LIC IPO (Life Insurance Corporation Limited IPO) Details
LIC IPO date postponed several times and finally it has announced now. It is coming up with an IPO that would open for subscription on 4th May, 2022. There was so much negative criticism about LIC IPO earlier, however, after the valuations are reduced now by Govt of India, the noise is reduced now to some extent. Should you invest in LIC IPO? Is LIC IPO good or bad for investment? What are the risk factors one should consider before investing in Life Insurance Corporation of India IPO?
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About LIC Limited
I don’t think much introduction required for LIC.
LIC is one of the largest government-owned life insurer in India.
LIC market share in the Indian insurance segment is 64.1%. Its new business premium share is around 66.2%. Its market share in terms of the number of individual insurance policies issued is 74.6%. It has both participating and non-participating products. Company offers life insurance plans, health insurance plans, ULIPs, Insurance cum saving schemes, annuity and Pension plans etc.,
LIC IPO Date, issue details, Size and Price Band
LIC IPO Price band of Rs 902 to 949 is confirmed now.
| IPO Opening Date | 04-May-22 |
| IPO Closing Date | 09-May-22 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 902 to Rs 949 per equity share |
| Lot Size | 15 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 21,008.48 Crores |
| Fresh issue | Nil |
| OFS | Rs. 21,008.48 Crores |
| Policy Holders Discount | Rs 60 per share |
| Retail Investors Discount | Rs 45 per share |
What are the competitive strengths of LIC Limited?
1) LIC is the leading insurance provider company in India and the fifth largest global insurer by GWP.
2) It is the trusted brand and a customer-centric business model.
3) Cross-cyclical product mix that caters to diverse consumer needs and an individual product portfolio that is dominated by participating life insurance policies.
4) Presence across India through an omni-channel distribution network with an unparalleled agency force.
5) Harnessing technology capabilities to support customer connect and drive operating efficiencies.
6) Largest asset manager in India with an established track record of financial performance and profitable growth.
7) Robust risk management framework.
8) LIC has highly experienced and qualified management team, distinguished board and strong corporate governance framework.
What are the Objects of the IPO Offer?
LIC IPO Size is Rs 21,008.48 Crores and entire proceeds is Offer for Sale (OFS).
Under LIC OFS, Govt of India would get entire money and the company would not get any funds.
Who are the promoters of LIC Limited?
The President of India, acting through the Ministry of Finance, Govt of India is the promoter of the company.
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How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years and 6 months.
| Financial Year ending / Period ending (Amt in Mns) | ||||
| Particulars | FY19 | FY20 | FY21 | 9M ending Dec-21 |
|---|---|---|---|---|
| Total Assets | 33,663,346 | 3,4,141,746 | 37,464,045 | 40,907,867 |
| Revenues | 26,450.0 | 27,309.6 | 29,855.7 | 17,573 |
| Profit After Tax | 26,273.8 | 27,104.8 | 29,741.4 | 17,153.1 |
| Profit % | 99.33% | 99.25% | 99.62% | 97.6% |
LIC IPO for Policyholders
It provides Rs 60 discount on IPO price to policy holders (whoever registered their PAN). When policyholders applying for IPO, they need to tick the “policyholders” quota before submitting. If submitted without ticking this, nothing can be changed later on.
Why to invest in LIC IPO?
Here are the positive factors in this company.
1) LIC is the largest insurance company in India and 5th largest insurer globally by GWP. LIC is the trusted brand for several decades.
2) It has diversified participating and non-participating products like life insurance plans, health insurance, ULIPs, Insurance cum saving schemes, Pension products etc.,
3) LIC has a strong distribution network across India.
4) Company has generated strong revenue growth in the last 3 years. Its revenues increased from Rs 2,645 Crores in FY19 to Rs 2,985 Crores in FY21.
5) Company has strong margin growth where its margins increased from Rs 2,627 Crores in FY19 to Rs 2,974.1 Crores in FY21.
6) LIC latest life insurance claim settlement ratio (CSR) is 98.6% for FY20-21 which is considered as a good claim ratio.
7) LIC IPO for policyholders offers Rs 60 discount on share price and retail investors would get discount of Rs 45 per share.
