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LIC IPO : Dates, Issue Price, GMP, Subscription, Share Analysis and Allotment

March 21, 2022 04:45 PM

LIC IPO : Dates, Issue Price, GMP, Subscription, Share Analysis and Allotment
LIC has over 13.5 lakh agents who play brings most of the new business. LIC plans offer 'fixed returns' along with life insurance coverage

LIC IPO : LIC is the largest insurance provider company in India. It has a market share of above 66.2% in new business premium. The company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products.

As of 30 Sep 2021, it has a total AUM of Rs. 39 lakh crores. LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices. It operates globally in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.

LIC IPO: Govt files updated draft papers with Q3 financials, net profit at Rs 235 cr

The government has filed updated draft papers with market regulator SEBI for an LIC IPO, incorporating December quarter financials of the insurance behemoth, an official said on Monday.

In the run-up to the mega LIC IPO, on February 13, the government had filed the draft red herring prospectus (DRHP) with the regulator giving details of financial results till September. The DRHP got SEBI approval early this month.

Govt has time till May 12 to launch LIC IPO without filing fresh paper with SEBI

LIC IPO: The Union government may not launch the initial public offering (IPO) of the Life Insurance Corporation of India (LIC) in a hurry as market sentiment is adverse due to the war in Ukraine, and there’s time till middle of May to elicit a better response from overseas institutional investors, officials aware of the matter said.

The window to launch the LIC IPO remains open till May 12, after which fresh regulatory approval will be required.

The government has time till May 12 to launch the LIC IPO with seeking fresh approval of market regulator SEBI, an official told PTI news agency.

If the government misses the May 12 deadline, LIC would have to file fresh papers with SEBI giving the results of the December quarter and also update the embedded value, the official added.

The LIC IPO was originally planned to be launched in March, but the Russia-Ukraine crisis has derailed the plans.

The government filed the draft red herring prospectus (DRHP) for the IPO with SEBI on February 13. “We have a window till May 12 to launch the LIC IPO based on the papers filed with SEBI. We are watching the volatility and will file the RHP giving the price band soon,” the official said.

LIC Q3 Results: Profit Rises On Change In Fund Distribution Policy

Life Insurance Corporation of India (LIC), the IPO-bound life insurer, said its fiscal third quarter(Q3) profit after tax jumped to Rs 234.91 crores, from a mere Rs 0.91 crore in the same quarter in the previous year, primarily due to a change in funds redistribution policy.

LIC’s profit for the first nine months of fiscal 2022, i.e. April-December, surged to Rs 1,642.78 crore, a jump from Rs 7.08 crore in the corresponding period previous year. The IPO of the largest insurer of the country has reportedly been approved by the markets regulator this week and an official announcement is imminent.

Life Insurance Corporation of India’s(LIC)  third-quarter profit surged after a change in its fund distribution policy allows shareholders to receive a higher share in surplus.

That’s because shareholders of India’s largest insurer now receive 5% of the surplus from the participating fund, and 100% of the surplus from the non-participating policyholders’ fund. In the past, they received 5% of the combined total pool of participating and non-participating funds. IPO-bound LIC changed its policy to bring it line with private peers.

LIC IPO : LIC gets SEBI approval to launch India’s biggest ever IPO

Market regulator SEBI has approved the much-awaited LIC IPO, sources told. According to the report, SEBI has issued observation letter for the same. The approval has come within 22 days of filing.

The government will sell over 31 crore equity shares of LIC, according to the draft red herring prospectus filed with SEBI. A portion of the IPO would be reserved for anchor investors. Also, up to 10 percent of the LIC IPO issue size would be reserved for policyholders.

LIC had in February filed its draft papers with the market regulator. The issue would be an offer for sale of 31,62,49,885 equity shares by the government, which holds 100 per cent stake in the insurance behemoth.

The government was expecting to garner Rs 63,000 crore by selling a 5 percent stake in the life insurance firm to meet the curtailed disinvestment target of Rs 78,000 crore in the current fiscal.

A total of 50 per cent of the net issue would be reserved for qualified institutional buyers (QIBs), whereas non-institutional buyers will have 15 per cent of shares allocated for them. The retail portion has been fixed at 35 per cent of the offer.

LIC appoints insurance veteran Sunil Agrawal as CFO

Life Insurance Corp of India(LIC) has appointed Sunil Agrawal as the chief financial officer, according to people familiar with the matter, as the state-backed insurer prepares for the nation’s largest initial public offering (IPO).

Agrawal’s appointment marks the first time LIC has hired an outsider for the firm’s top finance job and is aimed at aligning the 65-year-old insurer with market standards as it seeks to go public, the people said, asking not to be identified as the information isn’t public.

The appointment will be for a period of three years or the candidate attaining 63 years of age, whichever is earlier.

LIC IPO News : Cabinet approves up to 20% FDI

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Saturday approved a proposal to allow foreign direct investment (FDI) up to 20 per cent in Life Insurance Corporation through the automatic route.

The decision is expected to open doors for foreign investors who are keen to participate in the upcoming LIC IPO (initial public offering) scheduled for next month, considered to be India’s largest public offering.

The existing FDI policy did not prescribe any specific provision for foreign investment in LIC IPO, which is a statutory corporation established under LIC Act, 1956. As per the FDI Policy, FDI in permitted sectors is allowed up to the limit indicated against each sector/activity subject to applicable regulations.

LIC IPO Key positive factors

LIC is a part insurance and part investment products company. Their plans are a combination of insurance and investment with a guaranteed return.

LIC has over 13.5 lakh agents who play brings most of the new business. LIC plans offer ‘fixed returns’ along with life insurance coverage. This makes it easy to sell by agents and brings peace of mind to the insurers.

