LIC Mega IPO GMP: The IPO of Life Insurance Corporation (LIC) will open to anchor investors today i.e. on May 2. Will be open for subscription to retail investors from May 4 to May 9. The company has fixed the price band for IPO at Rs 902-949 per share. At the same time, the lot of size in this 15 shares. At present, the share price is increasing in the gray market before the issue opens. The price of LIC’s IPO in the gray market i.e. GMP has reached Rs 90. That is, if we look at the upper price band, according to the indications now, it can be listed at a premium of 10 percent.GMP is increasing continuously
GMP is increasing continuously
Last week on Friday it was at Rs 45. Today it started from Rs 70 and reached Rs 90. On 23 April, the GMP was Rs 15, while on 26 April it became Rs 25. Whereas on 28 April and 29 April it was showing Rs 45. In this sense, its GMP has increased 6 times since April 23.If you look at Rs 90 GMP, then the stock can be listed at Rs 1039 (Rs 949 + Rs 90 = Rs 1039). In this context, there are indications of listing at a premium of 10 percent. There may be more changes in GMP before the issue opens on May 4.
About the IPO
LIC has fixed the price band for IPO at Rs 902-949 per share. At the same time, the lot size in this is 15 shares. Investors can bid for a maximum of 14 lots. In this, the government will sell its 3.5 percent stake, which will give Rs 21,000 crore. This IPO is based on Offer for Sale (OFS). The company’s shares will be listed on NSE and BSE on 17 May 2022. After the issue, the promoters’ stake will come down to 96.5 per cent, which is now 100 per cent. The company’s stock list will be held on May 17.
Growth prospects in the sectors.
Brokerage house ICICI Securities says that there is huge potential for growth in the insurance sector. Insurance penetration is still very less in a country with such a large population. The GWP for life insurance companies is estimated to grow at a CAGR of 14-15% during FY21-26 and may reach ₹12.4 lakh crore.
At the same time, LIC is the market leader in this sector, with a market share of 61.6 percent. The company’s pan India presence makes it even stronger. The company has 2048 branch offices and 1559 satellite offices across the country. The company has a reach of 91 percent districts of the country. At the same time, it is the largest asset manager in the sector. Good track record of financial and profitable growth. Apart from life insurance, the company has savings, term insurance, health insurance, Ulip, annuity and pension products.
Valuation of IPO.
Due to global economic factors, the government has reduced the valuation to 6 lakh crores. The government will now sell its 3.5 percent stake in it for Rs 21,000 crore. The embedded value of LIC was Rs 5.4 lakh crore as of 30 September 2021. Going by the upper price band, the issue is priced at a value of 1.1 to embedded value at a valuation of Rs 6 lakh crore.