No Gains For Retail Investors On ICICI Prudential Life Insurance Listing

Shares of ICICI Prudential Life Insurance Company listed lower than its offer price and first time investors lost out on major gains. The shares were offered at a price of Rs 334. However, the stock listed at Rs 329. What's more, the stock continued to slide on the first day of listing falling by almost 11 per cent over its offer price.

The stock currently trades at Rs 297.65 on the bourses.

The ICICI Prudential Life Insurance IPO was oversubscribed 10.48 times and managed to mop up Rs 6057 crore at its offer price of Rs 334. Retail investors did not show much enthusiasm for the issue with the retail portion was subscribed just 1.37 times.

The ICICI Prudential Life Insurance IPO was one of the biggest IPO in six years.

The QIB portion was oversubscribed 11.83 times, while non-institutional investor portion was oversubscribed 28.55 times. Ace investor Rakesh Jhunjhunwal was among the investors having subscribed for Rs 750 crore worth of shares. Jhunjhunwala is said to have received allotment of Rs 27 crore worth of shares.

However, even despite the marquee investor's names being attached to the issue, the stock did not list over its offer price on the bourses. Experts point out that insurance companies in the Asian region are quoting at around 1.5-2 times embedded value, while ICICI Prudential Life Insurance Company was valued at 3.4 times embedded value at the higher end of the price band.

Big selling by some institutional investors is said to be the cause of the fall. Analysts also attribute the poor listing to the market's reaction to escalating tensions on the India-Pakistan border.

Analysts reckon that the stock could see some further selling pressure despite its high growth rates, and fair value could be around levels of Rs 250, which is about 2.5 times embedded value of Rs 97.

Retail investors will have to hold on to the stock for the company to deliver on new business and for the valuations to come to reasonable levels.