How to Increase the chances of LIC IPO allotment

How to Increase the chances of LIC IPO allotment

IPO
by Shreya Anaokar Last Updated: 2022-06-02T16:03:20+05:30

As we all know that right now there is a huge buzz regarding the LIC IPO but let us understand that how big LIC IPO is and how we can increase our chances of getting LIC IPO allotment.
 

How big is the LIC IPO?


1) LIC is India’s biggest life insurer with 286 million policies, 115,000 employees, 1.34 million individual agents and more than 2000 branches. It has a 64.1% market share in terms of premium and a 66.2% market share in terms of new business premium.

2) It manages around $528 billion of assets, more than the total size of India’s mutual fund industry and 3.3 times more than the total Assets Under Management (AUM) of all the  private life insurance companies.

3) The draft prospectus has put LIC’s embedded value at $71.3 billion. The embedded value is a measure of future cash flows in life insurance companies and an important financial metric for insurers.

4) If LIC is valued at 4x its embedded value, its market cap could be $285 billion, making it India’s most valuable company. A 5% stake at that valuation will fetch the government $14.25 billion.

5) If ICICI Prudential Life’s multiple is taken, LIC could be valued at $171.1 billion.

6) That would make it India’s third biggest company by market capitalisation and fetch the government nearly $8.6 billion in the IPO.
 

Why should one invest in the LIC IPO?


1) LIC makes up more than 70% of the total market share in the insurance sector in India.

2) Despite tough competition from private players, LIC is the sole PSU that has maintained its rank as the No.1 insurer in India.

3) Net profit of LIC surged to Rs.1437 crore in 2021.

4) For long-term growth potential, the LIC IPO makes available a fruitful investment opportunity. 

5) For LIC employees and retail investors, investing in the IPO for long-term profit and quick daily earnings may prove beneficial.


Latest overly subscribed IPOs:


1. Latent View Analytics Ltd: This public issue was listed at a premium of 168%. While the issue price was INR 197 per share, the IPO listing price was Rs.530 per share. It was oversubscribed by 326.49 times.

 

Company Name

Issue Size (Rs. Cr)

QIB(x)

NII(x)

Retail(x)

Employee(x)

Total(x)

Latent View Analytics Ltd

600

145.48

850.66

119.44

3.87

326.49

 

2. Paras Defence and Space Technologies Ltd: This public issue was listed at a premium of 168%. While the issue price was INR 175 per share, the IPO listing price was Rs.475 per share. It was oversubscribed by 304.26 times. 

 

Company Name

Issue Size (Rs. Cr)

QIB(x)

NII(x)

Retail(x)

Employee(x)

Total(x)

Paras Defence and Space Technologies Ltd

170.78

169.65

927.7

112.81

-

304.28

 

3. Tega Industries Limited: This public issue was listed at a premium of 168%. While the issue price was INR 453 per share, the IPO listing price was Rs.760 per share. It was oversubscribed by 219.04 times.

 

Company Name

Issue Size (Rs. Cr)

QIB

NII

Retail

Employee

Total

Tega Industries Limited

619.23

215.45

666.19

29.44

-

219.04

 

By now, you must have realised how rewarding an IPO could be. However, if you observe the subscription status carefully, you will realise that almost every new IPO is oversubscribed, meaning the chances of IPO allotment gets divided among the subscribers.

So, is there any way to enhance the odds of getting LIC IPO allotment? The answer is ‘Yes,’ Move ahead in the article to know how to increase the chances of IPO allotment.


Hacks to increase the Chance of Getting LIC IPO Allotment:

 
#Hack 1: Avoid big bids:
 
As per SEBI’s allotment process, the treatment for all retail applications (less than Rs 200,000) is equal which means that there is a same probability of getting an LIC IPO Allotment to both the cases whether you take one bid or multiple bids. There is no point in making a big application in case of oversubscription. For the oversubscribed IPOs, one should go for minimum bids with multiple accounts. That will help to invest spare money in other IPOs as well.

#Hack 2: Applying via multiple accounts:

In the first hack we have observed that applying for maximum bids using a single account is pointless, instead we can apply through multiple accounts for the LIC IPO. Applying via multiple accounts can increase the chances of LIC IPO allotment. You can also use the accounts of your Family and Friends for applying to open Demat account
 

#Hack 3: Never Bid at a Price Lower Than The Cut-Off Price

Companies often rely on a book-building process to determine the fair price of the stock. They set a range, and investors have to bid within that range. Cut-off price refers to the price at the top of the upper band of the range and the investor is willing to pay whatever price is decided by the company at the end of the book-building process. So, if the price band of an IPO is 100 to 120, the cut-off price is 120.

To increase the chances of LIC IPO allotment, you must bid at the cut-off price. If you see that the LIC IPO is oversubscribed, it means everybody has bid at the cut-off price. Hence, if you quote a lower price, your chances of getting the LIC IPO allotment will be nil.

The excess amount, in case the price is lower, the excess amount is refunded.

#Hack 4: Avoid last moment subscription:

If you have already made up your mind that you are going to apply for the LIC IPO, then go for it on the very first day or the second day. If the investor applies on the last day then there is a possibility of a few issues like the bank account not responding due to HNI and QIB high subscription or any other technical issues. So it's better to apply early than to delay it.

#Hack 5: Fill the documents Carefully:

Do not rush while filling the LIC IPO forms. The investor should fill in the details correctly like the amount, name, DP id, bank details etc. Printed forms are also available so one can go with it as well. The most secure and easiest way to apply for the LIC IPO is through ASBA. One can go with ASBA via their bank but the investor needs to check the details before applying for the same. It will surely avoid technical glitches.

#Hack 6: Benefit for LIC Policyholders:

LIC has a special reservation of 3.16 crore shares for its 26-crore policyholders. But only those who have linked their PAN with their policies and have demat accounts are eligible to invest. So if you are a LIC Policyholder the chance of getting the allotment of LIC IPO is higher.

#Hack 7: Benefit for LIC Employees:


If you are a LIC Employee then you have a higher chance of getting a LIC IPO allotment as employees of LIC have a separate quota of 1.58 crore shares, and they are also allowed to apply in the retail category, subject to meeting other conditions. And an employee who is also a policyholder can apply in retail and policyholder categories as well—or for total shares worth Rs.6 lakh. All three applications will be considered valid.

Also Read:-

How to Increase Chances of IPO Allotment?

Start Investing in 5 mins*

Get Benefits worth 2100* | Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Shreya Anaokar is a Content Writer at 5paisa. She has completed her Master’s in Finance and Graduation in Statistics from the University of Mumbai. 

Open Free Demat Account

& get benefits worth 2100*

 
Resend OTP
Please Enter OTP
  • Have Promo code?
  • Use code ACT2100
Enter Promo code

By proceeding, you agree to the T&C.

Start Investing Now!

Open Free Demat Account in 5 mins

Enter Valid Mobile Number