The Life Insurance Corporation of India (LIC) IPO is likely to be the biggest initial public offering in the Indian stock market. Meanwhile, The government has reserved 10% which is around 3.16 crores of shares of LIC through IPO. Click here to Apply for LIC IPO.
LIC is the largest insurance provider company in India. It has a market share of above 66.2% in new business premium. The company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products.
As of 30 Sep 2021, it has a total AUM of Rs. 39 lakh crore. LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices. It operates globally in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.
Key positive factors
- LIC is a part insurance and part investment products company. Their plans are a combination of insurance and investment with a guaranteed return.
- LIC has over 13.5 lakh agents who play bringing most of the new business. LIC plans offer ‘fixed returns’ along with life insurance coverage. This makes it easy to sell by agents and brings peace of mind to the insurers.
- LIC has high trust in the public for both life insurance as well as investment done with them. LIC is synonymous with insurance in India.
- LIC manage asset of Rs 39 lakh crores. That is more money than the entire mutual fund industry combined. They invest these funds across stocks and bonds. They own 4% of all listed stocks in India and more government bonds than the RBI.
- Leading insurance provider company in India and fifth largest global insurer by GWP.
- A range of life insurance products to meet the varied insurance needs of individuals.
Key challenges
- LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.
- The margin in insurance + investment products is low.
- It’s very difficult to value LIC as the business model is unlike any other company. LIC collects money upfront and then promises to compensate policyholders at a later stage. The premiums they collect (part insurance and part investment) cannot be recognized as revenue.
Company Financials:
| Particulars | For the year/period ended (₹ in Millions) | |||
|---|---|---|---|---|
| 31-Dec-21 | 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |
| Total Assets | 40,907,867.78 | 37,464,044.68 | 34,141,745.74 | 33,663,346.17 |
| Profit After Tax | 17,153.12 | 29,741.39 | 27,104.78 | 26,273.78 |
Objects of the Issue:
The IPO aims to utilize the net proceeds for the following purposes;
- To achieve the benefits of listing the equity shares on the stock exchange.
- To carry out an offer for sale of 221,374,920 shares by selling shareholders.
LIC IPO Details
| LIC IPO Date | May 4, 2022, to May 9, 2022 |
| LIC IPO Face Value | Rs 10 per share |
| LIC IPO Price | RS 902 to Rs 949 per share |
| LIC IPO Lot Size | 15 Shares |
| Issue Size | 221,374,920 shares of ₹10 (aggregating up to ₹21,008.48 Cr) |
| Offer for Sale | 221,374,920 shares of ₹10 (aggregating up to ₹21,008.48 Cr) |
| Retail Discount | Rs 45 per share |
| Employee Discount | Rs 45 per share |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| QIB Shares Offered | Not more than 50% of the Net Offer |
| Retail Shares Offered | Not less than 35% of the Net Offer |
| NII (HNI) Shares Offered | Not less than 15% of the Net Offer |
| Company Promoters | The President of India, acting through the Ministry of Finance, Government of India is the company promoter. |
LIC IPO Timeline (Tentative Timetable)
LIC IPO opens on May 4, 2022, and closes on May 9, 2022. The LIC IPO bid date is from May 4, 2022 10.00 A.M. to May 9, 2022 5.00 P.M. The Cut-off time for UPI Mandate confirmation is 12 P.M. on the next day of issue closing day.
| Event | Date |
|---|---|
| LIC IPO Opening Date | May 4, 2022 |
| LIC IPO Closing Date | May 9, 2022 |
| Basis of Allotment | May 12, 2022 |
| Initiation of Refunds | May 13, 2022 |
| Credit of Shares to Demat | May 16, 2022 |
| LIC IPO Listing Date | May 17, 2022 |
LIC IPO Lot Size
The LIC IPO lot size is 15 shares. A retail-individual investor can apply for up to 14 lots (210 shares or Rs 199,290).
