LIC IPO Actual Listing : Great disappointment… in spite of huge business, the LIC has given great disappointment on its listing . The scrip listed at Rs. 872 on NSE and at Rs. 867 on BSE . Extremely poor listing and We can say completely mismanaged IPO, lack of image boosting steps !!! That is the reason, we at Chanakya always believe to keep distance from PSU stocks.
LIC IPO Listing Estimate : If you look at the current grey market and the external factors affecting the secondary market, severe selling pressure of the FIIs, you will feel confident of the negative listing of this mega IPO of LIC. However, do consider some other aspects.
1) In this IPO , selling pressure from the policy holder applicants, Employee applicants, and most of the retail investors will be very low. Even QIBs will not sell any of the shares at this moment. Whatever selling is expected will be from NIIs. Compared to NII selling of around Rs. 2800 crore, the buying from QIBs will suck the shares.
2)More over prior to the IPO-opening, Grey market operators have accumulated shares at a premium of Rs. 40/50.
3)Moreover the market during Monday and Tuesday is expected to show bottom-out and up trend and it will also have positive impact to the listing. Another important aspect is strong fundamentals of this mega corporation.
4) At the time of our IPO-guidance, we had hinted at change in Surplus allocation policy, which has been implemented w.e.f 1.10. 2021. This new structure will boost the profits available for the shareholders in H2 of 2021-22 ( which will be announced post-listing)
So….. I expect marginal Positive Listing at around Rs. 1000 ( compared to issue price of Rs. 949) During the first trading session, I am confidant that the scrip will go below the Issue Price ( Rs. 949) , but hover around Rs. 1000.
Why Retain as long term investment ??? If you can retain this investment, I strongly suggest , not to sell the investment atleast for 9 to 12 months. I expect strong returns on this investment, during this period. : Paresh Gordhandas , CA, Research Analyst.
LIC Grey Market News Today #
On 17 May 2022
GMP : Rs. (-) 15
Allotted Applications : No Trades
LIC IPO Subscription Trend
On 09 May 2022 @ 7.00
QIB : 39531236 Sh : 2.83 T
NII : 29648427 Sh : 2.91 T
RII : 69179663 Sh : 1.99 T
Emp :1581249 Sh : 4.40 T
Poli : 22137492 Sh: 6.12 T
Tot: 162078067 Sh : 2.95 T
The Company highlights:
LIC reports net profit of Rs 1,437 crore for H1FY22 ( Update of 24 Jan 2022)
IPO-bound LIC on Tuesday reported a profit after tax of Rs 1,437 crore for the first half of the financial year 2021-22 as compared with Rs 6.14 crore in the year-ago period.
Its overall total net premiums increased Rs 1,679 crore to Rs 1.86 lakh crore during April-September 2021, from Rs 1.84 lakh crore in the year-ago period.Its new business premium growth rate stood at 554.1 per cent in H1FY22, compared with 394.76 per cent during the corresponding period of the preceding financial year, LIC said on Tuesday.
The Promoter of LIC
The President of India, acting through The Ministry of Finance, GoI
LIC IPO Main Objects
This is only Offer for Sale by the Selling Shareholders. The Government of India is selling a 5 per cent stake through the IPO
LIC IPO Details
IPO opens on 4 May 2022
IPO closes on 9 May 2022
Issue Type: Book Built Issue IPO
Issue : up to 221,374,920 Shares /Rs 21,008.48 Cr
* Offer for Sale Up to 221,374,920 Sh/ Rs. 21,008.48 Cr
*Reserved for Employees : 1581,249 Shares
*Reserved for Policyholder : 22137,492 Shares
*Net offer : 197656,179 Shares
Face Value per share : Rs. 10
LIC IPO Price Band Per Equity Share: Rs. 902/949
Employee/Retail Discount Rs. 45 ( @ Rs 904)
Policyholder Discount Rs. 60 ( @ Rs. 889)
LIC IPO Retail Lot Size 15 Shares
LIC Listing will at BSE,NSE
Shares offered to
QIB (50%) 98828090 Shares = Rs 9378.78 Cr
NII (15%) 29648427 Shares = Rs 2813.63 Crs
RII (35%) 69179662 Shares = Rs 6253.84 Crs
Emp: 1581,249 Shares : Rs. 142.94 Cr
Policyholder : 22137,492 Shares : Rs. 1968.02
