santosh Meena, chief of research, suggesting investors should not worry about the negative listing and stick with the company for the long haul.
He believes that LIC is a good dividend game for the current year. “Those who have applied for a listing profit can maintain a stop-loss of Rs 800,” he added. “New investors can take advantage of the dips to build this stock for the long term.”
Mohit Nigam, Head – of PMS, Hem Securities, said most major IPOs have failed to deliver strong listing gains. He sees LIC as a long-term game for existing investors, while short-term investors can wait to get in at a lower price.
“We believe that personal savings and awareness regarding insurance will increase, helping the industry outperform in the long term and indirectly benefiting LIC as it is the industry leader in this sector,” he added.
LIC is the largest insurance company in India, with a market share of over 66 percent in new business premiums. The company offers participating insurance products and non-participating products.
Nyati, the founder of Trading, said new investors could take advantage of the dips to build this stock for the long term. “We would like to add that the further disadvantage of the company will be limited due to the low float mailing list.”
LIC operates through 2,048 branches, 113 division offices, and 1,554 satellite offices. It operates worldwide in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.
