New Delhi, May 16 Brokerage house Swastika Investmart anticipates that LIC is likely to have a “flat” listing.
The brokerage’s rationale behind the anticipation is based on the current market situation such as increased inflation statistics, FII outflows, currency weakness, and geopolitical and rate hike-related worries.
The much-awaited listing of the insurance major is expected to take place on Tuesday.
Presently, markets are experiencing extraordinary volatility, which has caused sell-offs in equity markets all over the world.
According to recent grey market patterns, the LIC’s unlisted shares were selling at Rs 936 per share on Saturday, a discount of Rs 13 to the IPO price band’s upper range, the brokerage said.
However, the stock’s modest float may limit the stock’s post-listing decline.
“LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value and a huge network of agents. However, there are concerns with the company like losing market share to private players, lower profitability & revenue growth compared to private players, lower VNB margins, and short-term persistency ratios, but the valuation at Price to Embedded Value of 1.1 had discounted the above concerns.”
Nevertheless, investors must be aware that the business of insurance is long-term in nature and therefore it recommends investors to stay with the company for the long term even if the company lists at a discount.
