LIC Stock Listing: LIC Stock May Trade at a Discount, Indicates Gray Market

New Delhi: Declining confidence in equity markets is hurting the prospects for listed companies and LIC is no exception. The insurance giant is signaling a discounted quote, if one is based on the gray market premium. On the unofficial market, LIC is exchanging hands at a discount of Rs 20 per share to its issue price of Rs 949, which is just Rs 25 off the discount offered to retail bidders.

LIC’s premium on the gray market fell from Rs100 to Rs10 on Tuesday and then turned negative on Wednesday, just a day before the allocation.

DIPAM secretary Tuhin Kanta Pandey reported that LIC’s initial public offering will be awarded on May 12, while the company is likely to list on Tuesday, May 17.

LIC IPO garnered a great response from all categories; shares to be awarded to bidders on May 12: DIPAM Secretary

Bidders in LIC’s IPO will be allocated shares on May 12, and the insurance giant will list on stock exchanges on May 17, DIPAM secretary Tuhin Kanta Pandey said on Monday. Briefing reporters after press time, Pandey said LIC’s IPO has been highly successful across all segments.

Most dealers that follow the gray market said the weak response from foreign and institutional investors is hurting confidence in the state-owned gray market insurer. The volatility in the secondary market is adding fuel to the fire.

Abhay Doshi, co-founder of UnlistedArea, said inflation concerns have led to policy tightening, which is hurting the broader equity space and upsetting sentiment.

“Despite attractive valuations and additional days to underwrite, LIC failed to attract HNIs and institutional bidders, ultimately dragging gray market figures into negative territory,” it added.

LIC was the largest IPO ever in the domestic primary market as the government sold Rs 22.13 crore of shares or 3.5 per cent stake in the company, valuing it at Rs 6 lakh crore, about 1.12 times the built-in value of Rs 5.4 lakh crore.

However, analysts remain optimistic about the IPO given the company’s large market share, reasonable valuations and growth prospects in the insurance sector.

Sonam Srivasatava, a manager at Smallcase and founder of Wright Research, said growth prospects make Indian insurance quite an attractive option.

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