LIC IPO GMP today is 85, which is around 8 per cent higher from the LIC IPO price band of  ₹902 to  ₹949 per equity share, say market observers. (MINT)

Lic Ipo opens today: the 5 main reasons to subscribe to this public number

IPO of LIC: The initial public offering (IPO) subscription of insurance giant Life Insurance Corporation (LIC) of India opened today and it will remain open for auction until May 9, 2022. While the investors are busy analyzing LIC’s financial data, the gray market is also showing positive results. public issue signals. According to market watchers, LIC IPO GMP (grey market premium) today is 85, which is about 8% higher than the LIC IPO price range of 902 to 949 per share. Like the gray market, analysts are also bullish on LIC’s IPO as they consider it a suitable option for long-term investment.

Here we list the top 5 reasons to apply for the LIC IPO:

1]Attractive valuation: Tagging LIC’s IPO “buy” on attractive valuations, Kanika Agarrwal, Co-Founder and Chief Investment Officer at Upside AI, said, “LIC’s IPO is offered at a very attractive price. Since the government reduced the valuation by 50% for 6 lakh crore, its intrinsic value valuation of approximately 5.4 lakh crore is reasonable at 1.1x. Private insurers are trading at 2.5-4x.”

2]Diversification into a single investment: “As of September 30, 2021, LIC was India’s largest asset manager, with assets under management (AUM) of $39.55 trillion, more than 3.3 times the combined AUM of all insurers private life in India and more than 1.1 times the AUM of the whole of India. LIC’s investments in listed shares represented approximately 4% of the total market capitalization of the NSE as of September 21,” said said Narendra Solanki, Head of Equity Research (Fundamental) at Anand Rathi Shares & Stock Brokers.

3]Dividend-paying stocks: Market experts believe that LIC will be one of the dividend-paying stocks, which is another way to profit from your investment.

“In addition to providing consistent income, many dividend-paying stocks are in defensive sectors that can withstand economic downturns with reduced volatility. The Life Insurance Corporation of India is wholly owned and controlled by the Indian government. The diluted stake by the government of India remains its largest shareholder in the company and investors can expect a good dividend from the company after its IPO,” said Narendra Solanki of Anand Rathi.

4]LIC’s market leadership: Life Insurance Corporation of India faces fierce competition from private insurers, but remains the market leader. As the insurance industry has low penetration among the Indian population, this under-penetration record is expected to boost the growth of Life Insurance Corporation of India, already a market leader.

“LIC of India has the highest commission-to-bonus ratio of 5.5%, compared to the median of the top five private players of 4.4%,” said Narendra Solanki of Anand Rathi.

5]Strong long-term prospects: LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand equity.

Advising LIC IPO bidders to have a long-term time horizon, Santosh Meena, Head of Research at Swastika Investmart Ltd, said, “LIC IPO subscribers should be aware that Insurance business is long term in nature therefore we recommend this issue for long term only and policyholders should take advantage of this opportunity due to the discount given.”

Warning: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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