LIC’s IPO pricing may value it after Reliance, TCS

The IPO of LIC is believed to be the most valuable company in the country. But the government can evaluate it at a much lower cost than expected. Its valuation will be lakhs of crores of rupees but it will be in single digit, will be less than Rs 10 lakh crore. Then it will be the country’s third most valuable company after Reliance Industries and TCS, the company of Mukesh Ambani .

At present, the market cap of Reliance Industries is Rs 16 lakh crore and that of TCS is Rs 13.8 lakh crore. However, even after the conservative valuation, LIC’s IPO will be the biggest issue in the country so far.

To encourage policyholders to participate in the IPO, LIC will issue shares at a discount to them. The company wants policyholders to participate as there will be a change in the distribution of surplus in future. Actuarial firm Milliman has submitted its report on the embedded value of LIC, on the basis of which the pricing for the IPO will be decided.

LIC’s AUM is about 15 times more than SBI Life Insurance. This is the reason why its value was being put at more than Rs 15 lakh crore. Earlier, whenever the government had fixed ambitious pricing for IPOs of state-owned companies, LIC had revived it. Examples are General Insurance Corporation and New India Assurance. But this time the success of LIC’s IPO will completely depend on the market demand.