Shares of state-run insurer Life Insurance Corporation of India (LIC) fell over 9% Compared to IPO price of 860 949 made its trading debut after a record Initial Public Offering (IPO), which was at the top of the price range and was oversubscribed almost three times.
“We weren’t expecting big listings because there was panic in the market, and that’s expected to pick up,” a Life Insurer executive was quoted by Reuters as saying on Tuesday.
The executive further said that the company will look at rolling out Guaranteed Return Plan products to improve margins. “We believe that going forward we will be able to arrest the decline in market share and should be able to settle our market share at 62-63% of the insurance market,” the executive said.
Brokerage Macquarie has started coverage LIC Shares With a neutral rating and price target 1,000, stating that the insurer has lost market share in the 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 higher margin non-par products,” the brokerage said.
Equity sales in the 65-year-old insurance company were nearly three times oversubscribed, 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 last month reduced the size of its IPO from 5% to 3.5% due to prevailing market conditions. LIC makes up about one third of the issue proceeds The government has set a disinvestment target of Rs 65,000 crore for the current financial year.