LIC offloads over 83 lakh shares of GSFC; insurance stock hits fresh all-time low

Shares of Life Insurance Corporation of India (LIC) slipped to a record low on Wednesday.  LIC share price tanked around two per cent to all-time low of Rs 620.15 per share in early trade on the BSE on Tuesday. The shares of the insurance giant ended lower by 1.26% or Rs 7.90 to 621.15 apiece on the BSE.  The stock has declined around five per cent in the past five trading sessions.  

The public insurer had kept LIC IPO price at Rs 949 per share. LIC shares were listed below its issue price on the BSE at Rs 867.20 per share, a discount of ₹ 8.62 per cent from its IPO price. Even after the weak listing, the stock has continued to decline and is trading at a discount of over 34% per cent on its IPO price.  

Investors lose 2.07 lakh crore in LIC shares 

Meanwhile, the market capitalisation of LIC slipped to Rs 3,92,877.23 lakh crore on the BSE on Wednesday. The IPO was launched at a market-cap of Rs 6 lakh crore, which means investors have lost Rs 2.07 lakh crore so far in LIC shares. After Reliance Industries Ltd (RIL), Tata Consultancy Services (TCS), HDFC Bank, and Infosys, LIC was the fifth biggest company in terms of market-cap during the listing.  

LIC cuts stake in Gujarat State Fertilizers & Chemicals, adds BPCL 

Meanwhile, LIC sold as many as 8332109 shares of Gujarat State Fertilizers & Chemicals, reducing its stake from 6.059% to 3.968% in the chemical company.   

"This is to inform that Corporation’s shareholding in Gujarat State Fertilizers & Chemicals Ltd has decreased from 2,41,42,861 to 1,58,10,752 equity shares decreasing its shareholding from 6.059% to 3.968% of the paid-up capital of the said Company," LIC said in a regulatory filing on Wednesday, September 28.  

Earlier, LIC had bought an additional stake in BPCL. "The Corporation’s shareholding in 'Bharat Petroleum Corporation Limited' has Increased from 15,25,08,269 to 19,61,16,164 Equity Shares Increasing its shareholding from 7.030% to 9.041% of the paid-up capital of the said company," it had said in a BSE filing.  

What should investors do?  

In a late August report, brokerage firm Geojit financial had recommended a buy rating on LIC with a target price of Rs 810.  

"LIC saw a recovery in its market share in the quarter gone by, and will continue to maintain its dominant position in the life insurance domain for a very long time. Strong goodwill among the general public, government backing, and the robust investment portfolio remain favourable factors and ensure the company will continue to perform well in the long term," it had said.  

Though we may see a marginal slowdown in the new business margin growth in the near term, the company’s focus on increasing the contribution from high VNB margin products bodes well for its long-term performance, it added.