Life Insurance Corporation of India proved to be non-profitable for all types of investors as its shares fizzled out on the bourses yesterday.
LIC's share price dropped nearly 9% against its issue price of 949 rupees against expectations of a marginally lower listing on the BSE at 867 rupees.
They fell to a low of Rs 860 before they settled at Rs 875 apiece.
The market cap of LIC stood at 5.53 trillion at the end of its debut day. It means that investors lost around Rs 47,000 crore in the IPO, which valued LIC at Rs 6 trillion.
Analysts are not impressed by the muted debut, as they look at LIC's long-term growth prospects.
Girirajan Murugan, CEO of FundsIndia, says LIC is a long-term play and recommends adding LIC to one's portfolio on dips.
He says there may be a bit of selling initially due to overall market sentiment but BFSI stocks rebound after geopolitical tension eases, but B Gopkumar of Axis Securities opines that investors should not exit LIC's stock at current levels, as it is a play on the growth story of the under-penetrated life insurance industry.
LIC s continued market leadership position, strong Pan-India distribution network and shifting focus towards profitable products will support margins and improve persistency ratios. All these factors will make LIC an attractive pick from a long-term perspective.
There is more to LIC's listing than what meets the eyes.
Funds from government will be critical to bolster government finances and meet a deficit target of 6.4% of gross domestic product for FY 23.
The LIC s were already slashed by almost 50% to keep pace with market volatility. A tepid response to one of the most well-connected state-owned entities may prompt the government to rethink its divestment strategy.
Alphaniti Fintech, co-founder and director of Business Standard, said govt still has scope to sell further stake in LIC. When market sentiment improves, Govt may consider OFS, he says, but BPCL divestment is complicated. He says that government needs to clean the company, offer what investors want to do.
According to a report, the government is considering inviting bids for a 20% -- 25% stake in Bharat Petroleum Corporation instead of an outright sale of its entire 52.98%.
According to a Business Standard report, the sale of state-owned helicopter service provider Pawan Hans will likely be put on hold indefinitely.
The Centre has missed its revised divestment target twice in three years.
Now the end of the process to privatise BPCL and SCI seems to be difficult to achieve, because of the spill-over effects of the ongoing war.
Bhat believes that the government will get decent market proceeds from various stake sales when market conditions stabilise and govt re-works bids as per investor interest.
On Wednesday, investors will look for a rebound in LIC shares. They will also be watching the March quarter results and global cues for further market direction.