LIC shares: Here’s what grey market premium hints ahead of listing on Tuesday 

Shares of insurance behemoth Life Insurance Corporation of India (LIC) may list at a discount on bourses on Tuesday if one goes by grey market premium. According to market watchers, shares of LIC are available at a discount of Rs 20 in the grey market. 

The government has set the issue price at Rs 949 per share, the upper end of the IPO price band, fetching the exchequer around Rs 20,557 crore. 

Abhay Doshi, Founder, Unlisted Arena said, “Shares of LIC were trading at a discount of Rs 20 in the grey market. The financial behemoth got a mixed response despite attractively priced valuations on account of subdued market conditions.” 

“The current sentiment indicates at par to discount listing, however, if market sentiments stabilise till listing, we may see a positive impact. Hence, one should limit their expectations as far as listing gains are concerned.” 

Earlier, the public offer of the insurer got subscribed nearly 3 times on the final day of the offer on May 9, led by the robust response from policyholders, employees and retail investors. The company had fixed a price band of Rs 902-949 per share. However, it offered a special discount of Rs 45 per share to retail investors and employees of LIC. Moreover, there was a discount of Rs 60 for policyholders. 

Dinesh Gupta, co-founder, UnlistedZone added seconds Doshi. “LIC shares were available at a discount of Rs 15-20 in the grey market. We may see the listing at par or discount on Tuesday,” he said, adding subdues market sentiment affected grey market premium in the recent past. 

The majority of brokerages had given a ‘Subscribe’ rating to the issue for listing and long-term gains. 

Aayush Agrawal, senior analyst, Swastika Investmart said, "We anticipate that LIC might have a flat listing tomorrow, based on the current market situation. Due to increased inflation statistics, FII outflows, currency weakness and geopolitical and rate hike-related worries, present markets are experiencing extraordinary volatility. This has caused sell-offs in equity markets all over the world." 

"LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value and robust network of agents. Investors must be aware that the business of insurance is long term in nature. Therefore, we recommend investors to stay with the company for the long term even if the company lists at a discount," Agrawal said.

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