LIC has high trust in the public for both life insurance as well as investment done with them. LIC is synonymous with insurance in India.

LIC manage asset of Rs 39 lakh crores. That is more money than the entire mutual fund industry combined. They invest these funds across stocks and bonds. They own 4% of all listed stocks in India and more government bonds than the RBI.

Leading insurance provider company in India and fifth largest global insurer by GWP.

A range of life insurance products to meet varied insurance needs of individuals.

Key challenges:

LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.

The margin in insurance + investment products is low.

Also Read : LIC IPO: Govt may not need to amend any law to permit foreign participation

It’s very difficult to value LIC as the business model is unlike any other company. LIC collects money upfront and then promises to compensate policyholders at a later stage. The premiums they collect (part insurance and part investment) cannot be recognized as revenue.

LIC Company Promoters:

The President of India, acting through the Ministry of Finance, Government of India is the company promoter.

 Objects of the Issue:

The IPO aims to utilize the net proceeds towards the following purposes;

To achieve the benefits of listing the equity shares on the stock exchange.

To carry out an offer for sale of 316,249,885 shares by selling shareholders.

LIC IPO Details:

IPO Opening Date To be announced
IPO Closing Date To be announced
Issue Type Book Built Issue IPO
Face Value ₹10 per equity share
IPO Price To be announced
Market Lot To be announced
Min Order Quantity To be announced
Listing At BSE, NSE
Issue Size 316,249,885 Eq Shares of ₹10 (aggregating up to ₹[.] Cr)
Offer for Sale 316,249,885 Eq Shares of ₹10 (aggregating up to ₹[.] Cr)

What are benefits for LIC Policyholders in LIC IPO?

In 2022-2023 budget officials announced that, up to 10 per cent of the LIC IPO issue size would be reserved for its policyholders. LIC officials inform to its policyholders to update their PAN card details, so they can avail the advantage in the proposed public offer.

If you are a LIC policyholder and going to apply for upcoming LIC IPO then you need a Demat account and also your PAN card details must be updated on your policy records.

How can LIC Policyholders check and update PAN with LIC policy?

Go to https://linkpan.licindia.in/UIDSeedingWebApp/getPolicyPANStatus

Enter your Policy Number, Date of Birth (dd/mm/yyyy), PAN and captcha in the designated boxes. There after press Submit.

How can LIC Policyholders link PAN card details with LIC policy?

Either go to LIC’s official website https://licindia.in/ or visit the direct page https://linkpan.licindia.in/UIDSeedingWebApp/

If you go to the website, on the home page itself select the ‘Online PAN Registration’ tab

In the Online PAN Registration page, tap the ‘Proceed’ button at the bottom.

Thereafter, on the new page, enter date of birth, gender, email id, PAN, full name as per PAN, mobile number, and LIC policy number.

Click the declaration checkbox.

Enter the captcha into the box.

From your registered mobile number, request an OTP.

On receiving the OTP, key in the digits into the portal and submit.

How to apply for LIC IPO?

You can apply for the LIC IPO in these ways:

UPI:

You can invest in LIC IPO shares after you link your bank account to the choice of UPI.

Once you register your UPI account with Angel Broking and meet all the accompanying formalities, you can book LIC shares.

Then, initiate the transaction using your ID and confirm payment on the UPI app to block the allotment amount.

Demat Account:

An existing client of Angel Broking can apply for LIC IPO here.

First-time investors can open a DEMAT account at the Angel Broking portal for free. After receiving login credentials, they can begin their investment journey.

Competitive Strength:

Leading insurance provider company in India and fifth largest global insurer by GWP.

A range of life insurance products to meet varied insurance needs of individuals.

Strong omni-channel distribution network; 1.34 million agents, 3463 active Micro insurance agents, 174 alternate channels, etc.

Largest asset manager in India with established financial performance track record.

Highly experienced and qualified management team.

Why should you invest in LIC IPO?

These are among the primary reasons why individuals should consider investing in this IPO –

The Life Insurance Corporation of India boasts a reputed brand with stable financial standing and robust market presence.

Investing in LIC could favour investors significantly. The company clocked stock market profits of more than Rs. 10,000 crores in this June quarter. Its strong fiscal standing, robust fund size, and association with the government make LIC a lucrative investment opportunity for many.

Financial highlights:

Financial Year Total Assets in Million Profit After Tax in Million
March 2020 Rs. 31237324.81 Rs. 27127.10
March 2019 Rs. 30556126.59 Rs. 26885

LIC’s investee companies:

LIC is touted as the biggest investor in India. It has bought shares worth Rs. 90,000 crores in this FY21. Moreover, it plans to touch a stock market investment of Rs. 8 lakh crores by the end of this fiscal year.

Here are some of the most noteworthy investees of LIC –

Stock Quantity Held Holding %
Canara Bank 133,627,205 8.11%
PTC India Ltd. 17,654,072 5.96%
Bank Of Baroda 248,334,291 4.80%
ABB Power Products and Systems India Ltd. 1,881,348 4.44%
Biocon Ltd. 49,374,988 4.11%
Titan Company Ltd. 35,163,104 3.96%
ABB India Ltd. 8,376,287 3.95%
Reliance Infrastructure Ltd. 6,989,930 2.68%
Hindustan Zinc Ltd. 96,246,636 2.28%
Aditya Birla Capital Ltd. 51,407,882 2.13%
Aban Offshore Ltd. 1,000,000 1.71%
BEML Ltd. 515,435 1.24%
Indian Overseas Bank 228,087,493 1.21%

 

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