Shares of Life Insurance Corporation (LIC) will be listed on the stock exchanges on Tuesday amid worries about the market volatility and listing performance of the corporation.
Despite gloomy markets sentiments, the LIC offer got better than expected subscriptions figures led by strong demand from retail policyholders, retail investors and employees of the insurer. “Unofficial grey premium is trading down into the negative territory mainly on the back of depressed global markets which are in the bearish zone since Russia–Ukraine war,” said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd.
Moreover, selling pressure continued in the domestic markets as FPIs have remained net sellers in the financial year so far with outflows of around Rs 70,000 crore. “Considering all the parameters, we expect soft listing between plus or minus 5 per cent of the offer price. Moreover, LIC offer was never considered as listing gain candidate rather it should be looked at only long term,” Tapse said.
“Everything depends on market conditions… market discount indicates that the stock may be listed at a moderate to discounted price. However, we expect a listing with a 7 per cent discount to a 3 per cent premium,” said Ravi Singhal, Vice Chairman, GCL securities Ltd.
“Given the market sentiments still alarming and volatile following the global headlines, LIC may also trade in muted mood… hence we advise allotted investors not to panic and hold it for medium to long term. Those who are planning to buy on a listing day should accumulate by taking volatility as opportunity,” said an analyst.
The government has fixed the issue price of LIC shares at Rs 949 per share, the upper end of the IPO price band.
LIC policyholders and retail investors have got the shares at a price of Rs 889 and Rs 904 per shares respectively. The IPO closed on May 9 and shares were allocated to bidders on May 12. The government sold over 22.13 crore shares or 3.5 per cent stake in LIC through the IPO at a price band of Rs 902-949 a share.
The retail investors and eligible employees of LIC were offered a discount of Rs 45 per equity share over the issue price, while policyholders got a discount of Rs 60 per share.
The share sale fetched the government around Rs 20,557 crore. The offer which closed with nearly 3 times subscription, was predominately lapped up by retail and institutional buyers, but foreign investor participation remained muted.
LIC had last month reduced its IPO size to 3.5 per cent from 5 per cent decided earlier due to the prevailing choppy market conditions. Even after the reduced size of over Rs 20,557 crore, LIC IPO is the biggest IPO ever in the country.
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