The Indian stock markets have witnessed a significant surge in the number of retail investors in past few years. There is a massive rise in their participation in the IPOs showing their increased faith in the shares market.
Here is Biggest IPO Ever in India in 2022- Why not to miss LIC IPO?
Life Insurance corporation will launch the biggest IPO in the Indian history on 4th May’22.
LIC aims to aggregate around Rs. 21000 Crore at the upper end of the price band of Rs. 902-949 per share, with its estimated market capitalization being around Rs. 6 Lac crore.
The government which presently owns 100% stake in the corporation aims to liquidate 3.5% stake to mop up such huge planned amount.
The Life insurance Corporation is the biggest life insurer in India that has the largest numbers of individual and group policies issued around 286 million policies.
LIC has around 2048 branch and 1559 satellite offices that cover more than 90% of all the districts of the country.
LIC has around 115000 employees, 1.34 Mn agents and it manages around $528 Bn of assets.
LIC IPO oversubscription by Anchor Investors
The IPO was open for the anchor investors on 2nd May’22 and has been oversubscribed to its wide and robust demand. The government had planned to raise around Rs. 5630 Crores and had reserved 59.29 Mn shares for the anchor investors. As per the news sources LIC received bids for around more than Rs. 7000 Crores, which shows a very positive sign for the upcoming QIB and public offer which starts from 4th May-9th May’22.
Major Features of the biggest IPO Ever in Indian History
The government has planned to liquidate its 3.5% stake to gather Rs. 21000 crore capital, through an offer for sale mechanism. The government has reserved 10% of the shares for the LIC policy holders who have their PAN linked with the policies (last date of which was 28th Feb’22), 0.7% of the shares are reserved for LIC employees and 31.25% is reserved for retail investors.
The applicants that fall in the above category will get a discount of Rs.45/share (Rs. 60/share for existing policyholders).
The IPO will be open for investment for retail investors from 4th May’22 till 9th May’22 and the allotment will be finalized by the 12th May’22 and the shares will be credited to the allottee by 16th May’22.
Big 4 worth mentioning Indian IPOs of 2021
Zomato: Zomato’s IPO of was one of the most popular and successful IPOs of 2021. The company raised a whopping amount of Rs 9,375 crore via public issue and the issue was subscribed 38.25 times. The share gained more than 50% on the very first day of its listing.
Nykaa: One of the leading Indian E-Commerce Venture Nykaa too saw a successful listing on the Indian stock exchange in 2021. The IPO became very popular amongst the retail investors and it traded 79% above its issue price with company raising over 5352 crores through the IPO.
PB Fintech-Policybazaar/Paisabazaar: One of the leading online insurance advisor and provider along-with India’s largest digital consumer credit marketplace owned by PB Fintech too made its debut in the Indian stock market in 2021. The company raised around Rs. 5710 crore through the offer and its share traded at a premium of 17.35% from its issue price upon its listing on the stock exchange.
Paytm: India’s multinational financial technology firm Paytm that is specialized in digital payments, ecommerce and financial services too made its debut in 2021. Paytm’s IPO was one of the most awaited IPOs of 2021, where the IPO was subscribed 1.89 times. The company raised a whopping amount of Rs.18300 crore through this offer, however its share listed on a discount of 9% from its issue price and crashed over more than 27% from the issue price on the listing day.
4 Golden Tips to consider before applying for an IPO in 2022
Investing Goals: Before subscribing to any IPO one needs to be clear of his investing goals whether the IPO is being subscribed with the motive of earning only from the listing gain (if any) or one wishes to hold a long position in case shares are allotted after application.
Therefore, one should study about the financials of the company before taking any decision to apply in for the IPO.
Company Background/Business Model: The Business model of the company- How the company earns its revenues, what sorts of products or services it deals in, the future prospects of the company and its concerned industry, the governmental support or policies related the industry etc. One must read about the revenue, profit/loss, debt, liabilities, assets etc. details before applying for an IPO.
Company Valuation: Company valuation is one of the most prominent factors that must be considered before applying in for any IPO. The best way to evaluate the valuation of a company is to compare its price with its peers that are already listed on the stock exchange.
In case the company is a new one then one can do it by calculating certain ratios like price to earnings ratio and return on equity.
Read Prospectus carefully: The prospectus shared by the prospective company contains all the details of the company like the type of business, a summary of its financial statements, its capital structure, the objectives of the IPO, viewpoints of the management etc.
These details help an investor to make a wise decision in the light of all the material facts.
Also Read: How to apply for LIC IPO for Policyholders