NEW DELHI: LIC is all set to hit stock exchanges on Tuesday and going by the current mood in the unofficial grey market amid overall weakness in the market, the listing is unlikely to deliver solid gains to investors. Shares of Life Insurance Corporation (LIC) have been exchanging hands below their issue price of Rs 949 in the grey market as against commanding a premium of about Rs 90 earlier this month.
“Unofficial grey premium is trading down into negative territory, due to depressed global markets, which are in the bearish zone since the Russia – Ukraine war. Selling pressure continued in domestic markets wherein FII’s have remained net seller’s FY Till Date FII sold worth -70k cr. Considering all the parameters, we expect soft listing between +or- 5% of the offer price,” said Prashanth Tapse, vice-president (Research) at Mehta Equities.
He added that given the market sentiments still alarming and volatile following the global headlines, LIC may also trade in muted mood hence it is advised that allotted investors should not to panic and hold it for medium to long term. Life Insurance Corporation’s IPO, the country’s biggest public offer ever, was subscribed 2.95 times on the last day of offer period last Monday, helping the government mobilise about Rs 21,000 crore.
Aayush Agrawal, senior analyst at Swastika Investmart, expects a flat listing for LIC. Citing numerous factors that has weakened markets in recent months, Agrawal said there are concerns that LIC is losing market share to private players, lower profitability & revenue growth compared to private players, lower VNB (value of new business) margins and short-term persistency ratios. However, the valuation at price -to-embedded value of 1.1 had discounted the above concerns.
Grey market premium
Shares of Life Insurance Corporation (LIC) have been exchanging hands below their issue price of Rs 949 in the grey market as against commanding a premium of about Rs 90 earlier this month. LIC IPO, the country’s biggest public issue ever, was subscribed 2.95 times.