LIC share price nosedives further; hits new all-time low

Shares of Life Insurance Corporation hit a new 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 the insurer's share price.

The scrip has lost 15 per cent so far. 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.

Santosh Meena, Head of Research, Swastika Investmart Ltd. on LIC 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. 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," Meena added.

Shares of LIC have wiped off almost one-fourth of their wealth from the issue price of Rs 949.

Earlier on May 17, the country's largest insurer LIC made a lacklustre debut on stock exchanges, listing at over an 8 percent discount after a successful Initial Public Offering (IPO).

LIC had fixed the issue price of its shares at Rs 949 apiece after a successful IPO, which was over subscribed nearly 3-times when it closed on May 9.

Published on: Friday, June 10, 2022, 12:05 PM IST