Lic Ipo: Shares At Premium In Grey Market, Say Observers. What Gmp Indicates?

Trends

LIC IPO: The Initial Public Offering (IPO) of insurance behemoth Life Insurance Corporation (LIC) of India is going to hit Indian primary markets next month. As per the information available on the official BSE website, LIC IPO date of subscription has been fixed from 4th May to 9th May 2022. The Government of India (GoI) has fixed LIC IPO price band at 902 to 949 per equity share. Meanwhile, LIC shares have become available in grey market. According to market observers, LIC shares are trading at a premium of 20 in grey market today.

LIC IPO GMP

Market observers said that LIC IPO GMP (grey market premium) today is 20, which is 28 down from its grey market premium on Wednesday. They said that negative market sentiments could be the possible reason for this slump in LIC IPO GMP today. They also said that LIC IPO is gong to open after a week that means premium prediction by grey market despite weakness in secondary market should be taken as a good signal. Shares of LIC had made debut in grey market on Monday with a premium of 25.

What this GMP mean

As LIC IPO GMP today is 20, it means grey market is expecting that LIC IPO listing would be around 969, around 2 per cent higher from LIC IPO price band of 902 to 949 per equity share.

However, stock market experts said that GMP is not the right criteria to find out whether an IPO would perform better or not. They said that its financials of teh company that gives concrete i9nformation about the fundamentals of the company. They advised investors to look at the balance sheet of LIC instead of following GMP only.

On whether one should apply for the LIC IPO or not, Santosh Meena, Head of Research at Swastika Investmart Ltd said, “LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value. However, there are concerns with the company like losing market share to private players, lower profitability & revenue growth compared to private players. But the valuation of 1.1 times Price to Embedded Value discounts the above concerns and policy holders getting a discount of Rs. 60 makes this a bumper offer. Nevertheless, investors must be aware that the business of insurance is long term in nature; therefore we recommend this issue for long term only and policyholders must grab this opportunity because of the discount given.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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