The IPO of over Rs 21,000 crore LIC will be available for subscription till Monday, May 9, 2022, and the price range of the company has been set at 902-949 rupees per share.
LIC is the oldest and largest life insurance company in the country. It was formed by the merger and nationalization of 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore. LIC now manages around Rs 40 lakh crore in assets and is the world’s fifth largest life insurer and the country’s largest asset manager.
As of December 31, 2021, it covered 91% of all municipalities and had 1.33 million individual agents, and held a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of of New Business Premium, 71.8% cent in terms of the number of individual policies issued and 88.8% in terms of the number of group policies.
It is owned by the central government which will sell 22.13 crore (22,13,74,920) shares or 3.5% of its stake in LIC through the public offering. The IPO is entirely an offer for sale (OFS) and the government plans to raise over Rs 21,000 crore from the sale.
The size of the IPO was reduced from Rs 65,000 crore to Rs 21,000 crore as the Russian invasion of Ukraine and the sales supported by foreign portfolio investors (a net amount of Rs 1,48,078 crore since the beginning of December 2021) have affected the stock markets. Despite this, LIC’s IPO will be the country’s largest public offering, surpassing last year’s. Paytm IPO which grossed Rs 18,300 crore.
During the announcement from the IPO last week, the company announced a discount of Rs 60 per share for its policyholders and Rs 45 each for retail investors and LIC employees.
Half of the issue size was reserved for qualified institutional buyers (QIBs), 35% for retail investors and the remaining 15% for non-institutional investors.
Investors wishing to subscribe to LIC IPO can bid on a lot of 15 shares and multiples thereafter. At the higher price bracket, they will shell out Rs 14,235 (excluding discounts) to get a single batch of LIC. The shares will be listed on both the BSE and the National Stock Exchange (NSE).
Applicants should also note that the cut-off time for UPI warrant confirmation is Tuesday, May 10, 2021, until 12:00 p.m. Failure to do so may result in their application not being considered.
Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, Citigroup Global Markets India, Nomura Financial Advisory and Securities India, Goldman Sachs India Securities, ICICI Securities, JM Financial, JP Morgan India and SBI Capital Markets are the lead managers in the book. offer while KFin Technologies is the registrar of the issue.
Prior to embarking on the IPO, the anchor portion will be open for subscription today, May 2, 2022.
The research teams of Geojit Financial Services, Anand Rathi Share and Stock Brokers, and Reliance Securities in their respective IPO notes recommended “subscribing” to the offering.
Geojit Research in its report noted, “At the upper price range of Rs 949, LIC is available at P/EVPS (Embedded Value Per Share) of 1.1x, a 65% discount to the average valuation of private life insurance. players. Even if headwinds such as falling market share, falling short-term persistence ratios and below-normal margins demand a discount for private players, the current valuation is attractive given its strong presence. on the market, the improvement in profitability due to changes in the standards for the distribution of surpluses and the solidity of the sector. growth prospects. Therefore, we assign a “Subscribe” rating in the short and medium term. »
Reliance Securities in its IPO report said: “Although LIC has underwritten millions of insurance policies, the insurance premium to GDP ratio in India is 3.7%, well below from the world average of 7.2%. The IPO is valued at a Price/Embedded Value of 1.1x on the upper end of its 2QFY22 EV, a significant discount to the P/EV of listed private life companies. HDFC Life Insurance trades at a P/EV of 4.1x, SBI Life at 2.9x and ICICI Pru Life at 2.2x. LIC has a diversified portfolio of insurance and investment products to meet the needs of individuals. The company is well positioned with its omnichannel distribution network comprising 1.33 million agents, multiple partners and alternative channels, its trusted “LIC” brand value and 65 years of lineage. Additionally, LIC relies on its strong financial track record and experienced management team. Considering the giant market share, largest assets under management, strong brand, diverse product portfolio and valuation comfort, we recommend SUBSCRIBE to the question.
The share allotment is expected to take place on Thursday, May 12, 2022, and the shares are expected to list on Tuesday, May 17, 2022, according to the schedule set out in the Red Herring Prospectus (RHP).