Life insurance Corporation or LIC is the biggest life insurance company in India. It started its journey from a very small capital but now it has become a billion-dollar company. During the 2022 budget session, Finance minister Nirmala Sitharaman announced that this LIC is going to launch is its IPO. Through this post, we are going to look at the various aspect of LIC IPO.
IPO means an initial public offering. When any company gets listed in the stock market they issue a price. Any person who has a Demat account can pay the initial price and buy a share of the company.
According to DRHP the face value of one equity share of LIC is 10 rupees. The company is sharing 31.62 crores of shares in the stock market.
According to many media houses, LIC’s the market value or market capitalization after listing might be approximately Rs 22 lakh. That amount makes it India’s largest corporation. Reliance Industries has the highest M-cap of roughly Rs 16 lakh crore.
There is an official announcement about LIC IPO by the finance minister herself during the budget session.
Open a Demat account under any sub-broker house such as Zerodha, Fyers, Upstox. Then whenever the IPO gets launched just bid it according to your preference of lot size and price. If you already have a demat account then bid for the LIC IPO.
History of LIC
More than 245 Life insurance companies emerged into one and that is how LIC was formed in the year 1956 on the 1st of September. It was a government-owned agency. It is serving India for more than 65 years. The company started its journey with just a capital of 50 million. But now it is one of the biggest life insurance companies in India. Not only that LIC has spread its root in other countries as well such as Bangladesh, Myanmar, and 6 others.
Strength and weaknesses of LIC
In the following, we shall take a look at the present condition of LIC. So in the following, we shall discuss the strength and weaknesses of the company.
Strengths of LIC Company
In the following, we shall take a look at the strengths of LIC
- LIC sells both insurance and investment policies.
- Their products combine insurance and investing sometimes even to provide a guaranteed return.
- LIC has more than 13.5 lakh agents who bring in the majority of new business. LIC plans to provide ‘set returns’ as well as life insurance protection. This makes it simple for brokers to sell and gives insurers peace of mind.
- The public has a high level of trust in LIC for both life insurance and investing. In India, LIC stands for Life Insurance Corporation.
- LIC is in charge of assets worth Rs 39 lakh crores. That amount is greater than the whole mutual fund industry itself. These funds are split between stocks and bonds.
- They own 4% of India’s publicly traded stocks which is even more than RBI government bonds.
Weakness of LIC company
In the following, all the weaknesses of LIC are being presented-
- The new business premium of each year of LIC is quite high from the other opponents of LIC. But still, there is rising competition in the market. HDFC Life and specifically HDFC Pro are also increasing their new business premium year by year. It is also being analyzed that LIC has fallen from 66 % to 63% of New Business Premium in the recent two years.
- Due to the pandemic situation, people are more asking for their claims and returns from the company. Such things can be a big problem in the near future for the company. As a matured company, they have to solve such problems as soon as possible.
- During the lockdown, the agents were also going through a negative impact on their policy selling. Because they are unable to go out from their home and sell more policies for the company.
Company Promoters
The President of India and the finance minister are the main two major promoters of LIC of India.
Company Financials
| Particulars | For the year/period ended (₹ in Millions) | |||
|---|---|---|---|---|
| 30-Sep-21 | 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |
| Total Assets | 40,434,596.70 | 37,464,044.68 | 34,141,745.74 | 33,663,346.17 |
| Total Revenue | 15,197.24 | 29,855.71 | 27,309.56 | 26,449.96 |
| Profit After Tax | 15,040.13 | 29,741.39 | 27,104.78 | 26,273.78 |
As we can see in the above list that there is a clear growth of the company in its total asset section. The total revenue is also quite promising because there is also grown over the years as well. In the above chart, I have presented the revenue till September 2021 so at the end of this year as well the company will be able to cover its previous year’s revenue along with stable growth.
Currently, in 2021, LIC has the leading market share in the new business premium gathered over one year of business) the sector of the market that is approximately 63%. The very next opponent of LIC has only 7%. This shows how huge a working company is LIC.
About LIC IPO
LIC IPO will be completely OFS means Offer For Sale. In this IPO the authority is selling 5% of the stake of the company which is about 31.6 cr shares. Not only that LIC knew that they have a big number of policyholders in India. That is why they have announced to reserve 10% of the total shares that they are launching in the market. Eligible policyholders will also get a discount on the offer price of the LIC IPO. After the approval of SEBI, the LIC IPO is expected to lunch in March of 2022.
