The share price of Life Insurance Corporation of India (LIC) slumped to a new record low of Rs 720.10 on Thursday, which is nearly 25 percent down from its IPO issue price of Rs 949.
At the BSE, Life Insurance Corporation of India’s share was trading 1.56 percent down at Rs 726.50 at 12.42 pm against its previous day`s close at Rs 738.
The scrip hit a record low of Rs 723.70 in the intra-day. The share price of LIC has fallen sharply since its listing on the stock exchange on May 17.
LIC shares were allotted to the investors at Rs 949 apiece. It got listed on the stock exchanges at discount. The highest level it has touched is Rs 920.
There has been consistent erosion in the market value of the country’s largest insurer.
At the issue price of Rs 949, the market capitalization of Life Insurance Corporation (LIC) of India stood at Rs 6,00,242 crore.
Company Financials
In its first earnings release post shares listing, LIC posted a 17% decline in consolidated net profit to ₹2,409 crores for the fourth quarter ending March 2022 from ₹2,917 crores in the same quarter a year ago.
The total income of the insurer increased to ₹2,12,230 crore, from ₹1,90,098 crore in the same period of the previous fiscal year. LIC’s net premium income rose to ₹1.44 trillion from ₹1.22 trillion year-on-year (YoY).
Its solvency ratio, a measure of an insurer’s ability to meet its long-term debt obligations, rose to 1.85 from 1.76 a year earlier. The insurance giant said its asset base grew 12% to ₹41.8 trillion in FY22 from ₹37.4 trillion in FY21.
The government-run LIC is by far the largest insurer in India. The market share of the company in individual policies was 74.6% for the financial year ended March 31, 2022. In the Group business the market share of LIC during the year ended March 31, 2022, was 89% by several policies/schemes and 76% by first-year premium.
What Analyst says
Analysts say that LIC stock has been under a natural price discovery process; it is down over 20 percent from its IPO price and has not shown any signs of finding a bottom for itself. “Given the relentless decline since listing, the stock has gotten too deeply oversold and may be in for some technical pullback in near future.
LIC shares continue to witness selling on the back of inflationary concerns and liquidity tightening fears, Aamar Deo Singh, Head Advisory, Angel One, told FinancialExpress.com. Singh suggested investors holding the stock from a long-term perspective, ideally should not be swayed by the daily price movements. He said that technically, for the stock to witness a change in the trend, the stock must trade above the 840 mark consistently.
Last week, domestic brokerage firm Emkay Global Financial Services initiated coverage on LIC stock with a hold rating, and a target price pegged at Rs 875 apiece. While Macquarie analysts had initiated coverage of LIC stock with a ‘Neutral’ tag. However, despite the neutral tag, the international brokerage and research firm pinned a target price of Rs 1,000 per share on the stock.