Tag: LIC IPO

Year ender | The insurance behemoth LIC’s hunt for growth continues

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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If there is one thing which the primary markets in the year 2022 would be known for then it has to be for Life Insurance Corporation of India’s (LIC) initial public offering (IPO) — India’s largest-ever public offer. The government had plans to raise Rs 21,000 crore through dilution of just 3.5 percent stake. The issue price was Rs 949/share and aspiration was to have Rs 6 lakh crore market cap company.

Well, there was some cheer from the subscription response but only short lived. LIC listed at Rs 865/share, a 9 percent discount to its IPO price. Since then, it has been a ride which has kept investors on the edge of their seats. The stock hit its high on the listing day itself which was Rs 919/share and since then, it just refused to look north. The price slid all the way till Rs 588/share which was on October 21.

The slide between Rs 919 to Rs 588 took place in about 5 months and entailed a loss of Rs 2.1 lakh crore in market cap for LIC.

It has been a roller coaster ride. The stock has gained 26 percent from its lowest point. This elevation helped LIC regain about 1 lakh crore of market cap. Talking more recent, the stock has gained 21 percent this month and about 8 percent this week.

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But even after all of that action, it is still 22 percent away from its IPO price.

What has brought this bounce from lower? More importantly, are these triggers strong enough to turn this bounce into reversal? To have a conclusion on that we first need to understand what the triggers are:

PSU rally

First one is the larger PSU rally which we have seen. In the last 6 months, LIC’s investment just in the top 20 PSUs has grown 25 percent- returns ranging from 3 percent to 87 percent. This does two things – an increased investment returns increases the total income for the company and also pushes its embedded value.

A 10 percent move in equity markets moves LIC’s embedded value by 6.5 percent.

Financials

The next one is LIC’s financials. So far in FY22, LIC’s premium has seen a growth of 43 percent which compares to the private life insurance industry premium growing at 18 percent.

Not just that, LIC has taken market share to the tune of 400 bps from private players in FY22 so far.

Government’s proposal to amend insurance act

The next advantage comes from government’s proposal to amend the insurance act. These amendments, if approved, will allow LIC to enter health insurance market, distribute other general insurance products and distribute other financial products- opening three new business streams for the company.

Government looking to appoint private sector professional

The last one is, courtesy some reports, which suggest that the government is looking to appoint a private sector professional as the first CEO of LIC. This is also acting sentimentally positive for the stock.

Bottomline

To conclude, 2022- the buzz was all about LIC going public. 2023 will be all about a possible business turnaround at LIC and all eyes will be on how the largest life insurer maneuvers various regulatory changes which are in the offing.

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JSW Steel surges as LIC raises stake in steel stock

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”JSW Steel” isinid=”INE019A01038″ bseid=”500228″ nseid=”JSWSTEEL” sector=”Steel – Large” exchange=”bse”]

Shares of JSW Steel jumped as much as 3 percent in trade on Monday as Street sentiment remained positive on the stock after state insurer Life Insurance Corporation of India (LIC) raised its stake in the Sajjan Jindal-led steel firm. JSW Steel shares were trading at Rs 678.75, up 2.6 percent on BSE. The stock has hit the day’s high at Rs 680.50 so far.

LIC hiked its stake in JSW Steel from a previous 5 percent to 7 percent with an investment of about Rs 3,200 crore as the long-term prospects of the steel sector remain intact.

In a statement, JSW Steel said that the state insurance behemoth acquired 4.86 crore shares or 2.010 percent at an average cost of Rs 649.83 from the open market between August 3 and September 1. This came on top of LIC’s existing holding of 5.002 percent or 12.09 crore shares.

JSW Steel is the flagship firm of the diversified JSW Group and is a leading integrated steel company in the country with a capacity of 28 MTPA (million tonnes per annum) in India and abroad.

[wealthdesk shortname=”LIC India” isinid=”INE0J1Y01017″ bseid=”543526″ nseid=”LICI” sector=”” exchange=”bse”]

Meanwhile, LIC shares traded lower on bourses, down well over half a percent. At 1.03 pm, LIC stock price was trading at Rs 661 apiece, down 0.59 percent on BSE. The insurance stock hit the day’s low at Rs 660.50 so far.

LIC made its debut on the bourses on May 17 this year and was listed at Rs 867.20, at an 8.6 percent discount to the issue price of Rs 949.

Earlier, a Credit Suisse report had warned the resilience in domestic steel prices is unlikely to sustain with Street turning cautious on them.

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LIC’s woes may worsen as harried anchor investors’ lock-in period ends

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The downtrend in Life Insurance Corporation of India (LIC) shares continued for the 10th straight session as stockholders remained jittery ahead of the end of the lock-in period for anchor investors in LIC’s initial public offering (IPO).

