Friends, In March, when the market started going down due to COVID situation
before that many IPOs used to come in the market
and every IPO gave a very good return to its investors
on an average in the first day and in the next two, three months
An IPO , SBI Cards was going to get released then in which many people made a subscription
but on the first day itself, the market started going down the cause of which the IPO didn't give many good results
after which market continuously went down and the IPOs almost stopped coming in the market
But from the time bull run began and the market started rushing up, IPO has again started entering the market
Like, Rossari Biotech's IPO and it was kept at a price of Rs 455 and today its share price is up by 70%
means people those who might have got the IPO would have made a profit on the first day and
if they would have kept the share, they would have been making a profit today as well
It is believed now more IPOs are going to get launched in the market wherein you can make good returns
Among those IPOs, there is an IPO which everyone is discussing and
in this weekend we thought why not cover the believably the biggest IPO in India
This company's name is Life Insurance Company(LIC)
We will discuss in this video on LIC's IPO. It is too premature to judge on how well they perform
whether you should invest or not. Today we will discuss about LIC that you understand its and market so that
when the IPO gets launched you wont have to go looking for the basic details
I, Jagdeep Singh, Welcome you to Groww's Youtube Channel
Let's start with today's video
So friends, when did Lic's IPO come under the spotlight
When Mrs. Nirmala Sitharaman, Finance Minister of India was announcing the budget in 2020
she had said that the Indian Government wants to disinvest in many companies means
means they want to sell off their stake
In their list, there was a company, Life Insurance Corporation(LIC) which they want to disinvest from
cause of this its IPO can come out. You might know the meaning of IPO. It stands for Initial Public Offering
When any company wants to dilute their shares, makes a public announcement that they want to sell their shares
at a certain price and if you want to buy it you can fill in the application for its subscription
It is considered that if LIC is bringing in its IPO, the first thing you should know here is its Valuation
From its market valuation, we will know the percentage of stake to be diluted which will tell us the IPO size
I will give an example, A company's market valuation is of Rs 100, they want to dilute 10% of its equity
means the company's IPO will of Rs 10. Just like that LIC market valuation is considered to be around 8 to 10 lacs
Now if LIC wants to dilute 10% of its stake and its valuation is of 9 lakh crores
Its IPO would be of 90,000 crores which is considered to be the biggest in the history of India
There can be two-three more reasons for the IPO to be issued now. Reason 1, it's a good time to bring in an IPO
cause there is a positive trend in the market and investors have been bully in regards to the market
An IPO which is launched at this time can get a good return to its investors. Another reason behind it is
We can see a positive trend towards the insurance industry in India like you would have seen that
two recent companies top have entered Nifty 50 are HDFC Life Insurance and SBI Life Insurance
An interesting fact of HDFC Life Insurance is that 198 mutual funds have invested here
Another company from this sector, SBI Life Insurance, more than 200 mutual funds have invested here
Considering the development of the insurance sector in the developed countries
there are still opportunities and much penetration to happen here in the sector
cause of this investors are still looking out for opportunities to invest in the Insurance sector
I am talking about a general trend here not that you should be investing in the insurance sector
Here if investors get the opportunity to invest in the LIC IPO
they will get another way to invest in the insurance sector
From this discussion, I am sure you understood three things, First about LIC's IPO
Second, Why is the right time for LIC's IPO to be out or for any IPO cause of the bullish trend in the market
Third, Investors, those who want to invest in the Insurance will get another way to invest in the sector
Like I told you, Penetration has not happened in that level thus it can become another option for investors
Let's talk about the four integral things about LIC which can be helpful for your decision making
The first point here will tell you about the PAN India reach of LIC which makes it the best insurance company
As of 31st March 2020, this company has 8 Zonal offices, 113 divisional offices, 2048 branch offices
and the most important, its agent network of more than 12 lakhs who are widespread in India
If anyone feels the need for insurance, these agents reach there to help them which indirectly help LIC
Another interesting thing about LIC is that other than being in PAN India, it also has a presence in 14 countries
wherein they operate in different insurance sector like in Kinia, Singapore, SriLanka, UAE,UK
This shows you the large LIC presence cause of which it is the best company in the Indian insurance Sector
Secondly, I will talk about the different product mix plan by LIC
Talking about the list, it has Conventional Insurance Plan wherein they have a unit plan, Special Plans
Pension plans, Micro Insurance plans, and Health plans. LIC has more than 290 Million policy holders
which shows you the large network of LIC in India
LIC has more than 1.1 lakh employees and like I mentioned, they have more than 12 lakhs agents in India
If I talk about its financial state
Its one of the profit-making companies of the insurance sector and from its 290 million policyholders in India
does a premium collection of more than Rs 3,30,000 Cr in terms of their policy
thus you can understand how big their collection base is
Talking about PAT, this company's PAT is of more than Rs 2300 Crs
Other than that, If I tell you an interesting thing here, other than this particular income there is another source
which comes from its Equity Investment
Friends, If you don't know already, I would like to tell you that LIC is one of
the biggest players in the Indian Equity Market which invests in different companies
When the invested company does well, LIC earns profit from that as well
Talking about the profit here, they have earned more than Rs 2300 Cr
LIC keeps investing their insurance premium in different assets
and you will notice that LIC has a stake in very big companies like ITC
If I talk about the whole list here, it will take a lot of time
At last, lets talk about its market share, to understand how big it is
If I talk about the first-time premium holders, LIC's market share here is more than 66%
Talking about the total no. of policies here then its , market share here is of more than 74%
making it India's biggest insurance company
LIC has always shown a good growth track record and has improved its profit well
It has made good profits via its equity investments for Government
The government has now said that it ill dilute 10% of its stake
Friends, these were some basic details I wanted to share
You won't be able to decide on the basis of these details whether you should invest or not
But if you understand these details well, you will at least make up your mind to track this IPO.
When you get more details regarding it, you should decide whether to subscribe here or not
Here I want to tell you to not subscribe to IPO on the short term basis for immediate profit
If you want to invest, keep the long term horizon in mind. If you see a potential in the company and the sector
If you feel that the insurance sector will do good in the future and can lead to a good penetration
and feel this company can perform well, the company's management and its balance sheet is good
After analyzing all that if you feel you should invest, go-ahead
Never invest for short term as your chances of making a loss is high there
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Comment and tell us whether you will subscribe to LIC's IPO or not
If you feel you should subscribe, what is the reason behind it?
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Happy Investing!