TaxTMI 
TaxTMI 
TaxTMI 
Life Insurance Corporation of India (LIC) listing and trading of shares – expectations belied, loyal investors (policy holders) lost the most.
ZINDAGI KE SAATH BHEE ZINDAGI KE BAAD BHEE – is wrong and misleading even for policy holders.
IPO of LIC:
Public issue by way of initial public offering of shares (IPO) by the GOI was considered a game changer for listed shares and further shares issues by government of India of shares of public sector companies. One of reason was opening of accounts with large number of new investors with DP / demat accounts by policy holders to avail preferential offer of shares to policy holders of LIC.
Listing of shares
On Bombay Stock Exchange (BSE) on 17th May 2022 LIC IPO made debut with lot of fanfare at BSE in presence of Chairperson of LIC M R Kumar and the Secretary of Department of Investment and Public Asset Management (DIPAM) Shri Tuhin Kanta Pandey at the time of ringing the bell to celebrate the listing ceremony of LIC with lot of expectations of new shareholders of LIC, many of them are long-term loyal customers of LIC as policy holders and unit holders with theme in mind ZINDAGI KE SAATH BHEE ZINDAGI KE BAAD BHEE.
However, it disappointed when it started trading at unexpected low price of Rs.867.20 per share which was at discount of 8.62% from issue price of Rs.949 per share.
The share price of LIC is on consistent decline and it touched low of Rs.751.80 on 07.06.2022.
As per share market data since listing, its share price saw highest of R.918.95 on NSE and Rs. 920 on BSE which is also below the issue price. Therefore, even luckiest allotted who could sell shares at highest price on NSE also suffered loss of Rs.30 .05 per share and who sold at highest price at BSE also suffered loss of Rs.29 per share.
On 07.06.22 it traded on NSE in range of 751.80 and 772.90 with weighted average of 758.44 and closed at 753 per share. This is at discount of Rs. 196 and 20.65%
The fall is continuing – on 08.06.2022 price of LIC share has touched a new low of Rs.738.05 within 30 minutes of opening of share markets and falling trend is continuing.
On analysis we find that the response of foreign investors to the IPO was muted and belied expectations. Is it that foreign investors are wiser when it comes to investing in India because they have no sentiments interfering their investment decisions. Whereas, Indians have sentiments and long term relations with LIC that they made good response to IPO of LIC.
From news reports about IPO:
ON or about 09.05.2022 the Secretary of Department of Investment and Public Asset Management (DIPAM) Shri Tuhin Kanta Pandey has spoken on the following lines:
Strong response reflects Aatmanirbhar Bharat as it was lifted by domestic investors; overall IPO subscribed 2.95 times
The IPO was a record in terms of the number of applications, exceeding 60 lakh as per statement of some officials however, as per news reports merchant banking sources said that LIC IPO had received 73.37 lakh applications, which is a record in the Indian capital markets history.
While the portion set aside for policyholders was subscribed 6.11 times, employees bid 4.39 times the allotted quota and retail investors 1.99 times, and the reserved portion of qualified institutional buyers was booked 2.83 times and that of non-institutional investors’ 2.91 times.
“This issue response is a reflection of Aatmanirbhar Bharat. This issue has been domestically (by domestic investors) lifted. This IPO will deepen capital market and facilitate large number of investors to own shares in public sector organisations like LIC,” Pandey said.
Good returns were expected
Shri Sanjay Malhotra, Secretary the Department of Financial Services had told that the pricing has been done on LIC’s core intrinsic value. “Let us look at it from a medium to long term. We are hopeful that the value offered would give good returns,”
And now: on BSE portal we find that since 03.06.2022 on all trading days price of shares of LIC has touched new low. As per following list of notifications:
Notification
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Author do not recall any trading day when share price of LIC touched upper circuit of price limit.
Share holding pattern:
AS per BSE information the promoter group holding indicates only one promoter shareholder holding 96.5% stake. Only 3.5% shares are held by public members numbering 4007528.
Therefore, in spite of very low floating stock the share price is falling.
Investors lost considerably
From market price trend of share price of LICI we find that investors have lost considerably and that too within very short period.
Therefore, it was totally wrong to say that IPO of LICI was indicator of ATMNIRBHARTA.
Is it not indicative of failure of government as major investor of LICI in corporate management?
In a social group, few days after listing of shares, one message was received meaning thereby LIC will not be profitable during life, it may give benefit to your family / nominee only after you dies.
Author had suggested some people to go by saying and advertisement tagline of LIC ZINDAGI KE SAATH BHEE ZINDAGI KE BAAD BHEE and to hold shares of LIC for life long and very long term. Now he is forced to think that he was wrong.
Do not have sentimental attachments with shares of any company including LIC.
ZINDAGI KE SAATH BHEE ZINDAGI KE BAAD BHEE – is wrong in respect of life insurance policies because the real return is very meager, if at all. Only after life nominee can get capital but appreciation is only if policy holder dies soon and not after living long life. Therefore, the advertisement tagline is wrong and misleading.
It seems high time that LIC should change its advertisement tagline.