LIC stock falls 8% on listing day, but still beats HUL and ICICI to become India’s fifth most valued company

• Shares of LIC listed at ₹867.20 while the price band was fixed at ₹902 - ₹949 per share.
• The LIC IPO witnessed decent demand from investors as its IPO was subscribed for 2.95 times the number of shares offered in the six days of IPO bidding process.
• The market capitalisation of the company stood at ₹5.48 lakh crore.

The Indian equity markets now have another behemoth amongst them as Life Insurance Corporation of India (LIC) made it to the top five most valued companies on the day of the listing — coming after Reliance Industries, TCS, HDFC Bank and Infosys.

It beat another PSU navratna State Bank of India and ICICI Bank to comfortably occupy the fifth position - cementing its position as the most valued PSU and amongst the top valued financial majors. Its market capitalization is now at ₹5.48 lakh crore.

Due to selling pressures and a weak market sentiment, its stock fell 8.6% on listing to ₹867 as compared to ₹949, which is at the top end of the issue price. This fall however reflects the weak market conditions and has been widely predicted by analysts and the unofficial gray market, alike.

A flat listing of LIC was much expected by analysts
The equity markets have been taking a beating for the last two months, but the biggest shock came earlier this month after the central bank raised benchmark interest rates to tame the rising inflation. The other macro indicators that came in after too haven’t been encouraging, making experts predict a ‘series of steps’ that would tighten liquidity in the system.

Analysts had since given up hopes of a strong listing price. “We anticipate that LIC might have a flat listing tomorrow, based on the current market situation. Due to increased inflation statistics, FII outflows, currency weakness, geopolitical and rate hike-related worries, present markets are experiencing extraordinary volatility, this has caused sell-offs in equity markets all over the world,” Aayush Agrawal, senior analyst at Swastika Investmart said on May 16.

Further, analysts had said that there would be some selling pressure in the shares of LIC as retail investors who have been allotted the stock may rush to sell them.

“LIC IPO initially may see some selling pressure as all the retail investors have received the allotment. Looking at the cheap valuations of LIC as compared to other listed players offers comfort and investors with a longer time horizon can hold or buy more,” Yash Gupta, equity research analyst at Angel One.

The IPO, which opened between May 4-9, received bids for 47 crore shares as against 16 crore shares on offer. It was subscribed 2.95 times on the last day of the bidding.

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