Vodafone-Idea: What went wrong?
Mergers and acquisitions can turn the eyes of stock market investors towards the possible action that such large-scale actions can bring to the futur…
05 Mar, 2021
7 min read
7267 Views
IPOs have attracted overt attention of retail and institutional investors alike in the recent Indian stock market scene.
Last year, when the pandemic had driven Sensex down by over 34 percentage points compared to its pre-lockdown levels, a strong recovery ensued and many new names went public. In India, some of the biggest issues have been made by DLF, Reliance Power, Cairn India, and ICICI Prudential Life Insurance. But no one has ever witnessed what is about to take place in the stock market in 2022 - and that is, Life Insurance Corporation of India going public as a part of the government’s systematic divestment from some of its holdings.
Some of the experts are calling this IPO the mother of all IPOs in the Indian stock markets, while others have referred to the highly anticipated event as a mega listing - no matter what you call it, special provisions are being made to facilitate a smooth listing process, with some new rules being introduced to inject fairness and to set the expectations right. Let's check out some of the highlights, and major points that you need to keep in mind as the market gears up for this event.
The Securities Exchange Board of India has made some changes in its listing rulebook to accommodate the sheer size and to accommodate a company with a market capitalization as gargantuan as LIC’s. The insurer has tweaked its IPO size to 3.5% from 5%, fetching about Rs. 21,000 crores. The government will be offering 221,374,920 equity shares as an offer for sale in the IPO."
According to market analysts, The IPO valuing the insurer at Rs 6 lakh crore. The state-possessed insurer has bared its bedded value (EV) for the first time at about Rs5.4 lakh crore. The bedded value is the sum of the current value of unborn gains and acclimated net asset value. It could be considered analogous to book value but acclimated for unborn vittles and cash overflows. As you can see, this IPO will trump all the other IPOs that have taken place until now, and will be the biggest offer this year - and for many years to come. In fact, some experts have even said that an IPO of this size will absorb a significant amount of liquidity from the economy.
LIC's public offering's sheer size means that the allocation for policyholders, workers,non-institutional, and retail investors orders will be much bigger than any other Indian earlier offer. Then let’s review the offer size by categories.
LIC has fixed a price band of ₹ 902 each at the lower end and ₹ 949 each at the upper end. The bottom price is 90.2 times the face value of the equity shares, on the other hand, the cap price is 94.9 times the face value of the equity shares. LIC offers a deduction of ₹ 60 all to eligible policyholders bidding in the reserved order. While a reduction of ₹ 45 each is offered to retail individual investors. Bids can be closed for a minimum of 15 equity shares and in multiples of 15 equity shares thereof. The IPO is awaited to be open from 4 May to 9 May."
Now comes the last and the biggest question at hand - should you subscribe? It's not very easy to suggest" because market conditions are always changing and evolving over time, there are some observations that can be made. In the recent past, two general insurance corporations have gone public - namely, GIC Re and NIA Co. Ltd. Both of these offers have been disappointing to subscribers. NIA shares were introduced in the price range of Rs. 770-800, but is currently trading at Rs. 159 (at the time of writing.) On the other hand, GIC Re’s shares were introduced at Rs. 912, but are currently trading at Rs 197(at the time of writing.) But having issued bonus shares for shareholders that continued to hold within a specific time frame after the issue, the losses don’t look as steep as these numbers might suggest - or is it so? Even if you had subscribed to the NIA IPO, you have purchased each share at Rs 770, while currently holding Rs. 318 worth of shares for the same as a result of issuance of bonus shares. That’s still a steep loss of 58%+. GIC’s subscribers, on the other hand, stand at a 56% loss.
However, most are expecting something different from LIC, simply due to the sheer size and market capitalization of LIC in india. In fact, some have pointed out that even a marginal increase in the productivity of LIC’s workforce will result in notable growth and revenue boosts for the company. LIC currently employs 22 lakh agents - and if each agent were to sell one additional policy every year, then the company could see a massive boost in sales volume. We suggest that you take a more technical approach to deciding whether to subscribe or not. Looking for more knowledge on such super-avenues of investment? Then log on to our website www.angelone.in, and keep the learning going!
How would you rate this blog?
Related Blogs
Translate the power of knowledge into action. Open Free* Demat Account
Latest Blog
-
29 Oct, 2021
7 min read
Sugar Stocks Down as Sensex Falls
Sugar stocks are indicative of important trends in the market. They are also an important cog in the industries sector of the economy. Read on to kno…
-
08 Jul, 2021
10 min read
The Success Story of Pharmeasy
Today, PharmEasy is a reputable and well-known firm whose aim is to become the best health care delivery platform in India.
-
15 Jun, 2021
10 min read
A sneak peek at Zomato's IPO plans
Covid-19 came and turned the world upside down – tourism, airlines, fashion, F&B have suffered tremendously but online financial gateways, video conf…
-
15 May, 2021
8 min read
The Best Penny Stocks in India
Investing and trading on the stock market has the potential to generate profits.
-
28 Dec, 2020
6 min read
The Rise of Reliance: as told through its stocks
Reliance Industries Limited (RIL) is India’s largest publicly traded company. Read on to know more about history of Reliance stocks and it’s rise in …
-
04 Apr, 2021
7 min read
Dr. Reddy's Laboratories Ltd - Is this...
