LIC IPO is going to hit Dalal street soon. When it opens, LIC IPO is going to be India’s biggest public offering and thus, it wouldn’t be an exaggeration to say that this upcoming IPO is going to shape the future of Indian stock markets. Post listing, LIC is expected to be India’s largest company by market capitalization
LIC-Life Insurance Corporation of India
LIC is the largest life insurer in India with a 64.1% market share in terms of Gross Written Premium (GWP), a 66.2% market share in terms of New Business Premium (NBP), a 74.6% market share in terms of the number of individual policies issued, an 81.1% market share in terms of the number of group policies issued for Fiscal 2021, as well as by the number of individual agents (1.35 million), which comprised 55% of all individual agents in India as at March 31, 2021.
The company is the largest asset manager in India as of September 30, 2021, with an AUM (comprising policyholders’ investment, shareholders’ investment, and assets held to cover linked liabilities) of INR39,558,929.24 million on a standalone basis, which was more than 3.3 times the total AUM of all private life insurers in India and approximately 16.2 times more than the AUM of the second-largest player in the Indian life insurance industry in terms of AUM.
The company’s brand, LIC, was recognized as the third strongest and 10th most valuable global insurance brand as per the “Insurance 100 2021 report” released by Brand Finance. As at September 30, 2021, its individual product portfolio in India comprised 32 individual products (17 participating products and 15 non-participating products) and seven individual riders.
As of 30 Sep 2021, it has a total AUM of Rs. 39 lakh crore. 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.
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 bringing 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. It 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 the 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.
- 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.
Objects of the Issue
- 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.
Basic details about the company
| Full name | Life Insurance Corporation of India |
| Sector | Insurance |
| Industry | Insurance |
| Company Website | www.licindia.in |
Dates to remember
| IPO Open | 04 May 2022 |
| IPO Close | 09 May 2022 |
| Basis of Allotment | 12 May 2022 |
| Refunds date | 13 May 2022 |
| Credit to Demat Account | 16 May 2022 |
| Listing Date | 17 May 2022 |
IPO details
| Issue type | Book Building |
| IPO issue size | ₹21,008.48 Cr |
| Fresh Issue | NIL |
| Offer for sale | ₹21,008.48 Cr |
| No of shares Offered | 221,374,920 Eq Shares of ₹10 |
| Face value | ₹10 Per equity share |
| Price band | ₹902 to ₹949 per equity share |
| Policyholders Discount | ₹60 per share |
| Retail Discount | ₹45 per share |
| Employee Discount | ₹45 per share |
| Retail Allocation | 35% |
| Lot size | 15 Shares |
| Minimum application | 15 Shares |
| Maximum application | 14 Lots- 210 shares |
| Minimum application amount | ₹14,235 |
| Maximum application amount | ₹199,290 |
| Listing Exchange | BSE & NSE |
LIC Financial Performance (in INR crore)
| FY2019 | FY2020 | FY2021 | H1 FY2022 | |
| Total Income | 570,809.6 | 645,605.5 | 703,709.4 | 336,972.9 |
| Surplus | (2,416.1) | (10,148.9) | 3,861.8 | 1,485.7 |
| Transfer to Shareholders’ Account | 2,599.5 | 2,695.5 | 2,962.6 | 1,475.2 |
| Profit After Tax | 2,627.4 | 2,710.5 | 2,974.1 | 1,504.0 |
LIC Valuations & Margins
| FY2019 | FY2020 | FY2021 | H1 FY2022 | |
| EPS | 4.15 | 4.29 | 4.70 | 2.38 |
| PE ratio | – | – | – | – |
| RONW (%) | 322.25 | 317.14 | 45.65 | 18.76 |
| ROCE (%) | – | – | – | – |
| EBITDA (%) | – | – | – | – |
| Debt/Equity | – | – | – | – |
| NAV | 1.29 | 1.35 | 10.30 | 12.68 |
LIC IPO reservation pattern
| QIB- Qualified Institutional Bidder | 50% |
| NII-Non Institutional Investors | 15% |
| RII-Retail Individual Investor | 35% |
Company Promoters
The President of India, acting through the Ministry of Finance, Government of India is the company promoter.
LIC IPO Lead Manager(s)
- Axis Capital Limited.
- BofA Securities India Limited.
- Citigroup Global Markets India Private Limited.
- Goldman Sachs (India) Securities Private Limited.
- ICICI Securities Limited.
- J.P. Morgan India Private Limited.
- JM Financial Consultants Private Limited.
- Kotak Mahindra Capital Company Limited.
- Nomura Financial Advisory And Securities (India) Pvt Ltd.
- SBI Capital Markets Limited.
LIC IPO Registrar
Kfin Technologies Private Limited
Selenium Tower B, Plot 31 & 32
Gachibowli Financial District
Nanakramguda, Serilingampally
Hyderabad 500 032, Telangana
Phone: +91 40 6716 2222
Email: lic.ipo@kfintech.com
Website: www.kfintech.com.com
LIC Contact Details
Life Insurance Corporation of India
Yogakshema, Jeevan Bima Marg,
Nariman Point,
Mumbai 400 021,
Phone: +91 22 6659 8732
Email: investors@licindia.com
Website: www.licindia.in
Final thoughts
LIC IPO is going to hit Dalal street soon. applying for IPO is purely a personal choice. study well about the company and do subscribe if you are feeling good about the company. I hope this post will give you enough details to make a fundamental study of the company. learn well and make a wise decision.
Happy Investing