Valuation, market share: Why investors should opt for LIC's scaled-down IPO

The insurer has growth potential, underestimated embedded value and the government sell its stake in the company again

India’s biggest IPO, for Life Insurance Corporation of India (LIC), comes at a difficult time for many investors. The Ukraine War and lockdowns in China have halted India’s stock market bull-run; and the IPO was scaled down due to global uncertainty.

Should retail investors participate still? The answer is ‘yes’. The terms are generous and they will be even better for individual policyholders. The key valuation ratio for life insurers is the Price to Embedded Value per share (P/EVPE).

Embedded value is defined as the present value of (expected future profits) and an adjusted net asset value. For LIC, this