Apply Process for LIC IPO
Any person can bid for LIC IPO but the only term is you have to have a Demat account under any sub or full broker house. There are two ways to bid for LIC IPO. You can bid the LIC IPO as a normal Demat account holder or a LIC policyholder who also has a Demat account.
How LIC policyholders can bid for LIC IPO?
If you are a LIC policyholder and want to buy LIC IPO then there is good news for you. Because the company has announced that up to 10% of the total size of IPO is reserved for the policyholders of LIC. As a policyholder, it increases the chances of getting the LIC IPO. But there are criteria as well, they are-
First link your pan id with the LIC policy that you already have. If you have used your Pan card as an Id proof while buying the policy then skip this process. If not then it is mandatory for you.
The second thing that you are going to need is a Demat account. You can open a Demat account under any sub-broker house such as Zerodha, Aliceblue, Upstox, etc. Without a Demat account buying and storing shares are not possible. While opening a Demat account having a pan id is important for the process. Thus the Pan card will help your policy to get linked with the Demat account. This small thing will help you increase your chances of getting a LIC IPO. The rest of the process is the same.
How to link your PAN card with LIC policy?
If you have not already enlisted for online services with the organization, you must first register with the organization before you may create and link Aadhar Card or PAN with your insurance online. By following the procedures below, you can link your LIC insurance to other policies online.
Full process
- To begin, go to www.licindia.in and click on the Aadhaar and PAN to LIC Policies (31. 03. 2018 ) image link.
- Read the information thoroughly before pressing the process button.
- Put your information, including your name, date of birth, father’s name, gender, and Aadhaar-pan policy number and email address.
- After that, read the disclaimer and ticket, then enter the captcha code and hit the button.
- Click the get OTP option, and an OTP will be sent to your other registered cellphone number.
- Enter the received OTP and then click the submit button.
- Your other LIC policy link will be provided, and the data will be transferred to UIDAI for verification. Aadhaar and PAN will be connected to LIC policies.
- After all the process a confirmation will be ended to your provided phone number or email address.
LIC IPO Details
| IPO Open Date | March 2022 [expected] |
| IPO Close Date | Not announced |
| Issue Type | Book Built Issue IPO |
| Issue Size | 316,249,885 Eq Shares of ₹10 (aggregating up to ₹[.] Cr) |
| Offer for Sale | 316,249,885 Eq Shares of ₹10 (aggregating up to ₹[.] Cr) |
| Face Value | ₹10 per equity share |
| IPO Price | Not announced |
| Market Lot | Not announced |
| Min Order Quantity | Not announced |
| Listing At | BSE and NSE |
The LIC IPO lunch is still under process. That is why there is no official announcement regarding the LIC IPO lunch. That is also a reason for the not-announced sections of the above list.
LIC IPO : DRHP
- After getting the confirmation from the Insurance Regulatory and Development Authority of India LIC is all set to launch its IPO by measuring taking the measurement of SEBI.
- According to that draft of the LIC IPO, it Is clear that LIC is going to launch 5% of its total share.
- A total of 632 cr equity shares that the company holders only 31.6 cr equities are going to be launched through this IPL. This is going to be offered for sale or OFS based.
- The income through selling shares will be directly provided to the Government of India as it is a government-owned company.
Reservation of shares
| INSTITUTE | PERCENTAGE |
| Qualified Institutional Buyers | 50% |
| Non-Institutional Investors | 15% |
| Small traders | 35% |
| Lic Policy Holders | 10% |
LIC IPO Review
The life insuring company is already has a great history of trust and people are fond of this company as well. That is why it is dominating the market for the last 65 years. So when LIC announced that they are going to launch their IPO people got interested to apply for it. Because they already know it is a big and trustworthy institution. But the main question among traders and investors is whether it is going to be profitable or not.
If you are thinking to earn a good amount of profit as an investor by buying this IPO then I think you should go for it. Go for it, if you are planning to buy the IPO and leave it as it is for an investment purpose. You can also go for that because it is going to earn you as a long-term investment as well. At the end do not forget to use our selection method for profitable IPOs.
Conclusion
LIC is a leading company investing in their IPO won’t let you down according to our view. LIC has a glorious history. We can only hope that this company will do well in the share market in the near future as well. However we will throw more lights on this subject once the full IPO details are out.
