Swastika Investmart sees 'flat' listing for LIC, recommends investors to go long

New Delhi, May 16 Brokerage house Swastika Investmart anticipates that LIC is likely to have a "flat" listing.

The brokerage's rationale behind the anticipation is based on the current market situation such as increased inflation statistics, FII outflows, currency weakness, geopolitical and rate hike-related worries.

The much-awaited listing of the insurance major is expected to take place on Tuesday.

Presently, markets are experiencing extraordinary volatility, which has caused sell-offs in equity markets all over the world.

According to recent grey market patterns, the LIC's unlisted shares were selling at Rs 936 per share on Saturday, a discount of Rs 13 to the IPO price band's upper range, the brokerage said.

However, the stock's modest float may limit the stock's post-listing decline.

"LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value and huge network of agents. However, there are concerns with the company like losing market share to private players, lower profitability & revenue growth compared to private players, lower VNB margins and short-term persistency ratios, but the valuation at Price to Embedded Value of 1.1 had discounted the above concerns."

Nevertheless, investors must be aware that the business of insurance is long term in nature and therefore it recommends investors to stay with the company for the long term even if the company lists at a discount.