Mumbai : The Government of India has started preparations in full swing to bring the country’s largest and most profitable life insurance company Life Insurance Corporation of India (LIC) ie Mega IPO. The government plans to raise around Rs 90 thousand crore to Rs 1 lakh crore by selling its 10% equity stake in LIC. In this way, it will be the biggest IPO ever in the Indian capital market. It is expected that it will come in the beginning of the new year i.e. in the last week of January or in February 2022.
There is a lot of curiosity among the investors of the country and abroad about LIC’s IPO and it is also eagerly waiting because it will be different in many ways. LIC is India’s largest for-profit insurance company as well as the world’s leading insurance company. The market leader in the life insurance industry for 65 years, LIC has been contributing the most in the infrastructure development of the country. It is also the largest institutional investor in the Indian stock market. LIC has become a giant with insurance corpus of Rs 34.4 trillion, investment of Rs 36.8 lakh trillion and management corpus of over Rs 38 trillion. Current President M.R. Under Kumar’s leadership, LIC continues to accelerate its growth and become stronger, more competitive, techno-savvy and professional.
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third most valuable company
Analysts estimate that when LIC is listed on the stock markets, its market capitalization may be around 11 trillion rupees ($ 150 billion), which is the country’s largest company Reliance Industries. ) and the top IT company after TCS. Reliance’s market cap is currently 16.60 trillion rupees ($221 billion) and TCS’s is 13.50 trillion rupees ($180 billion). In this way LIC will become the third most valuable company in the country and will be included in Sensex and Nifty.
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The issue will come at an attractive price!
All the investors big and small are ready to buy the shares of LIC and every investor would like to have its share in their portfolio because one LIC will be the third most valuable company in the country. Secondly, its IPO will come at a reasonable price. It is known to all that the Government of India brings IPOs of all its companies at reasonable prices or at attractive prices. Due to which there is full scope of profit for the investors. Like the promoters of private companies, lucrative publicity does not bring in exorbitant prices i.e. arbitrary prices. In which investors are more prone to loss. Everyone has seen this in mega IPOs of private companies. In the Reliance Power IPO of Rs 11,500 crore that came 14 years ago, almost the entire capital of the investors has been sunk. And now the share of Paytm, the biggest IPO of Rs 18,300 crore, is also in a loss of about 25%. In contrast to this, investors in LIC’s IPO will have full potential to generate profit in the long term as well as profit at the time of listing. This is the reason why every investor is eagerly waiting for LIC’s IPO. It is believed that the IPO can come at a price of Rs 400 to 600.
LIC successful in dealing with tough competition
LIC, which started with an initial capital of Rs 5 crore in the year 1956, today has an asset base of more than Rs 38.04 lakh crore (Rs 38.04 trillion) including Life Fund of Rs 34.36 lakh crore (Rs 34.36 trillion) ie Management Fund (AUM). Already happened. Two decades ago, when the insurance industry was opened to private companies in the country, it was feared that it would be difficult for LIC to survive in the face of stiff competition from private companies, but defying all the apprehensions, LEIC is getting stronger day by day. LIC continues to be the most trusted insurance company even today, facing tough competition from 24 private companies. It is also number one with the largest market share i.e. 66.18% in first premium income and 74.58% in number of policies. LIC has expanded not only in India but in 14 countries. According to the survey report of ‘Brand Finance Insurance 100’, LIC is the 3rd strongest and 10th most valuable brand in the world. Today LIC has a bouquet of 32 insurance plans available for sale under Individual Business, which cater to the needs of different sections of the society. LIC is providing the best products to the customers as per their changing needs and changing times.
Although the government has not yet decided the size of the IPO, but based on the initial estimates, it will definitely be the largest IPO in India with a size of Rs 1 lakh crore. And it will create a new history in the Indian Primary Market. Also, it will become a game changer by providing a new direction to the market. Because when a record amount of Rs 1 lakh crore is to be raised, crores of new investors will come in the market. LIC has a vast network of 13.53 lakh agents and more than 250 million customers. Out of these, a large number of investors are opening Demat Accounts. If these crores of new investors come in the market, then the stock market will get more strength. Although the focus of the government is always on the retail investors, but we request the government to provide special discount in the IPO price to the policyholders of LIC along with the retail investors. Due to which the enthusiasm of the retail investors of the country for LIC’s IPO will increase further.
-Siddharth Khemka, Head of Retail Research, Motilal Oswal Financial
LIC being the highest profit making insurance company of the country, provides dividend of more than 2500 crores to the government. When this list is done, it will definitely be counted among the top 5 blue chip companies of the country. It will also be included in Sensex and Nifty. It will be the first company in the stock market to have a market cap of more than Rs 10 lakh crore at the time of listing. We believe that LIC will continue to be the market leader and most profitable company in the insurance sector of the country. That’s why every investor should invest in its IPO and always keep it in the portfolio. The government has intensified the preparations for the IPO. Its IPO is expected to come before March. Every investor should consider allocating funds for this from now on.
-Ashok Holani, Director, Holani Consultants Pvt. Ltd.