LIC shares dropped below Rs 700 apiece on Monday, losing 4.5 percent in a sharply weak market. LIC’s lock-in period for anchor investors is to end on June 13, which will allow them to sell their existing shares in the market.

Overall, anchor investors had bought 5.9 crore shares of the LIC at an issue price of Rs 949 per share ahead of its mega IPO, helping the PSU raise Rs 5,627 crore. As much as 71 percent of the LIC’s anchor book was subscribed by domestic mutual funds such as SBI, HDFC, ICICI, and others.

At current market price levels, those who won allotment in the LIC IPO have lost more than a quarter of their investment in the last month. At 11.31 am, LIC stock was trading at Rs 678.30, down 4.42 percent, after opening at the day’s high of Rs 690.90.

On BSE, LIC shares had listed at Rs 867.2 apiece, a discount of Rs 81.8 or 8.6 percent to the upper end of its issue price range of Rs 902-949 apiece. Given the tepid listing, India’s former finance secretary Shubhash Chandra Garg had declared in a tweet that the true worth of the LIC shares is less than half the issue price.

The sentiment in LIC share price has turned adverse, with brokerages such as Macquarie and Emkay highlighting challenges to scale up its non-participatory policy business, and its ongoing market volatility hurts its embedded value.

“Inherent volatility in Embedded Value (EV) is another big challenge given a substantial portion of EV constitutes marked-to-market (MTM) unrealised equity gains,” Macquarie India said in a recent note. It initiated coverage on the stock with a ‘neutral’ rating and a price target of Rs 1,000.

Emkay initiated coverage on LIC’s stock with a ‘hold’ rating and a price target of Rs 875. It said that LIC’s large size might be its biggest drawback.

“While we appreciate LIC’s market-leading position and comfortable valuations, we prefer private-sector peers that have better growth, profitability and therefore higher RoEV prospects,” Emkay said in a recent note.

LIC’s January-March quarter earnings reported a drop in net profit by 17 percent year-on-year to Rs 2,409 crore, and this did not help the stock.

Catch the latest market updates with CNBCTV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stock Market Highlights: Sensex ends 1,534 pts higher, Nifty50 reclaims 16,250 — biggest jump in 3 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stock Market Highlights: Indian equity benchmarks BSE Sensex and NSE Nifty50 clocked sharp gains on Friday in a rebound following their worst single-day fall in two months. All sectors saw strong buying interest, with financial, oil & gas , IT and FMCG being the biggest index movers. Broader markets mirrored the gains in the main indices. The Nifty Midcap 100 soared 2.2 percent and its smallcap counterpart 2.5 percent. Investors awaited the last leg of financial results for cues, with Paytm slated to report its quarterly numbers later in the day.

Catch highlights of the May 20 session, and more, here:

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Has LIC’s market debut brought PSU stocks back in vogue?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”LIC India” isinid=”INE0J1Y01017″ bseid=”543526″ nseid=”LICI” sector=”Life & Health Insurance” exchange=”bse”]

State-run Life Insurance Corporation’s debut in the secondary market — which comes in the midst of wild swings across global equities — has brought focus on public sector enterprises.

The Street is largely upbeat on the country’s largest life insurer, whose stock is yet to command a premium over its IPO price.

What about other biggies in the public sector space? 

Though nearly all of the 20 stocks on the Nifty PSU have taken a beating in the past one month, half of them have rewarded investors with double-digit percentage returns.

Market expert Ajay Bagga is not impressed.

“Hardly any PSU stock has lived up to its promise over a period of time. Most of them have been value destroyers. It is not a theme that has given great returns in the past, from metals to power to banks,” he told CNBCTV18.com.

He has an ‘avoid’ call on the public sector space.

Here’s a look at some of the biggest stocks in the basket:

State Bank of India (SBI) is not a part of the PSU index.

AK Prabhakar, Head of Research at IDBI Capital, is positive on the public sector space. To him, many PSU stocks look more attractive now compared to others from a valuation perspective.

“In a corrective market like this, many PSU stocks with a price-to-earnings ratio to the tune of 100 are moving to 15-odd levels (P/E) on average, be it the power, mining or defence sectors,” he told CNBCTV18.com.

As of May 19, the Nifty50 has retreated 15 percent from its all-time high, scaled in October 2021.

“PSUs have nothing to lose; defence companies are benefitting from the war in Europe and power firms from the power crisis,” said Prabhakar, who finds SAIL the most attractive stock in the metal pack.

His top picks among PSU stocks now are SBI and Canara Bank.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LIC shares enter beaten-down IPO index with 10% discount to issue price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Life Insurance Corporation (LIC) shares entered the S&P BSE IPO index on Thursday, May 19.

