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The country’s largest initial public offering till date — that of Life Insurance Corporation of India, made a weak debut on Tuesday and failed to cheer D-street with its listing.
LIC shares listed at a discount of over 8 per cent on its issue price of ₹949 apiece. On the NSE, the scrip listed at ₹872 apiece, which was a discount of 8.11 per cent over its issue price. On the BSE, it listed at a discount of 8.62 per cent at ₹867.2. The tepid listing, on a day when the BSE Sensex rose 2.54 per cent, also impacted retail investors and policyholders who got the shares at ₹904 and ₹889 apiece.
The share price of LIC struggled to remain above ₹900 during the initial trading on the stock exchanges. The scrip closed at ₹873 apiece on NSE and ₹875.45 apiece on BSE.
In the past, other large IPOs such as those of Paytm and SBI Cards and Payment Services have also had a weak debut. SBI Cards, for instance, had listed at a discount of 13 per cent; while Paytm scrip listed at a discount of 9 per cent on day one.
The ₹21,000-crore IPO of LIC had witnessed good response from the investors with 2.95 times subscription. Retail investors and policyholders had shown robust interest.
Fifth most valuable company
However, despite the weak listing, LIC is the fifth most valuable company in terms of market capitalisation. On BSE, its market capitalisation was ₹5.53-lakh crore, just below Reliance Industries Ltd, Tata Consultancy Services, HDFC Bank and Infosys Ltd. On NSE, its market capitalisation was at ₹5.52-lakh crore at the end of Tuesday.
LIC Chairperson MR Kumar said a big listing was not expected for shares of the life insurer as the markets have been volatile. Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), said the weak debut was due to unpredictable market conditions.
“Nobody can predict the market. We have been saying that it should be held for not a particular day but for more than a day. There is also a protection to retail investors as they got it at a discount price,” he told reporters.
No dampener
Analysts said the weak listing should not dampen investor sentiment. “While LIC debuted at a slight discount to its issue price, 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,” said B Gopakumar, MD and CEO, Axis Securities.
Hemang Jani, Head-Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services, said given the attractive valuations and stability in the markets, the brokerage expects some buying interest in the stock both from retail and institutional investors.
“Since large amount of money has been released post listing of LIC, part of this money could get diverted into equity markets,” he said.
The listing is in line with the Prime Minister’s vision, Pandey said at the ceremony. Noting that it was subscribed mainly through domestic investors, he further said that it gives an optimistic view of the capital markets going forward despite the headwinds.
“There is an underlying story beneath the ups and downs,” he said.
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