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Riya Tayal | 19 May 2022

Here's Why LIC IPO Listing Is Hurting Investors!!

Here's Why LIC IPO Listing Is Hurting Investors!!

Have you missed the opportunity to invest in LIC IPO listings? If yes, then you don't need to fret as you are in safe hands. Yes, you read that right! All the investors who have invested in LIC IPO are currently undergoing loss, which is hard to believe. 

And, if you are wondering about the reason behind this huge loss, then here's why!!

The start of Life Insurance Corporation of India (LIC) IPO on stock exchanges (BSE & NSE) has disappointed the investors. It has made a dull and unexpected start, trading at a discount to the Initial Public Offering price. The shares of the biggest insurance behemoth in India began trading on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) at Rs.872 per share, which is 8.11% down from the Initial Public Offering price of Rs.949 per share. And you will be surprised to know that the stocks fell in spite of the fact that the Nifty and Sensex were in the green. 

Moreover, the Rs.21000 crore public issuance by the Life Insurance Corporation of India is the most significant offering that Dalal Street has ever seen. At the beginning of this month, the issue by LIC had a powerful response from all the investors over a large 6-day subscription window instead of the regular 3-day window. 

Before the time when LIC shares were listed on the stock exchanges, the stock was trading at a bit discount on the grey market. And analysts had different feelings about the end result. In contrast, LIC staff, retail investors, and LIC policyholders received discounts. With this being said, the break-even price for LIC workers, LIC policyholders and retail investors was Rs.904 per share, which was 5% less than the issue price. For the moment, LIC policyholders were rewarded a reduction of Rs.60 per share, which resulted in a break-even price of Rs.889 per share. 

LIC IPO Price:  What the Government States ?

The government of India says that LIC IPO investors have suffered a loss due to volatility in the market. Tuhin Kant Pandey, Secretary, DIPAM (Department of Investment and Public Asset Management), s aid that the uncertainty of the market is the main reason for the weak listing of LIC stock. The IPO of LIC has shocked the investors as they expected to earn big money. But now, everyone is suffering. Not only this, but many people have invested in LIC shares for the first time but the motive of earning a profit, but unluckily they are suffering too!

Investors are now worried about the losses and trying to know what to do next, should they wait or go out to sell the shares at a loss? Even though the people of India have complete faith in LIC company but in such a scenario, they aren't able to understand the reason behind the loss. 

Fall in LIC IPO Share Price - Market Volatility is Responsible

The government of India was also trying hard to make money from this IPO, but unfortunately, it hasn't happened so far. As per the government, the stock market is responsible for the weak listing of shares, and therefore the LIC IPO share price fell down. In spite of the loss, the investors have been advised by the Indian government to keep LIC shares for a long time. 

Further Upside Potential 

Concurrently, on the occasion of the LIC IPO listing on Tuesday, Mr Kumar, LIC Chairman, had said that "LIC IPO price will go up and will get an excellent response soon. He also added that there's a decline in the market currently, but LIC shares will definitely see a rise in the future. I don't see any possible reason for this stock to remain weak". 

Let us tell you that LIC shares were listed on Tuesday with a decline and were listed on the BSE at Rs.867.20, i.e. almost 9% down. If analysts and experts are to be believed, the IPO of LIC might see a rise. But yes, investors might have to wait for that! At the same time, Macquarie, Global Brokerage Firm, has set a target of Rs.1000 for LIC IPO price with a neutral rating. In such a scenario, a hike of about 12% is being estimated from here. 

In short, the entry of India's largest insurance company LIC with its shares on the stock market was not good. LIC IPO was listed on BSE with a considerable discount of 9%. With this, investors are tense about whether to keep or sell the shares at a loss. But as LIC is a renowned and largest insurance company in India, we believe that investors will make profits soon. 

And, also if you don’t want to be at a risky side, you can invest into real estate. Not only real estate investment guarantees you lucrative returns but you are free from the stress of loss that many LIC IPO investors are facing right now.  

Also read: LIC to Unlock Value of its Huge Real Estate Asset


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