When a private firm distributes shares publicly for the first time in the stock market, it is an Initial Public Offering (IPO). When a firm declares an initial public offering (IPO), the stocks cease to be private and are jointly held by all shareholders.
The private corporation decides to go public for two reasons:
- To raise funding for the expansion of the company.
- To get back on track after suffering losses or incurring debts.
Shareholders often value iPOs with a solid corporate profile and market capitalization. Potential shareholders should carefully consider both of these aspects before making a choice.
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What are the Factors Affecting the IPO Valuation?
Following are the major factors that affect the valuation of an IPO:
- Company’s financial position over a few years
- Share market trends
- Several stocks issued in an IPO
- Company’s growth rate.
- Company’s business model.
About LIC of India
LIC is an investment/insurance-based company owned by the Government of India. It is the only life insurance company in the Indian Public sector with a large presence in the rural and urban areas.
The Central government has filed the draft prospectus of the upcoming Initial Public Offering of Life Insurance Corporation with the market regulator SEBI. The LIC IPO will be the biggest ever stock market listing in the nation. The government of India plans to launch the LIC IPO by this year’s last quarter. However, the final date is yet to be disclosed.
Positive Factors of LIC
- LIC is a corporation that sells both insurance and investment solutions. Their products combine insurance and investing in providing a guaranteed return.
- LIC has more than 13 lakh agents who bring most of the new business.
- LIC plans offer fixed returns along with life insurance coverage.
- LIC has high trust in the public for both investments and insurance.
- LIC is in charge of assets worth Rs 39 lakh crores. That sum is greater than the whole mutual fund industry. These funds are split between equities and bonds. They own 4% of all listed equities in India and own more government bonds than the Reserve Bank of India.
Why Should You Invest in the LIC IPO?
The primary reasons to invest in the LIC IPO are:
- The LIC of India is a reputed brand with a stable financial position and a robust market presence.
- Further, investing in the LIC IPO could favor the investors significantly.
- LIC has a sound fiscal position, a large fund size, and is affiliated with the government, making it a viable investment option for many.
LIC IPO Size
The central government owns a 100 percent stake in the LIC of India. The impending LIC IPO would be a completely open market offering. The government plans to offload a 5 percent stake in the Life Insurance Corporation of India.
LIC IPO Price
The LIC IPO price is yet to be published. It is tough to say the expected price as it depends on many factors. Moreover, the government will decide on the LIC IPO price and discount to retail and employees in a few days before the IPO opens. The LIC IPO price varies a lot in the first few weeks of listing, and it is considered a high-risk investment as one can make or lose big money depending on the LIC IPO price.
LIC IPO Objective
The objective of LIC IPO are:
- To obtain the advantages of listing equity on stock exchanges.
- To carry out the offer for sale by selling the shares to the shareholders.
LIC IPO Valuation
The value of LIC IPO stood around 5.39 Lakh crore as of September 30.21. The valuation of LIC IPO will be more than three to four times the embedded value.
LIC IPO Profit
The Lic IPO reported a profit of Rs 1,437 crore after tax for the first half of the current financial year compared to Rs 6.14 crore in the year-ago period.
Why is the LIC IPO So Crucial?
The LIC IPO is critical in achieving the disinvestment goal established for the current fiscal year, ending in March 2022. 2021-22 has set a disinvestment target of Rs 1.75 lakh crore against Rs 32,835 crores in the last fiscal year. Out of the Rs 1.75 lakh crore, the Rs 1 Lakh has come from selling stakes in public sector banks and financial institutions.