If you are reading this right now, it means that you are aware that the biggest IPO of the country is going to come soon. Today in this article, we will discuss the LIC IPO in detail. We will be covering the LIC as a company, LIC IPO date, IPO size, company financials, etc.
LIC IPO will be the blockbuster IPO in the Indian stock market. The size of the IPO will be approximately 80000 to 100000 crores. This is going to be the biggest IPO in Indian history.
The government is planning to sell 25% of its stake in LIC. However, the government will need to arrive at the actual value of LIC before filing DRHP. The process itself of evaluating the company size is going to be a mammoth task for the government considering the size of the company.
The government is also planning to give discounts to retail investors. So if you are the lucky one you will get the share at the discounted rates.
LIC Company Details
As I mentioned above it is one of the biggest institutions in India. Let’s have a look at some of the numbers of LIC. The asset value of the company is 31 lakh crores. The company was incorporated in 1956 with the amount of 5 crores.
- As of 31st March 2019, the total policyholder of the LIC policy is 29 crores. That’s 1/5 of the Indian population.
- LIC’s staff strength is 111979 as of 31st March 2019.
- LIC has a net premium income of ₹. 337000 crores (an increase of 6% as compared to the previous year)
- Profit after Tax (PAT) is 2688 crores as of 31st March 2019
- LIC is holding a giant market share of the first-year premium of 66% and around 75% in terms of the number of policies.
- THE Gross NPA of LIC is at 6.15% (looking at the huge asset, this is not a big thing)
- The claim settlement ratio of LIC is at 98% which is the highest among all the public and private sector insurance companies.
| Particulars | 31.03.2019 | 31.03.2018 | Growth % |
| Share Premium | 37116 | 36582 | 1.46 |
| Number of Branches | 11280 | 11111 | 1.52 |
| No. of Agents | 2194747 | 2083668 | 5.38 |
| Direct Employees | 285019 | 265727 | 7.26 |
| Total AUM | 3665743 | 3313049 | 10.65 |
| Equity Investment | 900733 | 812018 | 10.63 |
| Infrastructure Investment | 384262 | 376097 | 2.17 |
| New Premium | 293741 | 264327 | 11.13 |
Another important thing that you should know about any insurance company is the claim settlement ratio. I have written a detailed article on the claim settlement ratio. Let’s understand what is claim settlement ratio.
It is the % of the total claims settle during the financial year out of the total claims received. For example, if the company has received 100 claims from the policyholders and it settles 96 claims out of 100 that means the claim settlement ratio is 96%.
| Year | No. of Claims | ₹. Claims (in Crs.) | Settlement % |
| 2016-17 | 205.11 | 99109.66 | 97.20 |
| 2017-18 | 267.36 | 117888.30 | 95.50 |
| 2018-19 | 249.62 | 145636.06 | 92.95 |
As per the IRDAI data, LIC’s new business premium has shot up to ₹ 1.77 lakh crores in 2019-20 as compared to 1.42 lakh crores in the previous year. That’s a growth of 25.17%
LIC’s market share in number of policies and first year premium as at 31st March 2020 was 75.90% and 68.74% respectively which is an increase of 1.19% in number of policies and 2.50% in first year premium.
LIC’s single premium is of ₹ 21967 crores and the nonsingle premium is of ₹ 29260 crores. The ratio of 42.88: 57.12. LIC has shown growth in both numbers and premium amounts.
Not only this, LIC has created a new benchmark in collecting premium of more than 1 lakh crore in Pension and Group Schemes.
Leading independent valuation firm RBSA Advisors have estimated the valuation of Life Insurance Corporation of India (LIC) in the range of 9.90 lakh crore to Rs 11.50 lakh crore.
Now let’s have a look where LIC is investing the money collected from the market.
| Particular | Amount (in Crs) |
| Govt. Securities | 2828433.85 |
| Debt Market | 117168.56 |
| Currency Market | 34822.03 |
LIC IPO Details
| Issue Open Date | Expected in FY 2020-21 |
| Issue Close Date | Expected in FY 2020-21 |
| Issue Type | Book Building Offer |
| Price Band | Yet to be decided |
| Minimum Lot Size | Yet to be decided |
| Face Value | Yet to be decided |
| Issue Size | ₹80,000 to ₹1,00,000 crore* [Tentative] |
LIC IPO Size
The size of the IPO can be determined only after the total valuation of the company is calculated. The Estimated valuation of the LIC is around 13 to 15 lakh crore. So if we take that the government is planning to disinvestment of 5% to 6% then the amount will come to near 90000 crores. That’s huge and the biggest IPO till now in the Indian stock market.
So sooner or later the IPO will come for sure and it will be a blockbuster IPO in the Indian stock market. The government will disinvest in LIC in the phases. Like I mentioned above the Government is planning to sell a 25% stake in LIC but that all stake will not be sold in the one go. It will be in the trenches of around 5%.
LIC IPO Dates
The probable IPO date for LIC is around end of year 2020 or in the first quarter of year 2021. The launch date would be depended on the market condition. The government is planning this biggest IPO to cover the fiscal deficit that has widen during the current Pandemic of COVID-19.
A ministerial panel is set up for asset sales will decide on the size of the public offering while the cabinet will consider the changes to the capital structure of the insurer. This panel will discuss and finalize the size and the dates of the LIC IPO.
LIC IPO Updates
| Date | Event |
|---|---|
| Feb 01, 2020 | Govt proposed LIC IPO in Union Budget for 2020-2021. |
| Jul 29, 2020 | Deloitte is selected for pre-IPO transaction advisors. |
FAQs about the IPO
LIC is going public, one of the biggest government undertaking firm is planning to raise money by disinvesting some stake in the LIC. The company was established in the year 1956 with a corpus of ₹. 5 crores and today it is the biggest insurance company in India.
The exact date for the IPO is still not declared but it is anticipated that the IPO may come in late 2020 or in the first quarter of 2021.
Well investing in LIC IPO is the same as you invest in other IPOs. You can invest through ASBA or UPI method. You need to have the IPO amount in your bank account which will get freeze once you make the application and if you get the allotment the amount will be deducted from your bank account. In case you don’t get the allotment, the fund that was blocked by your bank will be unblocked.
The government is planning to disinvest around a 25% stake in LIC. The company will still remain as a government undertaking company even after the launch of the IPO. So the employees of the LIC will continue to get all the government benefits that they are getting right now.
Here are the points that you must consider before you make your decision to invest in LIC IPO.
As of 31st March 2019, the total policyholder of the LIC policy is 29 crores. That’s 1/5 of the Indian population.
LIC is the largest public sector insurance company in India.
LIC holds the largest market share in India.
PAT (Profit After Tax) positive company.
The large number of employees and nationwide distribution network.
LIC IPO will fetch foreign investment in India.
LIC has a net premium income of ₹. 337000 crores (an increase of 6% as compared to the previous year)
Looking at the above facts, you must subscribe to this blockbuster IPO. you will be lucky if you get the allotment of this IPO.
Conclusion
There is no second thought that one should not invest in this IPO. It will be the biggest and safest IPO coming soon. The one who gets the allotment is considered to be lucky. If you are investing for the first time then also you must go and subscribe to this IPO without any doubt.