Source : INDIA TODAY NEWS
Retail investors can bid for the government’s Offer for Sale (OFS) in Life Insurance Corporation of India (LIC) from Wednesday, with the Centre looking to raise up to Rs 31,410 crore through the sale of up to a 6.5% stake in the country’s largest insurer.
The OFS comes after strong institutional interest on the first day of bidding, with the non-retail portion being subscribed 1.66 times. But the bigger question for retail investors is whether the discounted offer makes LIC an attractive investment or whether they should stay on the sidelines.
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Experts believe the answer depends largely on an investor’s time horizon.
LONG-TERM INVESTORS MAY FIND VALUE
Antu Eapen Thomas, Senior Research Analyst at Geojit Investments Limited, said that the OFS presents an attractive opportunity for investors willing to stay invested for the long term.
“The LIC OFS offers an attractive entry opportunity for long-term investors. At around 0.6x P/EV, the stock trades at a significant discount to private insurance peers, offering valuation comfort. The company continues to deliver healthy growth in New Business Premium (NBP), while its sizeable Embedded Value and improving VNB margins reflect the strength of its franchise and earnings potential,” he said.
Thomas, however, cautioned that investors should be prepared for some volatility.
“The potential exercise of the 4.5% greenshoe option could increase the supply of shares in the market, leading to near-term volatility,” he added.
DISCOUNT MAKES THE OFFER ATTRACTIVE, BUT DON’T EXPECT QUICK GAINS
Meena Gupta, Senior Vice-President at Choice Broking, believes the OFS is suitable for investors looking to build a long-term position rather than those chasing quick gains.
“Retail investors should consider applying for the LIC OFS, but with a long-term perspective rather than a listing-day trade in mind. The floor price of Rs 382 represents roughly a 10% discount to LIC’s pre-OFS market price,” she said.
According to Gupta, another positive is that the government has indicated there are no plans for further stake sales in LIC over the next three to four years.
“This removes the single biggest overhang that has weighed on the stock — the fear of continuous supply from further disinvestment,” she said.
However, she pointed out that investors should keep their expectations realistic.
“The stock fell nearly 7–9% on the day the OFS was announced, which shows the market is treating this as a fair repricing rather than a bargain. This isn’t a bet for a quick post-listing pop.”
She said the offer is better suited for investors who believe in LIC’s long-term strengths, including its market leadership, vast distribution network and embedded value growth.
“In short, apply if you’re building a long-term position at a better entry point; avoid it if you’re only looking for short-term listing gains,” Gupta said.
LIC’S MARKET LEADERSHIP REMAINS A KEY POSITIVE
Yudhajit Baul, Founder of Yudhajit Financial Services Pvt Ltd, also believes the insurer’s strong fundamentals make the OFS worth considering.
He pointed to LIC’s financial performance, noting that the insurer’s profit after tax (PAT) rose 23% in the fourth quarter of FY26 compared with the year-ago period.
Its consolidated net profit increased to Rs 23,468 crore in FY26 from Rs 19,038 crore in FY25, while net premium income and total income also recorded growth.
“LIC has the largest market share in the life insurance business supported by a very strong distribution network. Life insurance penetration is still low in India compared with other emerging economies, and the opportunity to grow is enormous as awareness increases. Retail investors should seize this opportunity to invest in the LIC OFS,” Baul said.
WHAT SHOULD RETAIL INVESTORS KEEP IN MIND?
The common thread across expert views is that the LIC OFS is not being seen as an opportunity for quick gains.
Instead, analysts believe the discounted valuation, LIC’s dominant position in India’s life insurance market and improving financial performance make the offer attractive primarily for investors with a long investment horizon.
At the same time, they caution that the additional 4.5% greenshoe option, if exercised, could increase the supply of shares in the market and result in short-term volatility.
For investors looking beyond immediate price movements, however, experts say the OFS provides an opportunity to buy into India’s largest life insurer at a discount to the prevailing market price.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
– Ends
SOURCE :- TIMES OF INDIA
