Stock market blues are continuing due to the ongoing geopolitical crises. International markets are also showing signs of stress day by day. The Sensex is hovering around 57,000 and NIFTY is stuck near 17,000 levels. However, in spite of all these negativities there is good news in Indian markets. The government led insurance company Life Insurance Corporation (LIC) is all set to open its IPO on 4th May. Investors has been waiting for this day since LIC filed its DRHP with the regulator SEBI. The buss among investors is that LIC IPO will be a successful one and will bring cheer to investors with good/decent listing. Many retail and first-time investors are also considering to apply for the LIC IPO. Let’s see the key positive factors of applying for LIC IPO.
- High probability of allotment – While all can apply for IPO, few lucky ones get the allotment. It’s a seer matter of luck to get all that allotment what you apply. Many good investors do not apply for IPOs as they feel they do not get enough allotments. However, in case of LIC IPO you may not feel yourself unlucky. During this IPO LIC has planned to off load over 31 crore equity shares making it one of the biggest IPO. So, fair chance of all investors to get desired number of allotment.
- Biggest IPO so far in Indian markets – LIC is a government owned insurance company and Govt. of India fully owns the equity shares at present. As per the IPO details during this IPO government will off load 3.5% of its stake which is 31.60 crores shares. The IPO size is 21,000 crore which indicates that it is one of the largest IPOs Indian markets have ever seen so far.
- Revival of economy & markets – The big factor that we have read above is really big and it will play vital role. LIC IPO indicates that government is serious on their action of privatization of the public sector undertaking and will continue their journey of disinvestment. This IPO will bring the government 21,000 crore which will be utilized further for other projects/development activities reviving economy which has been affected due to COVID since last two years. Markets will also see increased volumes due to buy/sell and more money rotation. Moreover, many domestic and overseas institutional investors will also bring in their money for this IPO.
- Future Plans of LIC – LIC is the largest life insurance company in India. The brand presence and brand recall has been quite strong across all geography. The company has strong presence across all states & union territories. Their offices and super effective agents are dominating the market even in semi-urban/rural markets. The company has vast range of products which caters to all segments and age groups. Their digital presence and advertisements to take the products to the customers has been planned well for aggressive growth in coming years.
- Pricing – The IPO price band for retail investors and policy holders has been well planned with discounted price and looks optimistic for a higher listing debut.
Overall, the LIC IPO looks like a good investment opportunity. However, investors must recall that equity investments are subject to market risk and must access their own risk/ investment horizon/ objective.
