LIC IPO listing day strategy: D-St debut on May 17, grey market premium negative; should you buy, sell, hold?

Life Insurance Corporation of India (LIC) finalised IPO share allotment on Thursday, 12 May

LIC IPO, LIC, IPO
With its IPO, LIC has become the largest ever on Dalal Street, overtaking Paytm’s public issue last year. Image: Reuters

Life Insurance Corporation of India (LIC) finalised IPO share allotment on Thursday, 12 May. LIC stock will make its BSE and NSE debut on 17 May. The Rs 21,000-cr public offer received 2.95 times subscription during the 6-day bidding process. LIC shares were offered to investors through the IPO in a fixed price band of Rs 902-949 per equity share. In the grey market on Friday, LIC shares were seen trading at a discount of Rs 9, at Rs 940 apiece from the upper end of price band, according to people who deal in unlisted shares of companies. Analysts seem to be mixed on LIC IPO shares listing, with some expecting 10% premium listing, while others suggest taking a call on LIC shares post stock market debut.

With its IPO, LIC has become the largest ever on Dalal Street, overtaking Paytm’s public issue last year. In 2021 Paytm had raised Rs 18,300 crore through the IPO. Other large issues on Dalal Street include Coal India at nearly Rs 15,500 crore in 2020, and Reliance Power at Rs 11,700 crore in 2008. Through the LIC IPO, the government has diluted its stake in the insurance sector behemoth by 3.5% and raised a large chunk of the divestment target for the current fiscal year.

LIC IPO share listing: What should be listing day strategy?

Analysts at Axis Securities said that the volatility in the markets is likely to weigh on the listing day performance of LIC. They expect LIC to debut at a discount, and investors are unlikely to book any listing gains. “However, owing to the discount offered to the policyholders and retail investors, they could end up making a marginal gain on the listing,” they told FinancialExpress.com in an email.

LIC stocks may list at 10% premium

Sandip Sabharwal, investment advisor, told FinancialExpress.com that LIC listing may happen at a 5-10 per cent premium to issue price. “The market conditions have been volatile, if there is an opportunity to buy near issue price then it will be good for long-term investors,” Sabharwal said.

Take a call on LIC after listing

There are both positives and negatives in the LIC IPO, Aditya Kondawar, Independent IPO Expert, told FinancialExpress.com. The current market situation is also very turbulent with liquidity tightening going on across the world by central banks. “In the context of micro, macro and company specific factors, one can wait and watch post listing as to how the business performs and then take a call,” Kondawar said.

Akhilesh Jat, analyst at CapitalVia Global Research, said that the LIC IPO shares were at a discount in the grey market. The grey market premium of LIC IPO stood at more than Rs 90 per share a week ago and the latest GMP is at Rs 25 discount. “If the market remains volatile then we may see further downward movement in the LIC price. So the LIC share is expected to list at a discount price,” he said. Akhilesh Jat advised investors to invest in LIC for long-term as the insurance business is long-term in nature.

The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

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