Risk Factors of investing in LIC IPO
1) The entire IPO Proceeds is OFS which would go to selling shareholders i.e. Govt of India and the company would not get anything.
2) The ongoing covid pandemic is uncertain and can affect in future too. Such pandemic can restrict the ability of agents to sell insurance policies, significantly increase expenses, can affect its investment portfolio etc.,
3) LIC has trusted brand for decades. Any loss of reputation in brand can affect business.
4) There are several cases where insurance policies mis selling happening through agents / uncles / relatives. There is awareness being created by many experts on various forums for the past several years. This can impact the insurance saving schemes in future.
5) Investors should read complete risk factors indicated in the prospectus of the IPO document before investing in this IPO.
LIC Limited IPO Valuation
1) LIC IPO price band is Rs 902 to 949 per share.
2) If we consider last 3 years weighted average EPS of Rs 4.47 and the upper price band of Rs 949, P/E works out to be 212x.
3) Similarly, if we consider FY2021 EPS of Rs 4.7 and the upper price band of Rs 949, P/E works out to be 202x.
4) If we take 6 months ended Sep-21 EPS and annualize it, the P/E works out to be 200x.
5) Means company is asking IPO price of Rs 949 in the P/E ratio of 200x to 212x.
As per the DRHP (RHP is yet to be available) filed few months back, there are listed peers like HDFC Life trading at P/E 94x (Highest) and SBI Life at P/E 81.4x (Lowest) and the industry average is 85x. Hence LIC IPO Price at 200x to 212x is highly priced.
LIC IPO dates 2022
(Subscription, Allotment and Listing)
| Offer Open | 04-May-22 |
| Offer close | 09-May-22 |
| Finalization of Allotment | 12-May-22 |
| Initiation of Refunds | 13-May-22 |
| Credit to Demat Account | 16-May-22 |
| IPO Shares Listing Date | 17-May-22 |
How to buy LIC IPO online through Zerodha?
You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.
You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.
Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.
Follow below steps to apply this IPO in Zerodha platform:
1) Visit the Zerodha portal and login to Console.
2) Go to Portfolio and click the IPOs link.
3) Visit ‘LIC Limited IPO’ row and click the ‘Bid’ button.
4) Enter your UPI ID, Qty and the Price which you want to bid.
5) Click on ‘Submit’ IPO application form.
6) Visit the UPI App (net banking or BHIM) to approve the mandate.
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LIC IPO Good or Bad for investment?
LIC is the largest insurance provider in India and 5th largest insurance company globally by GWP. LIC is trusted brand in India for decades. Whether people like it or not, many keep investing in LIC policies through uncles, friends, relatives etc., who are acting as LIC agents.
Company has strong revenue growth in the last 3.5 years.
Company has good margin growth in the last 3.5 years.
LIC IPO share price is highly priced.
I would have been excited if the issue price would have been on lower side.
Owning to LIC brand and positive factors, investors can invest in this IPO for medium to long term perspective. Since company IPO price is highly priced, one may or may not get listing gains. One can add on the dips post listing and this can turn to be multi bagger stock if held for medium to long term.
Source: LIC IPO RHP
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The response to LIC IPO is mind blogging. Being the largest IPO, it attracted subscription rate at super sonic speed.
It would have been other case if Govt of India would have continued with earlier valuations. Since they reduced valuations, inspite of markets being bearish, LIC IPO is fully subscribed.
thank you for detailed analysis
Thanks Saj
Not interested. Gujarat gas, bpcl all are going down.
How Gujarat Gas, BPCL are related to LIC IPO?
Wanted some views from experts on LIC IPO.
1. Can a single applicant apply for different categories?
2. What is NII category?
1) Yes
2) NII – Non institutional investor who is other than Retail investor
Good Analysis. Worth subscribing. We should trust our PSUs.
Now my mind goes to the time ipo launching of general insurance.whatbis that ipo price and what I’d today price.lic is overpriced .so I am thinking of buy after listing below ipo price.
Thanks for your very good analysis. It’s very highly over priced and that too entire amount goes to govt. Which I say no never such ipo. I pay taxes and govt gives pea nut services and facilities hence no more money to govt. ipo. I also feel this can list less than issue price. No listing gain I feel. Let me skip this ipo.
I may enter when it lists and goes for nose dive then I will buy. Thanks