LIC stock rises for third consecutive day; unlikely to cross initial issue price even a year from now
In the last three sessions, it witnessed marginal recovery from its 52-week low of Rs 650 and closed Wednesday session Rs 668.55 apiece.
True, unfavourable equity market conditions did play spoilsport but putting the entire blame on markets for the valuation cut would be stretching the limits of logic a bit too far.
The government had fixed the issue price of LIC shares at Rs 949 apiece after a successful Initial Public Offering (IPO) which was over-subscribed nearly 3 times.
LIC share is trading in the red for the fifth straight session. The scrip has slumped by around 6 per cent in the last five sessions.
LIC on Tuesday listed its shares at a discount of 8.11 per cent at Rs 872 per share on NSE. On BSE, the shares got listed at Rs 867.20 apiece, down 8.62 per cent over the issue price of Rs 949 a share
The counter on NSE witnessed 2.26 crore shares traded and on BSE 13.4 lakhs shares were traded at the time of writing.
Just before the listing, brokerage firm Macquarie had set a target price of Rs 1,000 for LIC shares, slightly above the IPO price of Rs 949.
LIC policyholders and retail investors have got the shares at a price of Rs 889 and Rs 904 apiece, respectively, after taking into account the discount offered.
A decisive break below this level could potentially drag the Nifty down another 4% to 15031, said analysts.
The IPO received bids for 47.83 crore equity shares against the 16.2 crore equity shares on offer. A finance ministry official said the issue has been predominantly lifted by domestic investors.
"It shows that the capacity of the Indian capital market has increased substantially and it also shows that we can run our own capital market without depending on foreign investors," he said.
Against 16,20,78,067 shares on offer, 47,83,25,760 bids were received, according to data posted on stock exchanges at 7 pm.
Overall, the IPO is more than fully subscribed as it has received 17,98,42,980 bids, as against 16,20,78,067 shares on sale.
Policyholders’ portion receives highest bid, subscribed 3.11 times
Of the total, the policyholders' portion was subscribed a little over three times, while that for employees was subscribed 2.14 times.
Of the total, the policyholder portion was subscribed nearly three times while the reserved employees' segment was subscribed 1.8 times, as per the data on stock exchanges.
After surging over 200 points in early trade, the 30-share BSE benchmark turned volatile and was trading 27.41 points or 0.05 per cent lower at 57,184.21 in early deals.
The retail investors and eligible employees will get a discount of Rs 45 per equity share, and policyholders will get a discount of Rs 60 per equity share.
According to sources, the value bid by anchor investors was over Rs 7000 crore but this couldn't be independently verified.
Grey market is an unofficial market to trade IPO applications and shares before listing of the stock. It gives an indication of the appetite for the IPO by retail investors.