LIC IPO Day 1: 67% issue booked; employees portion fully subscribed, policyholders 2 times, retail investors 60%

Biggest IPO in Indian Markets: LIC IPO subscription status on Day 1

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO was subscribed 67 percent on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.99 times the portion reserved for them. The employee reserved portion has been subscribed 117 percent, while retail investors portion has been subscribed 60 percent. Non Institutional investors have subscribed 27 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

LIC's Post Public Issue Shareholding Pattern

Biggest IPO in Indian Markets: LIC IPO subscription status

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO was subscribed 67 percent at 18:54 hours IST on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.99 times the portion reserved for them. The employee reserved portion has been subscribed 117 percent, while retail investors portion has been subscribed 60 percent. Non Institutional investors have subscribed 27 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

LIC's Key Positives

LIC is a part insurance and part investment products company. Their plans are combination of insurance and investment with a guaranteed return.

LIC has over 13.5 lakh agents who play brings most of the new business. LIC plans offer 'fixed returns' along with life insurance coverage. This makes it easy to sell by agents and brings peace of mind to the insurers.

LIC has high trust in the public for both life insurance as well as investment done with them. LIC is synonymous with insurance in India.

LIC manage asset of Rs 39 lakh crore. That is more money than the entire mutual fund industry combined. They invest these funds across stocks and bonds. They own 4 percent of all listed stocks in India and more government bonds than the RBI.

Leading insurance provider company in India and fifth largest global insurer by GWP. (Source: GEPL Capital)

Biggest IPO in Indian Markets: LIC IPO subscription status at 18:18 Hours IST

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO was subscribed 65 percent at 18:18 hours IST on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.91 times the portion reserved for them. The employee reserved portion has been subscribed 112 percent, while retail investors portion has been subscribed 58 percent. Non Institutional investors have subscribed 26 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

Biggest IPO in Indian Markets: LIC IPO subscription status

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO is subscribed 64 percent, at 17:57 hours IST on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.9 times the portion reserved for them. The employee reserved portion has been subscribed 111 percent, while retail investors portion has been subscribed 57 percent. Non Institutional investors have subscribed 26 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

GEPL Highlights Key Challenges

LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.

The margin in insurance + investment products is low.

It's very difficult to value LIC as the business model is unlike any other company. LIC collects money upfront and then promises to compensate policyholders at a later stage. The premiums they collect (part insurance and part investment) cannot be recognized as revenue.

Biggest IPO in Indian Markets: LIC IPO subscription status

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO is subscribed 64 percent, at 17:39 hours IST on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.89 times the portion reserved for them. The employee reserved portion has been subscribed 110 percent, while retail investors portion has been subscribed 57 percent. Non Institutional investors have subscribed 25 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

Biggest IPO in Indian Markets: LIC IPO subscription status on Day 1

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO was subscribed 63 percent on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.84 times the portion reserved for them. The employee reserved portion has subscribed 104 percent, while retail investors portion has been subscribed 56 percent. Non Institutional investors have subscribed 25 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

Peer Comparison

Biggest IPO in Indian Markets: LIC IPO subscription status at 16:33 Hours IST

The biggest initial public offering (IPO) in the history of Indian markets, LIC IPO is subscribed 62 percent by 16:33 hours IST, on May 4, the first day of bidding. The LIC policyholders lead initial bout of buying in insurer's IPO as they have subscribed 1.8 times the portion reserved for them. The employee reserved portion has been subscribed 100 percent, while retail investors portion has been subscribed 55 percent. Non Institutional investors have subscribed 25 percent of their portion while qualified institutional buyers bought 33 percent of allotted quota of 3.95 crore shares, till now.

LKP Research Views on LIC IPO

India’s life insurance industry is expected to grow rapidly, owing to a relatively underpenetrated market and expanding awareness, which presents a multi-year growth opportunity. LIC has been providing life insurance in India for over 65 years and is the country’s biggest life insurer, with a significant brand value advantage. "There are concerns about losing market share to private players and having lower profitability and revenue growth when compared to private players. However, we believe that LIC’s distribution advantage, increasing sales mix of direct and corporate channels, and a gradual shift to high margin Non- participating products could be possible drivers for LIC’s future growth, negating lower than industry growth rates," said LKP.

At the upper price band, the brokerage said the stock is priced at 1.1x of its 2QFY22 Indian Embedded value (Market capitalization/Embedded value: Rs 6 trillion/Rs 5.39 trillion), which is at a significant discount to its listed peers. "Currently listed insurance companies trade at Market capitalization/EV multiple of ~2.8x. LIC has a marquee anchor list of investors and we recommend subscribe to the LIC IPO."