LIC Share Price on Friday: Life Insurance Corporation shares hit a fresh low on Friday as the regulatory lock-in period on shares allotted ended. LIC stocks fell 1.62 per cent to Rs 710 apiece on Friday morning. This is the ninth straight session of decline in LIC’s share price. During this period, the scrip has lost 15 per cent. The shares have tumbled 34 per cent below their issue price. LIC’s market cap has fallen to Rs 4.52 lakh crore compared with Rs 6 lakh crore at the upper end of price band of Rs 949 apiece at the time of listing.
Shares of LIC have wiped off almost one-fourth of their wealth from the issue price of Rs 949. Shares of LIC got listed on May 17, and since then there have been just four sessions when the stock has closed with a gain, data shows. For the rest of the days, it has crumbled under selling pressure.
The lock-in period for anchor investors is expected to end on June 13, which will allow such investors to sell their existing shares in the market.
“One interesting observation that can be witnessed is that the low made on the first day of trade after the 30-day anchor investor’s lock-in period may act as strong support for a further rally for quality stocks. If fundamentals are strong it’s a good time to buy on such dips,” Santosh Meena, Head of Research, Swastika Investmart Ltd., said.
Among the major investors who had participated in the IPO include the Government of Singapore, SBI Mutual Fund, HDFC Mutual Fund, HDFC Mutual Fund and Axis Mutual Fund.
Domestic mutual funds were the heavy buyers in the public issue, which has had a disastrous start to life in the public market. As many as 99 schemes bought LIC’s shares worth Rs 4,000 crore in the anchor issue.
What Should Investors Do?
Overall, sentiment for the company has turned adverse with some brokerages suggesting that the company will continue to languish as the company faces challenges to scaling up its non-participatory policy business and the ongoing market volatility.
Meena, said: “We believe India’s highly underserved life insurance market is still in its infancy and is well-positioned to capitalize on the enormous growth potential. LIC has several competitive advantages, including a strong brand value, a massive network of agents, and an enviable distribution network. Further, the company has plans to address concerns with the company like low VNB margins, loss in market share, high reliance on agency channel, etc. Additionally, the company’s issue was priced at a Price to Embedded Value of 1.1x, which was already at a discount compared to its global as well as Indian peers, and the current dip provides further valuation comfort. Another point we’d like to make is that investors should be aware that insurance is a long-term business; therefore wealth development and compounding occur only over time.”
Dr. Ravi Singh, vice president and head of research, Share India, said: “LIC share prices may drop further till 700 levels, and investors are advised earlier to exit their positions and wait for the turnaround of the sentiments. The high-risk appetite investors may hold their positions. It is expected that in the long run, the business metrics of LIC will improve steadily. Investment done at lower levels will deliver good returns in long term.”