The IPO proved to be successful despite the volatile stock markets, but analysts are keeping their fingers crossed about the listing day performance. They, however, believe that LIC is a medium-to-long-term buy.
“The market volatility is likely to weigh on the listing day performance of LIC. We expect LIC to debut at a discount, and it is unlikely for investors to book any listing gains,” said Axis Securities.
However, owing to the discount offered to policyholders and retail investors, they could end up making a marginal gain on the listing, it further said.
‘Expect soft listing’
Prashanth Tapse, Vice-President (Research), Mehta Equities, pointed out that unofficial grey premium is trading down into negative territory due to depressed global markets, which are in the bearish zone since Russia–Ukraine war. Selling pressure continued in domestic markets, wherein foreign institutional investors (FIIs) have remained net sellers. FIIs have pulled out ₹70,000 crore this fiscal.
“Considering all the parameters, we expect soft listing between +or- 5 per cent of the offer price. Moreover, LIC offer was never being considered as listing gain candidate rather it should be looked at only long term,” Tapse said.
Given that market sentiments are still volatile following the global headlines, LIC may also trade in muted mood.
“We advise allotted investors not to panic and hold it for medium to long term. Those who are planning to buy on a listing day should accumulate by taking volatility as opportunity,” Tapse said.
The government raised close to ₹21,000 crore from the 3.5-per cent stake sale in LIC. The IPO, which opened for subscription on May 4 and closed on May 9, was subscribed 2.95 times with strong demand from retail investors, employees and policyholders of LIC.
The Centre has fixed the issue price of LIC shares at ₹949 apiece, which is the upper end of the price band. Policyholders and retail investors have got the shares at a price of ₹889 and ₹904 apiece.
May 16, 2022