LIC sees lacklustre debut in stock market, lists at over 8% discount

Mumbai, May 17 (PTI) The country's largest insurer LIC on Tuesday made a lackluster debut on stock exchanges on Tuesday, listing at over an 8 percent discount after a successful initial public offering (IPO) which fetched Rs 20,557 crore to the exchequer.

As against the issue price of Rs 949, shares of LIC listed at Rs 872, a discount of Rs 81.80 apiece, on the BSE. The stock listed at Rs 867.20, showing a discount of Rs 77 apiece, on the NSE.

The country's largest insurer LIC is the fifth most valuable company in the country with a market capitalisation of about Rs 5.54 lakh crore.

LIC shares listed at a discount even as the benchmark BSE Sensex opened with gains later soared over 2 percent.

Life Insurance Corporation (LIC) had fixed the issue price of its shares at Rs 949 apiece after a successful initial public offering, which was oversubscribed nearly 3-times when it closed on May 9. The shares were lapped up mainly by retail and domestic investors, even as foreign investor demand was muted.

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.  The government sold over 22.13 crore shares or a 3.5 percent stake in LIC through the IPO.

In the intra-day trade on listing day, the stock recovered some ground and was trading at Rs 883.75, down 6.88 percent on the NSE. Over 4 crore shares changed hands.

On the BSE, LIC shares were trading at Rs 883.25, down 6.93 percent over the issue price. Over 21 lakh shares changed hands.

Talking to reporters here after the listing, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the weak debut on the bourses was due to unpredictable market conditions and suggested investors hold on to the stock for long-term value.

LIC Chairman M R Kumar said: "It (stock price) will pick up as we go along. I am sure a lot of people, especially the policyholders who have missed out on the allotment will pick up the shares (in the secondary market). I don't see any reason why it should be tepid for too long".

Market experts too suggested that investors should hold on to the shares and the scrip will see an uptick in the long term.

Axis Securities MD & CEO B Gopkumar said investors should not look to exit at current levels and hold the stock from a medium to long-term perspective.

"We believe LIC continues to be a solid bet in the long run as it is a play on the growth story of the under-penetrated life insurance industry. Its sustained market leadership position, robust pan-India distribution network, and shifting focus towards profitable products, thus supporting margins and improving persistency ratios, will collectively make LIC an attractive pick from a long-term perspective," Gopkumar said.

Geojit Financial Services Head of Research Vinod Nair said LIC is a decent investment opportunity in the short to medium-term considering its strong market presence, improvement in future profitability due to the changes in surplus distribution norms, and strong sector growth outlook.

Funds India CEO Girirajan Murugan said once the dust settles on the market due to the ongoing issues related to Ukraine- Russia war and the worries on the Inflation front, stocks in the Insurance sector along with other beaten-down stocks in the Banking/ NBFC space should see good momentum.

"There may be a bit of retail selling today due to the current sentiments in the overall market, but the long-term fundamentals of LIC remain intact," Murugan said.