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LIC IPO – Details

Deemed to be India’s biggest IPO till date, the Life Insurance Corporation of India Ltd has certainly got everyone’s attention. As per the reports, the LIC IPO is anticipated to raise an issue between Rs 70,000 crores to Rs 1,00,000 crores. With its IPO, the government-owned company is keen on taking a valuation close to Rs 15 Lakh crores. At this valuation, the company will stand in line with India’s biggest publicly listed companies such as Reliance Industries Ltd, Tata Consultancy Services Ltd and HDFC Bank Ltd.

Understanding LIC

LIC or the Life Insurance Corporation of India Ltd is an Indian, government-owned statutory insurance and investment corporation. The insurance company was established in September 1965, under the nationalized Life Insurance of India Act. LIC was a result of the merger of more than 245 insurance and provident societies. At present, LIC is the biggest insurance company in India, having 66% market share in the industry. As of 2020, the number of policyholders stood at 28.9 crores, making it the King of the Insurance Industry in India. As of March 31, 2020 it had total assets of Rs 37.75 lakh crore and equity AUM of Rs 6.63 lakh crore.

Objectives of LIC IPO

According to the DRHP filed with SEBI, LIC has proposed underlying objectives for its IPO

  • To address working capital requirements
  • To meet corporate purposes

Why should you invest in the LIC IPO?

Following are the set of reasons why we think you should be interested in investing in LIC IPO

  • LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1% market share in terms of premiums
  • LIC is the largest asset manager in India as at September 30, 2021
  • Strong Domestic and Global presence
  • Strong Financials

How to apply for the LIC IPO?

  • If you are an existing policyholder of LIC, it is mandatory that you link your PAN with the LIC Policy. In this way, you can get a reservation for the IPO application under the policyholder category.
  • You are also required to open a DEMAT account with a SEBI registered stockbroker such as Sainath Investments, through which you can apply for the IPO. The PAN Card used for LIC policies has to be the same as that registered with the Demat Account registered with the stockbroker.

LIC – IPO Analysis

(A) Strengths

  • LIC is 5th largest life insurer globally by GWP and the largest player in the fast growing and underpenetrated Indian life insurance sector
  • Trusted brand and a customer-centric business model
  • Cross-cyclical product mix that caters to diverse consumer needs and an individual product portfolio that is dominated by participating life insurance policies
  • Presence across India through an omni-channel distribution network with an unparalleled agency force
  • Largest asset manager in India with an established track record of financial performance and profitable growth

(B) Risks

  • Tougher competition from New-age private insurance companies such as HDFC Life, ICICI Prudential Life Insurance, etc.
  • Restrictions on LIC since it is a Public Sector Undertaking
  • Large workforce – which makes functioning challenging and hideous
  • Changes in the fiscal policy

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