LIC IPO: Will Retail Investors Dive in? Our Poll Suggests...

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Feb 21, 2022 - LIC IPO: Will Retail Investors Dive in? Our Poll Suggests...

LIC IPO: Will Retail Investors Dive in? Our Poll Suggests...

Feb 21, 2022

LIC IPO: Will Retail Investors Dive in? Our Poll Suggests...

By now, everyone has heard about the upcoming LIC IPO.

Life Insurance Corporation (LIC) has over 64% share of total insurance premiums in India, in financial year 2021, as per Statista. This is much higher than the share of premiums held by private life insurers.

LIC's assets under management (AUM) was Rs 38 tn as of September 2021, compared to Rs 37 tn in March 2021. This is almost 3x the AUM of all the private life insurers in India and over 15x more than the AUM of the second largest life insurer, SBI Life Insurance Company.

All these facts alone make the IPO very enticing apart from its potential size.

The state-owned behemoth is expecting at least one seventh of India's investing population (around 7.5-10 m retail investors), including its policy holders, to participate in the mega IPO.

It seems like an army of retail investors is sitting on the sidelines, just waiting to pour their money into the initial public offer (IPO).

So the big question is...will you apply for the IPO or wait on the sidelines?

To understanding what our readers are thinking, we ran a poll on Equitymaster's Telegram Channel over the weekend.

Here's what we asked our readers...

Given what you know and don't know about the LIC IPO, what's your stance today...

  • Will Apply
  • Won't Apply
  • Can't Say

With a response from over 1,100 participants, here is the final result:

48% say they will stay away from the LIC IPO.

Surprising, isn't it? Talk about pessimism...

LIC has sold 70% of India's total policies. Its assets exceed the GDP of several economies. Given its dominance you might have expected a majority it to be in favor of applying.

But the fact that people are considering staying away from LIC's IPO shows that there's some rationality left out there after all!

35% of the entire IPO is reserved for retail investors, so that's a huge task for the government. To make sure things go as planned, brokers, bankers, and LIC agents are driving efforts to ensure maximum retail participation.

37% people said they will participate in the IPO.

LIC's IPO is termed as India's Aramco moment, so it would require huge commitment from retail investors.

Prior to this, Paytm, Coal India, and Reliance Power were the three biggest IPOs in India.

Paytm's IPO managed to book its retail portion 1.7 times. Coal India saw just over 2 times subscription from retail investors.

Meanwhile, Reliance Power received a massive 14.9 times subscription from retail investors. This IPO was launched at a time similar to today. Demat account openings were at a high and people poured their money to invest in the IPO.

Due to the efforts that LIC agents, we know there's a lot of anticipation for the LIC IPO.

The lowest percentage, 15%, said they're not sure what to make of the situation.

They are sitting on the sidelines. They're observing how the market situation unfolds amid the Russia-Ukraine tensions. Sustained FII outflows has added to the nervousness.

Now getting back to our question...

We don't know if LIC's public issue will be successful or not. But the enthusiasm is strong due to many initiatives taken by government.

The IPO is crucial for the markets as it will help the government narrow its fiscal deficit.

Due to its massive size, a few companies are deferring their plans to launch their IPOs. They don't want to clash with LIC's mammoth issue. Rough calculations suggest that around US$10 bn will be sucked out of the system once the IPO is launched.

It remains to be seen how the IPO sails through once its price band, valuation and other key details are announced.

No matter what happens, LIC's IPO will be the defining market event of 2022. It will be a test of retail investors' appetite.

Watch the video below in which Co-head of Research at Equitymaster and Editor of Forever Stocks, Tanushree Banerjee, explains how you should evaluate the LIC IPO.

Insurance is not an easy sector for investors to figure out. The financial statements are full of jargon. In fact, they don't resemble financials of any other sector.

Watch the below video before you consider applying for LIC's IPO.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Yellow Ad


Last Day to Access 'One Stock Crorepati' Opportunity

As you know, recently we went LIVE with our One Stock Crorepati MEGA Summit...

Around 10,000 readers like you had registered to attend this summit.

At the summit, they learned Richa Agarwal's secret blueprint of identifying potential 'crorepati' stocks.

Plus, they also discovered the details of one stock with crorepati potential...

If you missed this summit for some reason, then you can still get all the details by watching this special replay of the summit.

Learn more

Equitymaster requests your view! Post a comment on "LIC IPO: Will Retail Investors Dive in? Our Poll Suggests...". Click here!


More Views on News

5 Indian Companies that are Leading the Green Hydrogen Revolution (Views On News)

Jul 4, 2022

As the green energy movement grows, Indian companies are on a mission to adopt green hydrogen, the cleanest form of energy in the world.

5 Indian Companies where Mutual Fund Holdings are Consistently Increasing (Views On News)

Jul 1, 2022

Mutual funds are buying shares at a time when FIIs are consistently selling. Here are 5 stocks where MF holdings has increased for the past 4 quarters.

Top 5 'Digital India' Stocks (Views On News)

Jun 29, 2022

These companies are leading the Government's US$1 tn 'Digital India' initiative.

Ajit Dayal on Investing in Infosys IPO and his Philosophy on Investing podcast (Views On News)

Jul 4, 2022

This week we continue our conversation with Ajit Dayal, Founder, Quantum Mutual Fund, Personalfn and Equitymaster.

This Billionaire Says Don't Invest in the Present. Should You Listen to him? (Profit Hunter)

Jul 4, 2022

A billionaire investor explains why you should not invest in the present.

More Views on News

Most Popular

A Complete Guide For Beginners On How To Invest In Ipos

As an investor, you must have endeavoured to find a suitable opportunity for investing in IPOs. But do you know what is an IP...

The One Smallcap Stock I'll Recommend Now (Profit Hunter)

Jun 21, 2022

This aspect of investing has a very high weightage on your overall returns, but often gets ignored when winning stories are written.

5 Consistent Compounding Stocks Available at Discount. Time to Buy? (Views On News)

Jun 22, 2022

The good side of a market correction? Investors get consistent compounding stocks at a discount.

Auto Stocks are in the Fast Lane. Is it Time to Buy? (Profit Hunter)

Jun 23, 2022

The auto index is outperforming the Nifty by a mile. Have auto stocks finally bottomed out?

5 Indian Companies where Mutual Fund Holdings are Consistently Increasing (Views On News)

Jul 1, 2022

Mutual funds are buying shares at a time when FIIs are consistently selling. Here are 5 stocks where MF holdings has increased for the past 4 quarters.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Jul 4, 2022 (Close)