All You Need to Know About the LIC IPO


The dates for the launch of the LIC’s IPO have finally been fixed. According to the latest reports, the LIC IPO is slated to open on 4 May 2022 and close on 9May 2022. This news has brought some respite for the investors whose anxiety levels reached sky-high after waiting for the IPO for quite some time now. This IPO was earlier supposed to get launched before 31March 2022. However, the ongoing Russia-Ukraine war led to the delay of the launch date.

Talking about the LIC IPO, it is expected to be India’s biggest IPO to date, surpassing PayTM’s IPO. The total valuation of this IPO is expected to be around Rs. 21,000 crore and the LIC being India’s largest and world’s fifth-largest life insurance company could create a stir in the Indian stock markets. Continue reading to know everything about the LIC IPO in detail.

The offer details

As mentioned, the LIC IPO is expected to be India’s biggest-ever IPO with a valuation of approximately Rs. 21,000 crores. It would surpass the PayTM IPO, which is the current record holder with a valuation of Rs. 18,300 crore. The government of India, which owns a 100% stake in the LIC, is planning to sell a 3.5% stake in the company through this IPO. This is a decline from the earlier estimates of the sale of a 5% stake.

As per the Draft Red Herring Prospectus (DRHP) filed by the LIC with the Securities and Exchange Board of India (SEBI), the IPO could consist of 31,62,49,885 equity shares with a face value of Rs. 10 per share. Fifty percent of this public issue would be reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Buyers (NIBs), and the remaining 35% for retail investors.

IPO Timeline

Although the exact IPO timeline is yet to be announced by the issuing company, the tentative dates for closing and opening of the IPO are out to the public. If everything goes well, the LIC IPO could open on 4May 2022 and close on 9 May 2022. This IPO was earlier scheduled for launch in March 2022, but the ongoing Russia-Ukraine war led to its postponement.

The tentative IPO allotment date, refund date, and listing date are yet to be announced. The IPO could be priced in the range of Rs. 950 to Rs. 1,000 per equity share.

Details of the issuing company

The issuing company of the IPO is the Life Insurance Corporation (LIC) of India. At present, it is India’s largest life insurance company and the fifth-largest globally. As per the DRHP, the embedded value of the LIC is approximately Rs. 5.4 lakh crore. However, going by the government’s estimates of a 3.5% stake worth Rs. 21,000 crore, the company’s valuation could turn out to be more than Rs. 6 lakh crore.

The LIC has a giant market share of 66.2% in India in terms of new business premium and 74.6% in terms of the number of individual policies issued. It also has a significant global presence with the total Assets Under Management (AUM) worth Rs. 31 lakh crore. LIC is also the largest institutional investor in India with a total investment of approximately Rs. 120 lakh crore.

The total profits generated by the LIC during the financial years 2019-20, 2020-21, and 2021-22 stood at Rs. 2627.30 crore, Rs. 2710.40 crore, and Rs. 29,74.40 crore, respectively.

Strengths and Weaknesses

Let’s evaluate the strengths and weaknesses of the LIC IPO. Below are the strengths of this IPO, which is touted as India’s biggest-ever IPO:

LIC is the leading life insurance company in India and fifth-largest globally
The company offers a wide range of life insurance products to cater to varied public needs
It has a very strong distribution network with 1.34 million agents, 2048 branches, and 174 alternate channels across India
Largest asset manager in the country with a proven track record
Below are the risks and weaknesses:

The COVID-19 pandemic has impacted the business adversely
Any unfavourable publicity can impact the brand name
Adverse variation in persistency metrics could impact the revenues
Rise of several private players in the segment
Market downswings can highly impact the company’s valuation
The final words

The LIC IPO has already created a euphoria among the investors and it could shake up the Indian stock market once it gets launched. If you want to subscribe to the LIC IPO, you can apply for it via a demat account. You can open your demat account for free with ICICIdirect, one of the leading stockbrokers in India. Moreover, you can also choose a brokerage structure as per your requirements. Being a full-service broker, they provide advisory services along with trading facilities.

This content is distributed by Icici direct. No TNIE Group journalist is involved in the creation of this content.