LIC IPO: Opportunity for retail investors to invest money from today, two discounts will not be available simultaneously

Expansion

After anchor investors, the country’s largest IPO is opening for retail investors from Wednesday. Policyholders and retail investors will have a chance to invest in the IPO of Life Insurance Corporation of India (LIC) till May 9.

At least 15 shares can be bid at a price of Rs 902-949. There are two exemptions in this IPO. One for policyholders and the other for retail investors. The benefit of two exemptions will not be available simultaneously. Policyholders will get a discount of Rs 60 and retail investors Rs 45.

Important things for investing

If you want to waive off the policyholder’s quota, then the policy should be before 13th February which should still be in force. Then by February 28, your PAN card should be linked to this policy. If the policyholder is a minor then there should be a demat account in his name.

Looking at the growth can buy IPO

Religare Broking says that investors should invest money in this stock. The insurance sector is still not very accessible. So it has huge potential to move forward. The insurance industry will grow at a compounded rate of 14-16 per cent during 2021-32. However, there remains a concern regarding its market share.

Concerns over the stake of the insurance company

Angel One has said that the valuation of LIC is only 1.1 times the embedded value. Private companies that are listed are trading at 2.5 to 4.3 times. However, LIC’s market share in the personal insurance business is certainly a matter of concern. Despite this, investors should definitely invest money in LIC’s IPO.

Cheaper than private companies

Reliance Securities said that this IPO is priced lower than listed private insurance companies. It has a diversified folio of insurance. It has a good financial record with 14 lakh agents. That’s why you should buy it. Brokerage house Nirmal Bang Securities also says that investors can buy shares. It said, if the company introduces new products, its market share will be further strengthened.

A look at the business of LIC

The downside of LIC is that its market share has been declining for 8 consecutive years. It has come down from 72 per cent to 64 per cent. The growth rate of the insurance industry in India is 17 percent, while that of LIC is 7 percent.

However, its premium in the gray market is Rs 85. This means that a share of Rs 949 is trading at Rs 1,034. Earlier this IPO, which opened for anchor investors on May 2, was fully subscribed. In this, 20 anchor investors from India and abroad participated.