LIC’s Weak List: Should IPO Investors Hold and Sell Stocks? If you have to buy
Life Insurance Corporation of India (LIC) shares made a light debut on the stock exchanges today. The stock is listed on the BSE at Rs 867, against an IPO price of Rs 949 per share, reducing the overall investor assets by Rs 43,000 crore. At the time of listing, LIC had a market capitalization of Rs 5.57 lakh crore, compared to the market value of Rs 6 lakh crore in issue value. Shortly after the LIC shares were listed, Macquarie analysts began covering the stock with a “neutral” rating and a price target of Rs 1,000 – 14 percent higher than the list price. The Indian government has sold 3.5 per cent shares to the public through the issue, which was earlier announced to be less than 5 per cent.
Read more: LIC Share Rating: McCurry launches coverage in ‘Neutral’, sets LIC stock target price above IPO level
What should LIC investors do now after weak listing?
Hold LIC shares allotted in IPO
Shares of state-run life insurer LIC are listed on the BSE at Rs 867.2, with a discount of 8.62 per cent over its issue price. On the National Stock Exchange (NSE), the counter is listed at Rs 872 with an 8.11 percent discount. Since the LIC IPO closed on May 9, the markets have witnessed a correction. “IPO prices were reasonable although sentiment was bad. Those who have been allocated should be retained, ”Sandeep Saberwal, investment adviser, told FinancialExpress.com.
“Those who have been allotted IPOs have no choice but to hold on for some more time. It would be pointless to exit at a loss because the IPO was on the medium term horizon anyway as the gains on the list were not expected anyway, ”said Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and Founder, Jamesstone Equity Research & Advisory Financial Services.
LIC stocks may see interest in buying from investors
Despite the mild listing, Hemang Jani, Head – Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services, said that due to the attractive market valuation and stability, interest in buying stocks can be expected from retail and institutional investors. “Since a large amount of money has been released since LIC’s listing, a portion of this money could be moved to the equity market,” he added.
Akhilesh Jat, an analyst at Capitalvia Global Research, advises long-term investors to hold on to this position because the insurance business is of a long-term nature. Jat added that some correction could be seen in the market volatility in the short term.
AR Ramachandran, co-founder and trainer at Tips 2 Trades, said LIC has listed below expectations due to the extremely high inflationary environment created by the unrefined price rise, which has ensured a sustained weak economic sentiment. “Long-term investors should hold on for better returns because basically LIC is a very strong company and could see a price of 1100-1150 next month,” he said.
Missed LIC IPO? What should you do now?
Sandeep Sabharwal advised investors who missed the IPO to wait 8-10 days to see where the stock is fixed and then decide to buy. Milon Vaishnav advises to wait before making new purchases. He noted that it would be wise to allow the price to stabilize and to evaluate its value. “New entries are not recommended until a trend appears,” he said.
Capitolvia Global’s Akhilesh Jat advises investors who missed the IPO to buy deep only in the long run. Mohit Nigam, Head – PMS, Hem Securities believes that awareness about personal savings and insurance will increase which will enable the sector to outperform in the long run and indirectly benefit LIC as it is the market leader in this sector. “We think long-term investors should hold the scrip while short-term investors can wait for lower prices to enter,” the corporation said.
Stock recommendations in this story are provided by the respective research analysts and brokerage firms. Financial Express Online bears no responsibility for their investment advice. Investment in the capital market is subject to rules and regulations. Please consult your investment advisor before investing.
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