What Would be the Impact of the LIC IPO in the Share Market?

We are all familiar with one of the best Indian Investment corporations, “LIC“.They are about to undertake their initial public offering (IPO).The LIC IPO is India’s largest-ever IPO and the world’s fourth-largest IPO by an insurer. You can now invest in India’s largest life insurance firm, in addition to being a policyholder. The LIC initial public offering is projected to be the largest in Indian history. The pricing range for the LIC IPO has yet to be revealed. The LIC IPO will be launched by the Indian government in the fourth quarter of this year. However, the expected dates for the IPO activities have yet to be published.

An initial public offering (IPO) is when a firm sells its stock to the general public for the first time. This procedure can make it easier for a corporation to obtain funding for future acquisitions and expansion. It also gives stock options as an incentive for privately operated investors and corporate management. An initial public offering (IPO) is a time-consuming procedure that is filled with dangers that could affect the company’s stock price.Over 1.3 million agents and 29 million policyholders work for LIC. They will earn a portion of the LIC’s much-anticipated initial public offering.

How to apply for LIC IPO?

There are several ways to apply for the LIC IPO:

UPI

• After linking your bank account to the UPI of your choice, you can invest in LIC IPO shares.
• You can book LIC shares once you have registered your UPI account and thencompleteall of the necessary processes.
• Then, using your ID, initiate the transaction and confirm the payment through the UPI app to block the allotted amount.

Pan card

As part of basic KYC requirements, LIC has been pursuing policyholders for matching their PA with their policies. “In order to engage in any such public offering, policyholders will really verify that their PAN details are rectified in the Corporation’s records,” LIC stated inadvertising launched in conjunction with the IPO. If you want to subscribe to the LIC IPO, you’ll need your PAN card information. When you trade on the stock exchange, your PAN card information is required. You’ll also need to make sure your PAN number is linked to your LIC policy.

Demat account

Although you can only buy stocks through a Demat account, you’ll need one in your name. Any full-service or budget stockbroker can open a Demat account for you. You must apply for a Demat account and submit basic KYC documents such as your identity proof, age proof, bank data, signature proof, and so on, as well as pay the account opening cost if one is required.

Why should one choose the LIC IPO?

• The following are some of the main reasons why people might consider investing in this IPO:
• The Life Insurance Corporation of India is a well-known brand with a strong market presence and a healthy financial position.
• Investing in LICs may provide major benefits to investors. In the June quarter, the corporation made stock market profits of almost Rs 10,000 crores.Because of its strong financial position, vast fund size, and government affiliation, LIC is a popular investment option for many people.

Market Reactions to the LIC Initial Public Offering

The government plans to sell around 5% of its LIC holdings. The company’s embedded value is believed to be in the billions of rupees. The LIC IPO valuation is expected to be around three to five times its embedded value. The massive LIC IPO could be worth around Rs 15 trillion. The government may sell a total of 316 million shares. LIC has the best chance of capitalizing on future growth opportunities as the industry leader.

Liquidity will be squeezed out of markets as a result of the LIC IPO

Analysts, on the other hand, are split on whether the LIC IPO will drain liquidity from the equities markets. The huge issue would have an impact on secondary market liquidity. Currently, the market has sufficient liquidity. Others argue that large difficulties compress liquidity for a short time and impact equity flow, which disturbs secondary market emotions as well, based on recent experiences. As investors rotate funds from the secondary to the main market, the big issues have an impact on liquidity in secondary markets. The largest-ever IPO in Indian history, LIC, is bound to suck liquidity from markets.

LIC’s Initial Public Offering (IPO) is aimed at retail investors.

Given its massive public brand value, the LIC IPO is expected to attract a lot of interest from both existing and new investors. However, long-term demand and performance will be determined by the company’s future growth, profitability, and market share retention in the life insurance business. In the short term, the government’s valuation and the discount granted to ordinary investors will determine the offer’s success and performance. Depending on whether the government’s appraisal of LIC’s inherent value is at a discount or premium to the insurance sector average, we can assume a strong demand or vice versa.

Presumption

Shareholders are frequently willing to pay less than the company’s owners expect. As a result, stock prices after an IPO may climb, indicating that the company may have raised additional funds. However,” stock price drop can occur if the offer price is too high, or if investor expectations are faulty”.Investors expect the corporation to have consistent cash flow and make regular dividends to shareholders. They will sell the shares if this does not happen, and the price will plummet. Quarterly financial statements are scrutinized by analysts for growth that benefits stock trading. The stock value of the corporation is depressed due to a lack of growth potential.

FAQs based on LIC IPO