LIC shares may list at a discount, indicates grey market

New Delhi: The deteriorating sentiment in equity markets is hurting the prospects of listing-bound companies and LIC is no exception. The insurance behemoth is signaling at a discounted listing, if one goes by the grey market premium. In the unofficial market, LIC is exchanging hands at a discount of Rs 20 per share over its issue price of Rs 949, which is merely Rs 25 away from the discount offered to retail bidders.

LIC's premium in the grey market dropped from Rs 100 to Rs 10 on Tuesday and then turned negative on Wednesday, just a day before allotment.

DIPAM secretary Tuhin Kanta Pandey informed that the allotment of LIC IPO will take place on May 12, whereas the company is likely to be listed on Tuesday, May 17.





Majority of the dealers tracking the grey market said muted response from foreign and institutional investors is hurting the sentiment for the state-run insurer in the grey market. The volatility in the secondary market is adding fuel to the fire.

Abhay Doshi, co-founder, UnlistedArea, said inflationary worries has led to policy tightening which is hurting the overall equity space and jittering the sentiments.

"Despite the attractive valuations and extra days for subscription, LIC failed to woo HNIs and institutional bidders, which has ultimately dragged grey market numbers into the negative territory," he added.

LIC was the largest ever IPO in the domestic primary market as the government sold 22.13 crore shares or 3.5 per cent stake in the company, valuing it at Rs 6 lakh crore, about 1.12 times the embedded value of Rs 5.4 lakh crore.

However, analysts are still positive on the IPO following the company's large market share, reasonable valuations and growth prospects in the insurance sector.

Sonam Srivasatava, Smallcase manager and Founder of Wright Research, said the growth prospects make Indian insurance a fairly attractive play.