Life Insurance Corporation of India IPO – Schedule *(TENTATIVE)*

27th April – Announcement of Price Band

29th April – Anchor Investors Allotment
02nd May – Offer Opens
05th May – Offer Closes
10th May – Finalisation of Basis of Allotment
11th May – Unblocking of ASBA Accounts
12th May – Credit of Equity Shares to Depository Accounts
13th May – Commencement of Trading

Life Insurance Corporation of India IPO – Issue Information *(TENTATIVE)*

Issue Opens on: 02 May 2022

Issue Closes on: 05 May 2022
Issue Type: Book Built Issue IPO
Issue Size: 22,13,75,000 Shares
Face Value: Rs.10/- per Share
Issue Price: Rs.950 – Rs.1,000 Share *(TENTATIVE)*
Discount: 5% (for Employees & Policy Holders)
Market Lot: 15 Shares
Listing At: NSE, BSE

Equity Shares outstanding prior to the Issue = 6,32,49,97,701 Shares

Fresh Issue of NIL Shares @1,000/- = Rs. NIL Crs
Offer for Sale of 22,13,75,000 Shares @1,000/- = Rs.*21,971.47Crs
(*considering 5% discount for Employees & Policyholders)
Equity Shares outstanding after the Issue = 6,32,49,97,701 Shares

Category-wise Break up:

Anchor – 5,64,50,625 Shares = 5,645.06Crs. (@1,000/-)
QIB – 3,76,33,750 Shares = 3,763.38Crs. (@1,000/-)
NII – 2,82,25,313 Shares = 2,822.53Crs. (@1,000/-)
RII – 6,58,59,063 Shares = 6,585.91Crs (Lot size: 15 = 43,90,604 Forms)
Employees – 1,10,68,750 Shares = 1,051.53Crs. (5% discount = @950/-)
PolicyHolders – 2,21,37,500 Shares = 2,103.06Crs. (5% discount = @950/-)
Total Issue – 31,62,49,885 Shares = 21,971.47Crs.

Subscription required for 1X

RII = 43,90,604 Forms
NII = 2,822.53 Crs.

Life Insurance Corporation of India IPO – Financial Information (Basis of Valuation)

The information is collated from the following documents:

1) DRHP = Draft Red Herring Prospectus Dated February 13, 2022 (652 pages)

EPS for FY18-19 >>> Rs 4.15 (Page #97 of DRHP)

EPS for FY19-20 >>> Rs.4.29 (Page #97 of DRHP)
EPS for FY20-21 >>> Rs.4.70 (Page #97 of DRHP)
EPS for H121-22 >>> Rs.2.38 (Page #97 of DRHP)

RoNW for FY18-19 >>> 322.25% (Page #98 of DRHP)

RoNW for FY19-20 >>> 317.14% (Page #98 of DRHP)
RoNW for FY20-21 >>> 45.65% (Page #98 of DRHP)
RoNW for H121-22 >>> 18.76% (Page #98 of DRHP)

NAV as on September 30, 2021 was Rs.12.68 (Page #98 of DRHP)

Listed Industry Peer Group (Page #99 of DRHP):
SBI Life Insurance Company,
HDFC Life Insurance Company,
ICICI Prudential Life Insurance Company

Life Insurance Corporation of India IPO – *Market’s Current Estimates of oversubscription*:

NII = 40KCrs. = ~14.17X

RII = 60L Forms = 1.37X Applic. wise (Avg allotment of ~10.98 shares per lot)

Interest cost *@7.00%p.a.* for 7days = *134.25 paise for 1X*

Thus, for NII the costing = 14.17 X 134.25 paise = Rs.19.02 per share (= GMP)

And, for RII the costing = 10.98 X 19.02 = Rs.208.83/- (= Subject2)

Life Insurance Corporation of India IPO – *GMP Estimated*

GMP 20 +/- 1
Kostak 200 +/- 10
Subject2 @300/-

LIC IPO

Issue Price = 1.20 X Embedded Value (as of Sept’21)

Market Cap = 1.20 X 5,39,686 Crs = 6,47,623Crs
Rate per Share = MarketCap ÷ No. of Outstanding Shares = 6,47,623Crs ÷ 6,32,49,97,701 = 1,024/-

Fair Value = 3.00 X Embedded Value (as of Sept’21)

Market Cap = 3.00 X 5,39,686 Crs = 16,19,058 Crs
Rate per Share = MarketCap ÷ No. of Outstanding Shares = 16,19,058 Crs ÷ 6,32,49,97,701 = 2,560/-

*LIC IPO*

*Comparison with Peer Group* 22/April

HDFC Life | CMP = 554.50 | No. of Shares = 2,11,26,19,161 | MCap = 1,17,145Crs. | Embedded Value =
29,543Crs. | MCap / EV = *3.965*

SBI Life | CMP = 1,134.15 | No. of Shares = 1,00,03,70,562 | MCap = 1,13,457Crs. | Embedded Value =
35,290Crs. | MCap / EV = *3.215*

ICICI Life | CMP = 524.00 | No. of Shares = 1,43,73,10,661 | MCap = 75,315Crs. | Embedded Value =
30,203Crs. | MCap / EV = *2.494*

And,
*LIC IPO | Issue Price = 1,000 *(TENTATIVE)* | No. of Shares = 6,32,49,97,701 | MCap = 6,32,500Crs. |
Embedded Value = 5,39,686Crs. | MCap / EV = 1.172*

Life Insurance Corporation of India when compared to SBI Life Insurance Company Limited …

On “MarketCap / Embedded Value” ratio basis …

Does it deserve to be lower or higher?