Discounted LIC listings; brokers say price could rise once intraday selling subsides

The listing of India’s largest life insurance company LIC did not cheer D Street on Tuesday as the stock was listed at ₹867 on BSE, down 8.64% from compared to its IPO price of ₹949.

LIC, which is also billed as India’s sovereign wealth fund for its deep equity investments, had given shares at a 10% discount off the IPO price to retail investors and LIC policyholders.

LIC’s share price struggled to stay above ₹900 in the first exchange trade.

Brokers, however, say that once those expecting reverse gains pull out, the price of LICs could rise.

LIC’s ₹21,000 crore IPO garnered a good response from investors with nearly 3x subscription.

Market regulator SEBI had allowed a 6-day subscription period from May 4-9 for the IPO and also extended daily hours.

The shares to be allocated to qualified institutional acquirers (QIB) were subscribed 2.83 times, while those of non-institutional investors were subscribed 2.91 times and that of retail investors (RII) was subscribed 1.99 times.

The insured portion was subscribed 6.12 times, while the employee portion was subscribed 4.40 times.

Huge intraday sales were always expected at the counter. Once the sale is made, the stock price could stabilize, brokers said.

Santosh Meena, Head of Research at Swastika Investments, said: “The current market is not conducive to primary issues and LIC being the largest IPO has seen a negative rating. Those who requested sign-up gains can maintain a stop loss of ₹800.

Published on

May 17, 2022