GIC IPO, India’s 2nd biggest issue, goes sluggish on Day 2 after stellar Day 1; shy of full subscription

GIC Re Rs 11, 370 crore IPO was subscribed by 90% as at the end of Day 2. (Representative Image: IE)

The second biggest IPO in India for Rs 11,370 crore saw dull response on Day 2, taking the overall tally of subscription to 90%. This is after the issue was subscribed by more than 79 per cent as at the end of bidding process yesterday, as institutions lapped up the issue of India’s largest reinsurer. At the end of Day 1 yesterday, the QIB portion was oversubscribed by 1.55 times. Qualified Institutional buyers quota was subscribed 1.67 times, retail portion saw subscription for a little more than 15 per cent. There is also clear contrast seen in the bid orders between Bombay Stock Exchange and National Stock Exchange as the subscription on NSE stood at 78% while it was just 11% on BSE. At the end of day 2, the total bids stood at 11,16,79,024 as against the total size of 12,47,00,000, data from NSE showed.

Life Insurance Corporation of India (LIC) has put in a major bid for Rs 8,000 crores in the issue, Livemint reported citing unidentified sources. GIC is expected to raise Rs 11,372.64 crore at the upper end of the price band of Rs 912. The company has set a price range for the issue between Rs 855 to Rs 912 per equity share. GIC IPO is India’s second-largest public offer since Coal India’s Rs 15,200 crore and Reliance Power’s Rs 10,123.2 crore share sale — which was at the second spot before GIC IPO, now slipped to the third place. Tomorrow being the last day, we bring to you recommendations from a few brokerages to decide whether to go in for the issue.

Angel Broking

Angel Broking has a subscribe rating on the issue, given the strengths of the company. “ The financials of the company may get affected adversely if India witnesses bad monsoon or successive poor monsoon seasons, drought, flooding or other catastrophic events impacting the Indian agriculture industry. Nonetheless, positives such as leadership position, well managed investment book, robust balance sheet and reasonable valuations provide comfort, hence, we recommend subscribe on this issue,” the research firm observed in a report.

Motilal Oswal

“We are positive on GIC for long term as both general and reinsurance sector in India provides huge opportunity for growth as it is highly underpenetrated compared to other developing and developed economies,” the research and brokerage firm said in its report.

Samco Securites

Samco Securities says that the issue is fairly priced, and can be subscribed to given its long-term prospects. “GIC being a monopoly business should be subscribed to given that the issue is fairly priced. The stock must be held with ultra long term perspective for superior returns,” Samco said in a note.