The index — which tracks the performance of newly-listed companies on BSE — fell as much as 3.2 percent during the session.

Companies with a minimum float market value of Rs 100 crore on the listing day make it to the BSE IPO. They are removed from the index after completing two years since listing.

LIC shares fell as much as 2.3 percent to a fresh low of Rs 855.8 apiece on BSE. At this level, the stock took its discount to the issue price of Rs 949 to 9.8 percent.

The state-run life insurer’s shares debuted in the primary market on Thursday,  May 17 at a discount of eight percent.

Many analysts are positive on LIC shares.

“LIC is trading at a price to embedded value (embedded value) of around 1.08 times, which is at a significant discount to other listed private life insurance companies like HDFC Life, ICICI Prudential Life and SBI Life. As expected, given the adverse market conditions, the LIC listing has been muted,” said Yash Gupta, Equity Research Analyst at Angel One.

However, he also said that LIC’s cheap valuations in comparison to its listed peers offer comfort. “Investors with a longer time horizon can hold on to their positions… Retail traders with a short-term view can exit their positions in case there is any upside movement over the next few days,” he said.

Catch latest market updates with CNBCTV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stock Market Highlights: Sensex sheds 1,416 pts, Nifty50 cracks below 15,850 amid broad sell-off but ITC shines

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stock Market Highlights: It was the worst day for Indian equity benchmarks BSE Sensex and NSE Nifty50 in more than two months on Thursday, amid a sell-off as concerns resurfaced about rising inflation and its impact on world economic growth. Losses across sectors pulled the headline indices lower, with financial, IT, oil & gas and auto shares being the biggest drags. Broader markets also bled, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling almost three percent each. ITC bucked the trend with a gain of 3.4 percent after the company reported its financial results.

Catch highlights of the May 19 session, and more, here:

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LIC shares gain but still have some distance to cover to reach issue price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Life Insurance Corporation (LIC) shares eked out a marginal gain on Wednesday, a day after the stock of the state-run insurance giant made a weak debut in the secondary market.

The LIC stock rose by as much as Rs 14.6 or 1.7 percent to Rs 890 apiece on BSE — coming within 6.2 percent below its issue price — before settling at Rs 876.3 for the day. The stock remains in the discount zone compared to its issue price.

On Tuesday, LIC shares had begun their journey in the secondary market at a discount of eight percent to the issue price.

Manishi Raychaudhuri, Asian Equity Strategist-Equity Cash-Asia Pacific at BNP Paribas, told CNBC-TV18 that, in his view, the LIC IPO was attractively priced.

“Different IPOs come with the different fundamentals, different management quality and different market presence. I would not comment on specific IPOs or specific stocks, but the IPO index has gone down and has been secularly going down for more than a year. I think that has something to do broadly with foreign investor sentiment on the market,” Raychaudhuri said.

“One trend that might emerge going forward is a slightly better or more reasonable pricing of IPOs that would leave a little more on the table for secondary market investors,” he added.

Macquarie has a ‘neutral’ call on the LIC stock with a target price of Rs 1,000. At the listing day closing price, the brokerage’s target suggests a 14.2 percent upside in LIC shares.

Explaining the rationale behind the brokerage’s take on LIC, analyst Suresh Ganapathy told CNBC-TV18: “One has to look at the fact that the embedded value obviously is the biggest component of valuation for LIC and the new business value accretion to the overall value for LIC is actually pretty low.”

When you give a multiple on this new business, it moves the valuation for the private sector players but doesn’t do the same for LIC, he explained.

Can investors expect LIC shares to enter premium territory soon?

Prashanth Tapse, Vice President (Research) at Mehta Equities, is positive on the state-run insurance behemoth’s fundamentals and expects the stock to catch up going forward though he fears market volatility might play spoilsport.

“Given the mood of foreign institutional investors, it is difficult to assume any huge buying into the LIC counter… There may be a limited upside in LIC or other listed life insurance players in the short term,” he told CNBCTV18.com.

He recommends those holding LIC shares not to panic looking at short-term volatility and use volatility as an opportunity to accumulate for the medium to long term.

Catch latest market updates with CNBCTV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stock Market Highlights: Sensex ends choppy session 110 pts lower and Nifty slips below 16,250 dragged by SBI, L&T, PowerGrid

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stock Market Highlights: Indian equity benchmarks BSE Sensex and NSE Nifty50 finished a choppy session lower on Wednesday, as investors globally weighed optimism on easing restrictions in China with aggressive rate hikes. Gains in FMCG, pharma and select oil & gas shares were offset by losses in IT and financial counters. Broader markets failed to stay positive, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling less than half a percent each. Investors awaited the last leg of corporate earnings for cues.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow