8% Lower Debut Of LIC Listing A Reflection Of The State Of The Market

Shares of insurance behemoth, LIC, listed today at Rs 884 against the offer price of Rs 949. The stock was last seen trading at Rs 895 on the NSE.

The 8% lower debut of LIC shares is a commentary on the current state of global markets rather than the company itself, experts believe.

"The 8% lower debut of LIC shares is a commentary on the current state of global markets rather than the company itself. In terms of subscription, the LIC IPO was extremely successful given the fact that it was the biggest IPO of India. LIC has a solid business, trusted brand, and market leadership in an underpenetrated insurance market. In FY-21, LIC's market share was about 75% for individual policies and 81% for group policies. It is the top life insurance company by a wide margin.

The insurance industry in India is growing at an annual rate of about 15% and the growth is expected to sustain over a long period of time given that insurance penetration in India is a meagre 3.2% which tends to be more than 8% for developed economies and it is about 5% in China. LIC is a typical blue-chip company which is expected to give steady returns over a long period of time and therefore returns over a day is not relevant. It is expected to remain quite attractive for investors," Mohit Ralhan, Managing Partner, TIW Capital Group.

According to Hemang Jani, Head - Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services Ltd. "Though LIC listing has been below the issue price of Rs. 949, given the attractive valuations and stability in the markets, we expect some buying interest in the stock both from retail and intuitional investors. Since large amount of money has been released post listing of LIC, part of this money could get diverted into equity markets."