LIC IPO debuts at stock markets, lists with a 9.4% discount over issue price

The much-awaited Life Insurance Corporation of India’s (LIC) initial public offering which was listed on the stock markets on Tuesday, slid by over 9% upon its debut, amid a sentiment of market volatility. The IPO, priced at Rs. 949, last week, was trading at Rs. 900 minutes after trading began.

The Bombay Stock Exchange (BSE) later saw share prices fall by (as much as) 9.4% to Rs. 860. The LIC IPO has managed to raise $2.7 billion, with the small-time Indian investor joined in the buying by sovereign funds in Norway and Singapore. The IPO was earlier oversubscribed three times, with LIC policyholders receiving Rs. 60 discount and the option to bid multiple times for the shares on offer.

Stock exchange data showed that the stock listed at an 8.11% discount at Rs. 872 per share on NSE over the issue price of Rs. 949.

Earlier attending the listing ceremony held at the BSE, Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), said, “This is a momentous event. LIC IPO is in line with the PM's vision. India is one of the most important emerging markets and it will be one of the fastest-growing economies in this decade.”

In his comments, former finance secretary Subhash Chandra Garg said, “LIC listed at a discount as suspected. Two crore shares, about 10% of the issue, were sold and bought in the first 15 minutes. There could be sponsored buying. Its true value is less than half the issue price and so it looks like LIC shares are rushing towards its right valuation.”

Parth Nyati, founder, Tradingo, said, “LIC enjoys many competitive advantages like strong brand value, extremely large scale of operations, a huge network of agents, and an envious distribution network, further, the company’s issue was priced at a Price to Embedded value of 1.1x, providing a valuation comfort.” Nyati suggested that investors should stay with the company for the long term despite the negative listing. “Those who applied for listing gains can maintain a stop loss of Rs. 800. New investors can take advantage of the dips to accumulate this share for the long term. We would like to add that the company’s further downside will be limited due to low float post listing,” he said.

In the run-up to the IPO, the government offloaded 3.5% of its stake in the insurance giant to raise Rs. 21,000 Crore. LIC IPO opened for subscription from May 4-9 with a price band of Rs. 902-949 per share. For LIC employees and retail investors, there was a discount of Rs 45 per equity share.

Around 11 am, the LIC stocks were trading at a discount of 5% over the issue price indicating some recovery.