Down nearly 8% at closing bell, LIC adds to poor listing scorecard of PSUs

Life Insurance Corporation of India’s (LIC’s) tepid stock market debut adds to the weak listing scorecard of public sector undertakings (PSUs). 

Most large floats by the government have failed to create long-term wealth for investors. For instance, shares of Coal India, second-largest PSU IPO after LIC, are currently down 25 per cent over their issue price. The stock got listed in November 2010. 

Shares of General Insurance Corporation of India (GIC RE) and The New India Assurance Company—which listed in 2017—are down 74 per cent each. 

There are some exceptions to the rule though. Shares of IRCTC, which listed in 2019, are currently 10x their issue price. 

Similarly, NTPC and Power Grid too are nearly 3x and 6x above their IPO price, respectively. However, returns for both these stocks have laggard that for the market. NTPC listed in 2004 and Power Grid in 2007. 

Most PSUs quote at attractive valuations to their private sector peers and are even large dividend payers. However, uncertainty related to governance and policy-making, makes these stocks a no-go for a lot of investors.