LIC didn't hit the ground running but there is great value in stock, say some experts

Macquarie initiated coverage on LIC stock with a 'neutral' rating. The foreign brokerage has suggested a target for LIC at Rs 1,000, which hints at a modest 5.37 percent upside over the issue price of Rs 949.

LIC shares trade at discount in grey market ahead of listing today

Market expert Prakash Diwan told CNBC-TV18 that retail investors would love to have LIC shares in their portfolio from a longer-term perspective, even at the issue price.

"You are participating in an industry, and there is no doubt that the stock will grow. The growth rate might vary quarter-on-quarter, year-on-year. Also, LIC share weightage itself will probably start seeing its way come into a lot of indices, and once that happens, you will see the demand which is far more than what we have seen in the IPO through ETF acquisitions, which will have to be triggered and that means that the stock will have the floor, which will be far more resilient."

"Today, the market is in a mood which is not as buoyant as some of the other IPOs. There was too much exuberance. The pricing was a bit steep, hence the disappointment. With LIC, that's probably not happening. So I would believe retail investors for sure will be better off. Institutional investors have their own dynamics to adjust. But I am sure there will be secondary demand after some time, once the price stabilises."

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Ajay Srivastava, CEO of Dimensions Corporate Finance Services, said he is not very optimistic about PSU stocks and doesn't believe that they can survive in a competitive market.

"I have applied for the shares. I have got an allotment, but I am not really going to look at them. I am going to just park it away. But will I go too far into it? The answer is no. Because in a highly competitive market, like insurance, where even the private sector has been struggling to thrive; you have seen the share price of most private companies, they have not done really wonders, their own promoters have left the companies."

"It is very difficult to believe that LIC will make substantial gains for shareholders in a market like this. Also, knowing one year down the line, the government will try to sell the next tranche of stocks, the overhang of supply remains. How do you be competitive at the PSU? The banks are not competitive? How will it be competitive? I am not sure. But I am not selling the shares,” Srivastava added.

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Naveen Kulkarni, CIO, Axis Securities, said that LIC's listing at a discount was expected given the wider market decline. Kulkarni, however, recommends holding the stock.

"Listing at a discount to the price, I think to some extent it was expected, considering the markets have come down from the level when the LIC IPO was talking about a couple of months back... I would suggest that we hold on to the stock. I don't think so we need to book losses in this stock, definitely. There is great value in the stock."

Sanjeev Pujari of Consulting Actuary said that he doesn't expect LIC to hit the ground running, but with time LIC could be where it wants to be.