Business strategy

Key Things to Know Before Buying LIC Shares

LIC IPO is set to open for the public on May 4 and will close on May 9 (Image: Shutterstock)

LIC IPO Date: The LIC IPO will open for the public and policyholders on May 4 and continue till May 9, according to the company’s filing with Sebi.

LIC IPO: India’s largest insurer Life Insurance Corporation (LIC) is set to open its initial public offering or IPO next week. Through the LIC IPO, the government looks to sell 3.5 per cent of its stake in the company to meet its disinvestment targets this fiscal. The public issue that is slated to raise Rs 21,008.48 crore will be entirely an Offer For Sale (OFS) by the government of India, which has cut the LIC IPO shorter from the earlier Rs 60,000 target amid geopolitical concerns. However, despite the reduced size, LIC IPO will still be the largest ever IPO in the country till date.

Here are the key things investors should know before investing in LIC IPO

  • LIC IPO Date: The LIC IPO will open for the public and policyholders on May 4 and continue till May 9, according to the company’s filing with Sebi.
  • LIC IPO Size: LIC is expected to garner around Rs 21,000 crore through its IPO at the upper end of the price band with a valuation of Rs 6,00,000 crore, while embedded values are around Rs 5,40,000 crore.
  • LIC IPO Price Band: The price band of LIC IPO is set at Rs 902 to Rs 949 per equity share, with a Rs 60 discount for policyholders and Rs 45 discount for employees and retail investors.
  • LIC IPO Latest GMP: According to market observers, LIC IPO GMP today is Rs 92. The grey market shares of LIC is trading at Rs 20 higher than yesterday. On Friday, LIC IPO GMP was Rs 72 per equity share.
  • LIC IPO Lot Size, Investment Limit: A bidder can invest in a minimum of one lot comprising 15 shares, and in multiples of 15 thereafter. A maximum 14 lots can be applied for at the upper end of the price band, as LIC has set an investment limit of Rs 2 lakh for one investor.
  • LIC IPO Subscriber Quota: In a first in the country, the company has reserved 10 per cent of its IPO shares to eligible policyholders. Qualified institutional buyers will have access to 50 per cent of the shares while retail investors will be able to bid for 35 per cent shares. The remaining is reserved for non institutional buyers.
  • LIC IPO Share Allotment date: The share allotment for LIC IPO is likely to be done on May 12
  • LIC IPO Listing Date: Shares of India’s insurance behemoth LIC will list on bourses on May 17, DIPAM secretary Tuhin Kanta Pandey has said on Friday

LIC IPO: Should You Buy?

Anandrathi Communications: At the upper price levels, the LIC has valued the IPO at 1.11 times its embedded value with a market cap of Rs.6,002 billion which we believe is quite lower when we compared with the three listed peer like HDFC Life Insurance Co, SBI Life Insurance Co. and ICICI Prudential Life Insurance Co. where the average embedded value stood at Rs 3,105 billion and the average market capitalisation-to-embedded value ratio arrived at 3.4 times. Hence, the issue looks quite attractive for investors. Considering the largest size of the IPO. Company’s well diversified product portfolio, and financial track records and bright prospects ahead, we recommend a “Subscribe” rating to this IPO.

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