JOIN USLIC makes lacklustre stock market debut
Life Insurance Corp of India’s shares fell as much as 9.4% on listing day, making it the world’s second-worst trading debut among large initial public offerings this year.
Shares of India’s largest insurer ended 7.8% lower than the IPO price of Rs 949, after losing 9.4% earlier on Tuesday, when the broader market closed up 2.6%.
"The 8% lower debut of LIC shares is a commentary on the current state of global markets rather than the company itself,” said Mohit Ralhan, the Managing Partner & CIO of TIW Private Equity. “LIC has a solid business, trusted brand, and market leadership in an underpenetrated insurance market. LIC is a typical blue-chip company which is expected to give steady returns over a long period of time and therefore returns over a day is not relevant.”
B Gopkumar, MD & CEO of Axis Securities, also urged investors to hold on to the stock, calling LIC "a solid bet in the long run” citing its market position, robust distribution network and shifting focus towards profitable products.
The comments echoed those of Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey, who blamed the weak debut on market conditions and urged investors to hold on to the stock for long-term value, according to a PTI report. Some others looked at it differently.
"LIC has also been losing market share to private insurers, so investors will be cautious. It was not expected to really give a huge premium on listing, but there is some disappointment on the listing discount," a fund manager with a domestic mutual fund which skipped subscribing to India's largest IPO told Reuters.
The insurance behemoth now has a market value of around Rs 5.54 lakh crore and is India's fifth-largest company.
Retail investors and eligible employees got a discount of Rs 45 per share, while policyholders got a discount of Rs 60 per share in the IPO of the 65-year-old insurance giant.
LIC’s first-day performance makes for the second-worst debut among 11 global companies that listed this year after raising at least $1 billion through first-time share sales, according to Bloomberg. It is the fourth-largest deal among global IPOs priced this year, which has so far seen a dearth of large-size offerings in financial hubs across the globe, the news agency said.
(With inputs from agencies)