LIC IPO: Life Insurance Corporation of India (LIC) IPO was oversubscribed by all categories of investors on Monday morning as the issue entered the last day of the 6-day bidding period. The Rs 21,000-crore IPO was fully subscribed last week but Qualified Institutional Buyers (QIBs) were yet to bid for their portion entirely. LIC IPO has so far received bids for 32.35 crore equity shares, against the 16.2 crore shares on offer, taking the overall subscription tally to 2 times the issue size. LIC IPO continued to get traction over the weekend after investors were allowed to bid for the mega-issue even over the weekend.
So far on the final day of the subscription phase, QIBs portion has been subscribed 1.12 times with bids coming in for 4.43 crore equity shares against the 3.95 crore shares reserved for QIBs. Non-Institutional Investors (NIIs) have subscribed their reserved shares 1.33 times, bidding for 3.95 crore shares against the 2.96 crore on offer for them. The Retail Investors portion has been subscribed 1.69 times so far, with bids coming in for 11.68 crore equity shares. 6.91 crore equity shares are reserved for retail investors.
Employees of LIC and Policyholders have subscribed to their portions the most. Employee subscription tally reached 3.95 times with bids coming in for 62.56 lakh shares, while Policyholder’s quota was bid 5.3 times as investors bid for 11.75 crore equity shares.
LIC IPO grey market premium (GMP) slips
On the final day of bidding, LIC’s grey market premium (GMP) was seen sliding lower. On Monday, LIC equity shares were quoting a premium of Rs 40 per share in the unlisted space. This was down from Rs 60 premium shares were trading over the weekend.
Brokerage firms have been bullish on LIC IPO with most advising investors to subscribe to the issue. Analysts have highlighted that LIC has been priced attractively. “At the upper-priced band of Rs 949, the issue is valued at 1.1x EV (Sep ‘21) which is at a significant discount to private sector valuations,” Nirmal Bang said in a report. Geojit Financial Services said that SBI Life Insurance Company trades at a P/EVPS of 3.2x while HDFC Life Insurance Company is at 3.9x and ICICI Prudential Life Insurance Company is at 2.5x.
Currently, LIC has a 61.5% in terms of New Business Premium (or NBP), a 71.8% market share in terms of number of individual policies issued, an 88.8% market share in terms of the number of group policies issued for the nine months ended December 31, 2021. “Even though headwinds like declining market share, lower short-term persistency ratios and sub-par margins demand a discount to private players, the current valuation is attractive considering its strong market presence, improvement in profitability due to changes in surplus distribution norms and strong sector growth outlook,” analysts at Geojit Financial Services wrote in the IPO note.