LIC share falls 24% over issue price, loses Rs 1.5 lakh crore in m-cap ahead of anchor investors' mandatory lock-in expiry

Shares of LIC (Life insurance Corporation) continued to decline unabated as they dropped to a new low of Rs 721 per share in Thursday's intraday trade on the BSE.  This was a fall of 24% on the upper price band of the IPO price at Rs 949 per share.  

Besides, the shares of India's largest IPO also lost 1.42 lakh crore in market capitalisation since its listing. The company had debuted on the exchanges with Rs 6lkah crore m-cap, which has come down to 4.57 lakh crore as on June 9, 2022.  

At 3 pm on Thursday, the shares were trading with nearly two per cent loss to Rs 723.55 per share on the BSE. In the last five trading sessions, the counter cracked nearly 11 per cent.  

Anchor investors lock-in expiry  

Meanwhile, the mandatory lock-in on shares allotted to anchor investors is expected to expire on Monday, June 13. The issue of India's largest insurer remained open between May 4-9. The shares were listed on the exchanges with 8-9% discount on the NSE and BSE on May 17.  

What experts said on LIC shares?

Earlier, Sunil Damania, Chief Investment officer, MarketsMojo, had recommended to keep off the stock for the time being.  

"Looking at the current market situation and how the company has corrected post-IPO, we believe that LIC, even from this level, may continue to underperform going forward," he had said when the stock slipped below Rs 800 per share.  

Santosh Meena, Head of Research, Swastika Investmart Ltd, on Tuesday said LIC has a number of competitive advantages, including a strong brand value, a massive network of agents, and an enviable distribution network.  

"Investors with a long-term view can buy this stock at CMP and follow a buy on dip strategy," he said. 

What brokerages say?  

Meanwhile, global research firm Emkay initiated a coverage on LIC with arget price of Rs 810 with a hold rating.  

"While we appreciate LIC’s market-leading position and comfortable valuations, we prefer private sector peers that have better growth, profitability and therefore higher RoEV prospects," the brokerage had said in its note. 

While covering life insurance companies, brokerage house ICICI Securities, in its report on June 8, said LIC reported 3-year CAGR of 11.2% in individual APE for FY23TD. "This is a strong performance considering the impact of covid, especially on the agency channel," it underlined.  

Key monitorables for life insurance companies (As per ICICI Securities) 

-Possible recovery of retail term protection in H2CY22. Term prices have remained stable since Dec’21/Jan’22. 

-Growth in credit protect can aid margins. 

- Impact of weaker market performance on ULIPs. 

-As all insurers reduce the reinsurance proportions, underwriting standards will have changes  

We believe that after witnessing muted growth in business premiums in January and February 2022, the life insurance industry is witnessing heathy recovery, said brokerage firm Sharekhan. 

"The protection segment for life insurers is expected to continue to gain pace as supply-side issues subside and non-par and annuity segments are likely to witness strong growth," it said.