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LIC IPO- Should you bet on listing pop or a long-term strategy?

 Life Insurance Corporation's (LIC) initial public offering (IPO) continues to attract retail investors, including employees and policyholders, who have been among the highest bidders for the offering to date.
Despite falling premium in the grey market, intense selloff in the global markets, rate hike concerns and inflationary worries, LIC is holding its charm.

Majority of the market experts say that LIC is a long term play and investors should bid for the issue according to their funds and risk appetite. However, one should not bet on issues for listing gains only.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that listing gains are possible in LIC IPO since valuation is attractive. Medium-term prospects also look good, he added.

     

“A lot of other stocks now look attractive after the correction. A key market trend is the preference for value stocks over growth stocks,” Vijaykumar said. 

Even Ajit Mishra, vice president of research. Religare Broking supported the advice, adding that big issues are not profitable. You have to invest in good companies for the long term and LIC is one of them.

 “Despite market pessimism, investors should bid as high as they can, funds permitting, as valuations favor the insurance giant,” he added.

 The government values the LIC at Rs 6 lakh crore, which is 1.12 times its intrinsic value (EV) of Rs 5.4 lakh crore. Embedded value is a measure of the consolidated shareholder value of an insurance company.

 Santosh Meena, head of research at Swastika Investmart, said LIC valuations were lower than their listed peers. "Investors need to understand that insurance is a long-term business and this issue is just a long-term game."

 However, other experts are skeptical about the matter due to the current market conditions and the company's low profitability, which could affect its attractiveness among its peers.

 Analysts said broader markets were experiencing a much-needed healthy correction and investors should look to buy dips. However, the current round of patches is not yet complete, according to the warning.

Some analysts are warning investors to be cautious on the issue of LICs. They say that given the current sentiment in the market, investors should not be in the dark. The issue must be subscribed taking into account the appetite for risk.

Astha Jain, senior research analyst at Hem Securities, said the issue was well received and should generate modest price gains. However, investors should lower their expectations amid the ongoing correction.

"We suggest investors bid on LIC, but it's time to watch their risk appetite as market conditions are no longer as attractive as they used to be."

LIC is the largest insurance provider in India. The government was previously expected to value the insurance giant at Rs 12-13 lakh crore, but global volatility weighed on earlier plans.


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