BackLIC executive optimistic on shares despite weak listing
LIC shares made a lacklustre debut by listing at discount to IPO issue price
PremiumState-run insurer Life Insurance Corporation of India (LIC) shares plunged as much as over 9% to ₹860 as compared to IPO price of ₹949 in its trading debut after a record initial public offering (IPO) that priced at the top of the range and was oversubscribed nearly three times.
“We were not expecting a big listing as markets were jittery, and expect it to pick," said the life insurer's executive on Tuesday, as quoted by Reuters.
The executive went on to add that the company would look to push the guaranteed return plan products going forward to improve margin. “We believe that going forward we will be able to arrest the fall in market share and should be able to settle our market share at 62-63% of the insurance market," the executive added.
Brokerage Macquarie has started coverage on LIC shares with a neutral rating and a price target of ₹1,000, stating that the insurer has lost market share in individual business over the past several years due to lack of a diversified product portfolio and excessive focus on single premium and group business.
“The call here is whether LIC will be able to diversify the product mix in favor of high margin non-par products," the brokerage said.
The sale of equity in the 65-year-old insurance behemoth was oversubscribed nearly three times, riding on the enthusiasm of policyholders who received a ₹60 discount and bid multiple times for the shares on offer.
The state-run insurance giant had last month reduced its IPO size to 3.5% from 5% decided earlier due to the prevailing choppy market conditions. The proceeds from the LIC issue make up for about a third of the ₹65,000 crore disinvestment target of the government set for the current fiscal.
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