The shares of insurance major LIC will make their market debut tomorrow (May 17).
LIC IPO: The shares of insurance major LIC will make their market debut tomorrow (May 17). The LIC IPO, open for subscription between May 4 and May 9, witnessed a positive response from the market and was oversubscribed, with 2.95 times LIC IPO subscription. Post listing, the state-owned insurer will become the fifth-largest company in the country with a valuation above Rs 6 lakh crore.
However, the company’s grey market premium (GMP) is indicating a lacklustre listing, which is likely to take place on May 17. The share allotment is already complete on May 12.
LIC GMP Today
The company’s unlisted shares currently are trading at Rs 936 apiece on Sunday, which is Rs 13 lower than the upper limit of the IPO price band, according to the latest GMP price available on chanakyanipothi.com. This is the fifth consecutive day when the LIC IPO GMP is in negative territory. The price band for the LIC IPO was fixed at Rs 902-Rs 949 per equity share.
The current grey market premium (GMP) of minus Rs 13 is, however, better than the minus Rs 25 recorded last week.
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LIC IPO: What Does GMP Mean?
Grey Market is an unofficial market where individuals buy/sell IPO shares before they officially hit the exchanges. GPM is a premium amount at which grey market IPO shares are traded and it reflects how the IPO is likely to react on its listing day. Trade analysts believe that the not-so-encouraging response the IPO received from foreign and institutional investors is the primary reason behind its falling appeal in the grey market. The worsening of the Indian and global markets further added to the selling pressure in the unofficial market.
However, stock market experts said that grey market premium is not an ideal indicator of the success or failure of a public issue. They said that GMP is an unofficial data, which is non-regulated as well. So, one should look at the balance sheet of the company instead of grey market sentiments as the financials of the company gives a better and more concrete fundamental picture of the company.
LIC IPO: Should You Book Listing Gains?
As of now, a profit for investors who were allotted IPO shares at no discount seems difficult, as the GMP has remained in the negative zone for the past several days. Policyholders and employees, however, could make a possible listing gain as they were allotted shares at a discount.
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Analysts at Axis Securities said that the volatility in the markets is likely to weigh on the listing day performance of LIC. They expect LIC to debut at a discount, and investors are unlikely to book any listing gains. The analysts further said that owing to the discount offered to the policyholders and retail investors, they could end up making a marginal gain on the listing.
LIC’s initial public offering (IPO) received 2.95 times a subscription on the final day of bidding, with the portion reserved for qualified institutional buyers (QIBs) fully booked. The bids received were 47.83 crore against the offer size of 16.21 crore. The LIC IPO’s price band was fixed at Rs 902-949 per share and the company offered a discount of Rs 60 per share for its policyholders and Rs 45 apiece for retail investors and LIC employees.
Eligible investors are expected to see the shares credited on May 16 and the company is likely to see the listing on stock exchanges on May 17. LIC IPO created a record with the number of applications for the stock of the country’s insurance behemoth crossing 5.9 million on May 8. The portion reserved for retail investors was fully subscribed on the third day and 1.59 times by the end of the fifth day of subscription. The issue has finally received 13.8 crore bids from retail individual investors, against 6.9 crore shares set aside for them.
