Despite rally, LIC makes a tepid debut on bourses

Grey Market Impact

- Grey market discount indicated moderate to discounted listing

- Policy holders, employees got a discount of Rs45-60

- It also prime reason for bleak listing

- It was expected to list at discount

Mumbai: Despite markets moving upwards on Tuesday, insurance behemoth Life Insurance Corporation of India (LIC) made a tepid debut on Dalal Street at Rs867.2 on BSE, a discount of 8.62 per cent over its issue price of Rs949. On the National Stock Exchange (NSE), the counter listed at a discount of 8.11 per cent.

LIC's share stock touched a low of Rs860.10, and then recovered and rallied to a high of Rs920, still down when compared with its issue price of Rs 949. It ended the first day of trading at Rs 872.70, down Rs 76.30, or 8.04 per cent. It has touched an intraday high of Rs 920.00 and an intraday low of Rs 860.10.

On Tuesday, the BSE Sensex rose 300 points to 53,280, and the NSE Nifty climbed 95 points to 15,930.

According to analysts, LIC's investors lost over Rs42,500 crore and the corporation's market capitalisation fell to Rs5.57 lakh crore in early trade against just over Rs6 lakh crore at the issue price.

Talking to Bizz Buzz, Manoj Dalmia, founder and Director, Proficient Equities, said: "The grey market discount indicates that the stock may have a moderate to discounted listing."

Talking to reporters in New Delhi after the listing, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the weak debut on the bourses was due to unpredictable market conditions and suggested investors to hold on to the stock for long-term value.

LIC Chairman M R Kumar said: "The stock price will pick up as we go along. I am sure a lot of people, especially the policyholders who have missed out on the allotment will pick up the shares (in the secondary market). I don't see any reason why it should be tepid for too long".

Market experts too suggested that investors should hold on to the shares and the scrip will see an uptick in the long term.

Axis Securities MD & CEO B Gopkumar said investors should not look to exit at current levels and hold the stock from a medium to long-term perspective. "We believe LIC continues to be a solid bet in the long run as it is a play on the growth story of the under-penetrated life insurance industry. Its sustained market leadership position, robust pan-India distribution network, and shifting focus towards profitable products, thus supporting margins and improving persistency ratios, will collectively make LIC an attractive pick from a long-term perspective," Gopkumar said.

Geojit Financial Services Head of Research Vinod Nair said LIC is a decent investment opportunity in the short to medium-term considering its strong market presence, improvement in future profitability due to the changes in surplus distribution norms and strong sector growth outlook. Funds India CEO Girirajan Murugan said once the dust settles on the market due to the ongoing issues related to Ukraine- Russia war and the worries on the Inflation front, stocks in the Insurance sector along with other beaten down stocks in the Banking/ NBFC space should see good momentum. "There may be a bit of retail selling today due to the current sentiments in the overall market, but the long term fundamentals of LIC remain intact," Murugan said.