Lot size: 15 Shares = 5165415* Forms
Min Retail Application : 15 Sh , Rs. 13560 ( @Rs. 904/ net of discount)
Max Retail Application : 210 Sh, Rs 189840 ( @Rs. 904/ net of discount)
LIC IPO Tentative timeTable
LIC IPO Allotment on 12 May 2022
Unblocking of ASBA 13 May 2022
Credit to Demat Accounts 16 May 2022
Listing on 17 May 2022
LIC IPO Financial & Analytical Ratios
Earnings per Share 2019-20 Rs 4.29
Earnings per Share 2020-21,Rs 4.70
Earnings per Share 2021-22 9M Rs 2.71
Book Value of the Share as on 31.3.2021 Rs 10.30
Book Value of the Share as on 30.9.2021 Rs 12.68
Return on Net Worth: 19-20 317.14 %
Return on Net Worth: 20-21: 45.65 %
Return on Net Worth: 20-21 9M : 20.84 %
India Embedded Value Rs. 5396.86 Billion
Upper Price Band/annualised EPS: 262.88
Upper offer price/Book Value Ratio
Upper offer price/BV after IPO Ratio:
LIC IPO Peer Comparison:
1) SBI Life Insurance @ PE Multiple of 78.16
Market Capitalisation to Embedded Value : 3.77 T
2) HDFC Life Insurance @ PE Multiple of 82.33
Market Capitalisation to Embedded Value : 3.96 T
3) ICICI Prudential Life Insurance @ PE Multiple of 78.81
Market Capitalisation to Embedded Value : 2.49 T
The fact that major listed insurance companies haven’t performed well in a market .the banking and insurance sectors have not done so well during the same period.HDFC Standard Life, one of the leading private sector insurance company, has a market cap of INR1.3 trillion and trades at a PE multiple of 121x.
However some of the Analysts believe that this IPO show a strong possibility of getting good returns by investing in it
The domestic equity market has done well over the past couple of years — delivering a return of over 65% in FY2020-21 alone. However,
Considering the performance of listed insurance companies for the last calender year , the returns by SBI Life, HDFC Life, ICICI Prudential, and ICICI Lombard including New India Assurance and GIC Re were not encouraging either.
Important aspect of Valuation and discussion on Illtiming of IPO and Peer comparison with World’s Top Life insurance companies are given at the bottom of the page.
Book running lead managers for the LIC IPO:
Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, JM Financial, Goldman Sachs (India) Securities, ICICI Securities, Citigroup Global Markets India, JP Morgan India, Nomura Financial Advisory and Securities (India) and SBI Capital Markets are the
Registrar for the LIC IPO
Listing proposed on : NSE and BSE.
Important Aspect :The valuation
Valuing insurance companies in general, and LIC in particular, is not an easy task. The Company has a large number of products, real estate, and subsidiaries that make the valuation game trickier.
The government plans to sell 5% of the insurer’s equity and is seeking a valuation closer to USD133 billion ( Rs10 lac crore/Rs 1000,000 Crore ). Based on the FY2021 profits of Rs 2,901 crore, the estimated PE of the IPO could be anywhere between 35x and 50x.After listing , LIC will join the league of world’s top life insurerance companies, by market capitalisation.
ILL Timing for IPO ??
Is the LIC IPO ill-timed? Indicators suggest it is delayed beyond the best time in the market. The recent dip in the Nifty50 and Sensex and poor performance of the much-hyped Paytm and Star Health shares reflect unfavourable sentiments hampering the euphoria. A fatigue of sorts seems apparent among investors.
Keeping these facts in view, it is difficult to say if the forthcoming IPO by the insurance behemoth will be able to give ‘desirable’ returns.
Other Top Global Life Insurers by Market Capitalisation :
1) AIA (Hong Kong), 2) Ping An Insurance Group (China),3) China Life Insurance (China), and 4) Prudential (UK) Valuation math for world’s leading insurance companies will be updated soon.
On 27.04.22 GMP Rs. 28, Kostak Rs. 700, SbT NIL
#This is only coverage of News related to Grey Market . We donot deal in Grey market premium, nor we recommend dealing in Grey Market. Investment decision based on Grey Market trends can be faulty.