“We are expecting a soft listing of LIC IPO as we have seen good corrections in the market in the last 15-20 days due to global as well as domestic issues, like rate hikes, due to which listing expectations have decreased,” said Yash Gupta, equity research analyst at Angel One.
Gupta recommends buying the stock on further weakness.
“If someone wants to buy for the long term, one can buy 50% now and 50% on any decline in the near term. Short-term investors should wait for some time, let the price of the stock settle,” he said.
LIC’s IPO – India’s largest ever initial share sale, which was open for subscription between May 4 and May 9, was subscribed nearly 3 times, led by strong demand from the insurer’s policyholders and employees.
While domestic institutions also participated, the appetite from overseas investors was moderate. About 70% of the insurance major’s anchor book was subscribed by domestic mutual funds.
“We anticipate that LIC might have a flat listing tomorrow based on the current market situation,” said Aayush Agrawal, senior analyst, . “However, the stock’s modest float may limit the post-listing decline.”
Some analysts recommend buying the stock citing strong prospects.
“Given the secondary market conditions, LIC may list at par (to IPO price). We are recommending buying with a medium- to long-term perspective on an at-par listing, as valuation multiple of price-to-embedded value of 1.1 times on historic basis is attractive.” said Geetanjali Kedia, senior research analyst at SPTulsian.com, which had recommended subscribing to the IPO because of LIC’s size, sovereign guarantee on its policies and issue pricing.
The government sold 22.13 crore share, or 3.5% stake, in the company, valuing the company at ₹6 lakh crore. LIC’s IPO has fetched the exchequer about ₹20,557 crore.