2020 was a peculiar year, especially in terms of the industries that managed to flourish despite the challenges that the lockdowns and isolation meas…
-
06 Jan, 2021
6 min read
Tata Consultancy Services: A story...
Tata Consultancy Services (TCS) is the world’s most valuable IT company. Read this success story of how TCS expanded globally, acquired new verticals…
-
06 Oct, 2021
5 min read
Byju’s IPO Plans
Currently, India's most valuable unicorn, online education provider Byju's, is in talks to raise $400 million to $600 million and then expedite plans…
-
13 Oct, 2021
6 min read
LIC Seeks to Appoint CFO
According to a notice on its website, the state-owned Life Insurance Corporation of India (LIC) is looking for a Chief Financial Officer ahead of an …
-
24 Feb, 2021
7 min read
Shree Cements: A lesson in Prudence
This article will help you take a deeper look into the rise of Shree Cements, through the lens of it’s stock performance over the past few years.
-
07 Jul, 2021
10 min read
Ixigo IPO: Ixigo Plans a 750 Crore IPO
Ixigo is a travel portal and it plans to host an IPO of between Rs 1500 crore to Rs 1800 crore later this year.
-
10 Mar, 2021
7 min read
PVR - a comeback on the cards?
Who doesn’t like to watch movies. But when the COVID pandemic first hit the Indian subcontinent, investors began to withdraw from their investments -…
-
21 May, 2021
8 min read
Asian Paints: 7000% returns in 17 years
Some investment propositions have the ability to make investors – both the newbie and the expert alike – stop and stare.
-
08 May, 2021
8 min read
Adani Ports and its recent rise. Here's why
If you have been following the rise of Adani Ports’ stock price in recent weeks, you are probably curious as to what is driving this growth.
-
05 Oct, 2021
7 min read
LIC IPO: All we Know So Far
While investors await the Life Insurance Corporation's mammoth public offering mostly happening this financial year, why do experts think the IPO has…
-
13 Jun, 2021
7 min read
Soaring commodity prices. Here's why
Prices of commodities in the energy, metal and agriculture sectors have seen a sustained rise in the first few months of this year.
-
07 Apr, 2021
7 min read
The Tata Motors Upheaval Story
The automotive industry has been famously tied to the performance of the extended economy for most countries.
-
06 May, 2021
9 min read
Should you place your bets on ITC?
Investors trading on the stock market are advised to focus on maximising their wealth by making shrewd decisions based on the performance and fundame…
-
30 Aug, 2021
7 min read
Should you Invest in the Latest Sovereign...
For the uninitiated, sovereign gold bonds can be understood to be certificates issued and mandated by the Reserve Bank of India.
-
03 Jun, 2021
6 min read
Hotel Stocks on the Rise Despite Lockdown
The hospitality industry suffered a major setback when the prime minister announced a nationwide lockdown for 3 weeks at the end of March 2020.
-
24 Sep, 2021
7 min read
Indian Railways Share Quarterly Results -...
The Indian Railway Catering and Tourism Corporation (IRCTC) is a subsidiary of the Indian Railways.
-
16 Mar, 2021
8 min read
Indiamart’s QIP: behind the scenes
Last year, when the pandemic had hit businesses hard across the globe, most people resorted to the internet to keep their businesses afloat.
-
27 Jan, 2021
9 min read
HDFC Bank Ltd’s Journey to becoming the...
As of November 25, 2020, HDFC Bank had hit a market cap of ₹8 Lakh Crore and had become the third company to do so after Reliance and TCS.
-
31 May, 2021
7 min read
The Rise of Metal Stocks Amid the 2nd Wave
The past few months have brought with them several changes.
-
01 Jun, 2021
8 min read
Muted Tata Communications stock in wake...
There is a meme going around that says: Sneezes went from “Bless you” to “To hell with you” real soon.
-
11 Jun, 2021
7 min read
Stock Picks Based on Q4 Results
As FY21 drew to a close, it was a déjà vu moment as lockdowns (although state-level), and a second wave of the COVID-19 pandemic defined investor beh…
-
24 Aug, 2021
5 min read
Stocks to Watch: NMDC, Tata Motors,...
This article seeks to shed light on stocks that have recently been made available in the market. Included among them is the government’s stake in NMD…
-
09 Jul, 2021
9 min read
IPO Alert! Devyani International files...
Against all odds, the Indian market, despite a minor tailspin due to the nationwide lockdowns last year, has seemed to recover relatively well.
-
11 Jul, 2021
11 min read
Go Air IPO: Go Air looks to enter the IPO market
GoAir, one of India’s most popular airlines, is preparing for an initial public offering (IPO). Rebranding itself as “Go First”, the airline filed a …
-
23 Jul, 2021
8 min read
Laurus Labs Share: More than 50% Return...
Shares of pharmaceutical and biotech company Laurus Labs have continued to surge upwards and have hit a new high amounting to INR 599 per share on th…
-
23 Aug, 2021
6 min read
Clean Science, GR Infraprojects IPO...
This article seeks to shed light on initial public offerings (or IPOs) that have recently been up for grabs in the market. Included among them are Cl…
Ready To Trade? Start with
Subscribe to #SmartSauda Newsletter
CONTINUE WITH GOOGLE
CONTINUE WITH FACEBOOK
