LIC IPO Could Make It The Biggest Listed Company In India

Market experts are expecting Life Insurance Corporation of India (LIC) to become the country's biggest company by market capitalisation on its successful listing, with an estimated valuation of Rs 8 to 10 lakh crore.

On Saturday, at the Union Budget 2020 presentation, Finance Minister Nirmala Sitharaman said that the government has proposed to sell a part of its holding in LIC by way of Initial Public Offer (IPO).

Currently, the government owns the entire 100 percent stake in LIC.

LIC is likely to become the country's biggest company by market capitalisation on the day of the listing given that it is the largest company in terms of assets under management (AUM)," said Kajal Gandhi, Analyst at ICICI Direct to PTI.

Gandhi further pointed out that LIC, being an over 60-year-old company, cannot be assessed just on embedded value like other private sector players that have been around for about 20 or less years and that AUM and profits will also be the key determinants.

"Being a government-owned entity, it is likely to see valuation gap versus private players," Gandhi said, adding that at even 25-30 percent of its AUM, the company can be valued at around Rs 8-10 lakh crore.

Even a 10 percent dilution will be difficult for market to absorb in one go and the government may look at doing this in lots, she added.

With inputs from PTI