New Delhi, India : The Life Insurance Corporation's (LIC) initial public offering (IPO) continues to attract retail investors, including workers and policyholders, who are among the top bidders thus far.
LIC is keeping its allure despite declining premiums in the grey market, an extreme selloff in global markets, rate rise fears, and inflationary concerns.
The majority of market analysts believe that LIC is a long-term investment, and that investors should bid for the issue based on their funds and risk tolerance. However, one should not solely wager on topics for the sake of listing gains.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, LIC listing gains are possible due to excellent valuation. He said that the medium-term prospects are equally promising.
"Following the correction, many other equities suddenly appear to be appealing. The preference for value companies over growth equities is a significant market trend "Vijaykumar expressed himself.
Even VP Research Ajit Mishra. Religare Broking agreed with the sentiment, adding that huge concerns are not suitable for listing profits. Long-term investments should be made in good companies, and LIC is one of them.
"Investors should go all-in on the issue if their funds allow it, despite the market's pessimism, because the values favour the insurance behemoth," he added.
LIC is valued at Rs 6 lakh crore by the government, which is 1.12 times its embedded value (EV) of Rs 5.4 lakh crore. Embedded value is a measure of an insurance company's consolidated shareholders value.
According to Santosh Meena, Head of Research at Swastika Investmart, LIC's valuations are lower than its listed counterparts. "Investors must recognise that insurance is a long-term business, and this issue is only a long-term play."
Other analysts, on the other hand, are suspicious about the issue because of present market conditions and the company's low profitability, which could hurt its appeal in comparison to its counterparts.
According to analysts, the broader markets are undergoing a healthy correction, and investors should try to purchase the dips. The danger, though, is that the current cycle of adjustment is not yet complete.
Investors should be careful about the LIC issue, according to some analysts. They argue that, given the current market attitude, investors should not go all guns blazing. Depending on one's risk appetite, they should subscribe to the issue.
According to Astha Jain, Senior Research Analyst at Hem Securities, the issue is receiving positive feedback and is projected to produce modest listing gains. However, investors should temper their expectations as the market continues to fall.
"We recommend that investors bid for LIC, but be mindful of your risk appetite because market conditions are not as favourable as they were previously."
In India, LIC is the largest insurance provider. The government had supposed to value the insurance behemoth at Rs 12 to 13 lakh crore previously, but global volatility hampered those plans.
On the condition of anonymity, a fund manager stated that LIC can only benefit investors if the company operates profitably.
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