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First and foremost, consider why you want to participate in LIC’s initial public offering. Do you want to make quick money or accumulate riches over time? For the time being, ignore the desire to increase your listing value. One of India’s most trusted brands is LIC. When it comes to acquiring insurance, trust is the most critical consideration, and it bears even more weight when it comes from a government agency. So, apply for the shares, then make additional accounts. Your risk profile and evaluation will determine this.
LICs would sell 20,557 crores worth of shares at a price range of Rs 902-949. Existing policyholders will receive a Rs 60 per share reduction, while retail investors and workers would receive a Rs 45 per share discount. Investors should apply for the stock in the higher price band to ensure a share allocation. The discount serves as a safety blanket for investors. Recognize what works and what could continue to work for LIC.
Although it has the largest market share, is it losing ground?
LIC IPO has a market share of more than 60% based on total premiums received in the financial year 2021-2022. As a result, LIC is the market leader. However, it has steadily lost market share. Despite losing market share, it continues to have the greatest portion of the life insurance industry, especially when compared to foreign insurance market leaders.
Penetration has been achieved thanks to a strong agent network.
LIC also boasts India’s biggest network of life insurance agents, with over half of all individual agents working for the company. India is a predominantly uninsured country, yet individuals have begun to take insurance more seriously since the COVID-19 outbreak. This provides a chance for the industry to expand. With a protection gap of more than 80%, India has the biggest protection gap among Asia-Pacific (APAC) countries. Given our scale and under-penetration, we have a high chance of continuing to generate at least 15% new business profit (NBP) for a long period. The share will be listed on NSE and BSE. You can register yourself as a broker on 5paisa and enjoy trading for the same.
A large-cap stock that is awaiting inclusion in indexes.
Following its listing, LIC will be included in the NIFTY and SENSEX indexes, and it is certain to remain one of India’s top corporations, making it a company worth adding to your portfolio. Your risk assessment determines the proportion of allocation. There are a few things you should be aware of:
Profit margins are lower than rivals.
Savings plans generate the majority of LIC’s revenue, although they have a greater operational cost than selling protection insurance. When compared to SBI Life’s 21 percent, HDFC Life’s 26 percent, and ICICI Prudential Life’s 27 percent, LIC’s VNB margin, or Value of New Business margin, is about 10%.
Conclusion
The government owns LIC, which has helped out a number of troubled businesses in the past. Even the LIC’s share sale prospectus acknowledges that some activities may be necessary, with no certainty that such actions will be advantageous. We can only hope that when it is listed, this will change. If supply is stable, stock prices might climb slowly. There is the worry that LIC would continue to issue offers for sale in order to acquire further funds, which might act against the stock price, as opposed to a business like Tata Consultancy Services Ltd (TCS), which, rather than issuing new shares, buys back its own. However, as long as you’ve made a good investment.
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