LIC is India’s one of the major assets. In simpler words one can say it is the cash cow of the government. It makes more profit than all the government companies. Its asset base is huge and currently valued at 4,04,34,596 Million Rs. When such a company dilutes its share it is going to be huge obviously. The shares issued for selling are close to 316249885 shares. The company is currently valued at 5 Lakh Crore Rs. In the current capacity the government expects the vacation to almost grow by 5 times in the upcoming years. The IPO valuation is definitely gonna be somewhere more than 60000 Crore Rs.
The company is offering its policyholders and employees a discount as well. With all such good things in place the LIC IPO has submitted its DRHP and is finally moving ahead towards listing. It is estimated that the listing can be accomplished before the F.Y ends as per Indian calendar (31st March, 2022.) The share dilution news so far is 5% among the holding.
Currently the government owns the entire company. Thus 100% stake is in the pockets of the government of India. However the Indian government is planning to offer for sale shares for a 5% calculation of the company. This will free up major liquidity for the government as well and also increase the company’s valuation if its archives listing benefits.
Company Information
LIC is India’s largest insurance provider. It dominates the insurance market with 65% average share in the business. There are 8 major zonal offices for the company at Chennai Delhi, Kanpur, Mumbai, Bhopal, Kolkata, Hyderabad and Patna. There are in all 2048 branches for the company. It also has international tie-ups in many countries. They are Fiji, Sri Lanka, UAE, Bahrain, United Kingdom, Qatar, Singapore, Bangladesh, Kuwait, Mauritius, Nepal etc.
The face value for the share is 10 Rs per share. The lead managers for the IPO are SBI Capital Markets Limited, BoFa Securities, Axis Capital Limited, Nomura Financial Advisory and Securities India Limited, Citigroup Global Markets India Private Limited, ICICI Securities Limited, Goldman Sachs India Securities Private Limited, JM Financial Consultants Private Limited, KOtak Mahindra Capital Company Limited and J.P. Morgan India Private Limited.
The registrar for the IPO is Karvy FIntech India Private Limited. The issue would definitely be listed at both the exchanges. The LIC IPO will be a book built issue.
Financial Outlay
The financials for the company have been wonderful so far. The current net profit as of Sept 2021 is 15040 Million Rs. This is accompanied by revenue flow of 15197 Million Rs and assets base of 40434596 Million Rs. Thus the company is doing excellent on the fonts of earring profits. However if looked closely it is not making much money as it should in comparison to the asset base. The company’ profits have increased in almost a similar manner of 1000 Million Rs every year. Similarly by end of March, 2022 the company executes a profit of somewhere above 30000 Million Rs.
The asset base is also increasing in the company. The jump was of 1000000 Million Rs every year. As of now the company has increased its asset asset base by 3000000 Million Rs this year and by March it’s can be executed sound 5000000 Million Rs. With such a robust asset base the company can have multiple options available for investing opportunities. From the financials one thing is very clear, once the company gets listed it would be a top entry for it into the Nifty50 soon. The sales of LIC are prominent due to its operation in the niche markets through LIC Agents.
Market Effects
The LIC IPO would be definitely the most awaited IPO of the year. However one has to be careful with his or her holdings in the market for that time period. Trading and that too buying is not at all an option. The reason is the market follows the demand, supply and volume mechanism,=m. This means once the markets get the LIC IPO news, retailer investors would be blindly pooling of their funds from open mart to invest into the same.
This will lead to a major volume loss in the markets. Obviously there are chives if the IPO gets the desired amount of subscription as well. The IPO Sze is pretty big and the company needs to have a bumper listing for the benefit of the Indian Economy. For a probability of great returns almost more than 200000 Crore Rs of money will be drawn away from the market for its listing. Even this fire will only make it 3 times the subscription rate.
There are chances that people may even pick up stock once the listing is done. Hence one should be extremely cautious while the IPO is listed as it will encounter for major volume outflow for the open markets.