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Minimum | 1 | 15 | Rs 14,235 |
| Maximum | 14 | 210 | Rs 199,290 |
LIC IPO Promoter Holding
| Pre Issue Share Holding | 100% |
| Post Issue Share Holding | 96.50% |
LIC IPO Details by Investor Category
| Category | Bidding at | Max Bid Amount | Basis of Allotment | Discount | Final Price |
|---|---|---|---|---|---|
| HNI | At price | Rs 9,067 Cr | Proportionate | No | Rs 949 |
| Retail | Cut-off | Not above Rs 2 lakhs | Draw of Lot | Rs 45 per share | Rs 904 |
| Employee | Cut-off | Not above Rs 2 lakhs | Proportionate | Rs 45 per share | Rs 904 |
| Policy Holders | Cut-off | Not above Rs 2 lakhs | Proportionate | Rs 60 per share | Rs 889 |
LIC IPO Reserved Category (Policyholder, Employee, and Retail)
LIC IPO Multiple Applications
A LIC policyholder can apply for LIC IPO shares using 2 IPO applications in the following categories:
- Policyholder + Retail Category
- Policyholder + HNI (NII) Category
LIC IPO Limits in Reserved Quotas
- Rs 2 lakh investment limit in policyholders, employees, and retail investors’ quotas.
- Policyholders can Increase limits by bidding in the “policyholders + retail” quota (Rs 2 + 2 lakh).
- Employees can Increase limits by bidding in the “employee + policyholders + retail” quota (Rs 2+2+2 lakh).
Advantages of Reserved Quota in LIC IPO
- Policyholders get Rs 60 per share discount on the final offer price.
- Rs 45 per share discount in retail and employees’ quota.
Eligible Policyholders for Reserved Policyholders Quota in LIC IPO
- The policy should be bought on or before February 13, 2022.
- The annuity policyholder is eligible, but not the beneficiary.
- the Last date for updating PAN details in your policy was February 28, 2022.
LIC IPO Review
Ever since LIC announced its IPO plans, it became the talk of the town and more so after filing its DRHP in February 2022. Investors across the board were busy calculating its valuations considering its mammoth size of business and market share amidst competition. Now that it has filed RHP and its issue details are announced, its pricing mirroring embedded value and business growth trajectory appears reasonable. With its investor-friendly move with a discount to its pillars i.e. policyholders as well as retail investors, the issue has now turned more attractive. The government of India has again shown its investor-friendly gestures with such moves amidst troubling times like the Russia-Ukraine war, spiraling inflation, and weak global markets. Investors may consider investing in this mega insurer’s maiden mini offer for medium to long term rewards.
How to apply for LIC IPO?
Here is your quick checklist for LIC IPO:
UPI
- Link your bank account to a UPI ID.
- Register your UPI id with your Demat account.
- Subscribe for LIC IPO and approve the payment on your UPI ID.
Demat Account
- If you are an existing Upstox user, Apply Now!
- If you’re a new investor, Open a DEMAT Account for free with Upstox and begin your investment journey.
For HNI Investors
You can also apply for LIC IPO under the HNI category where your investment should be between 2 Lakhs to 5 Lakhs. Additionally, 15% of IPO shares are reserved for HNIs.
LIC IPO – Noteworthy Highlights
LIC is the only government-owned insurance company in the country. The entity was formed by merging around 245 insurance companies. Other highlights include :
• Besides life insurance, the company also extends mutual funds, pension funds, housing finance, and card services.
• As of 31 March 2021, there were around 13.53 lakhs individual LIC agents.
• It has more than 1.14 lakh employees. LIC employees are also offered a discount of Rs.45/- per share.
LIC IPO FAQs
The government is diluting its stake in LIC through this upcoming IPO. It is an invitation for the public to participate in its ownership. Post listing, the company will come under the regulations of SEBI.
LIC’s IPO will open for subscription from 4 May to 9 May.
The Minimum LIC IPO market lot size is 15 shares
Yes, you can apply for this LIC IPO without a UPI ID. However, in such cases, you can take the assistance of the ASBA process provided by a bank to apply for an initial public offering. Also, if you do not have a UPI ID, you can swiftly generate one without any hassle by referring to any of the UPI handles approved and mentioned on the NPCI list.
The LIC IPO price is Rs 902 to Rs 949 per equity share. A discount of Rs 45 is offered to Retail Investors and Rs 60 to LIC Policyholders.
The effective price for LIC IPO shares at the upper price band will be Rs 949 for QIB and NII, Rs 904 for retail, and Rs 889 for Policyholders.
