Shares of Life Insurance Corporation (LIC) are trading 27 per cent lower to their initial public offer (IPO) listing price. Investors have lost nearly Rs 1.5 lakh crore wealth in LIC since May 17 (listing date). The stock of India’s largest insurer has traded below its listing price for a majority of period since its debut. This implies that a majority of investors who bought the stock on or after listing are sitting on losses. The stock saw a weak listing on May 17 amid highly volatile market conditions. LIC stock made its debut at a discount of 8.62 per cent at Rs 867.20 against the IPO issue price. The company offered its shares in a price band of Rs 902- Rs 949.
LIC stock hit its all-time high on the listing day. It touched a high of Rs 920 on May 17 this year and has been falling since then. On September 26 (previous session), the LIC stock hit a new low of Rs 629.30 on BSE. That translates into a 31.59 per cent decline from life-time high to life-time low. The weakness in the LIC stock can be attributed to highly volatile market conditions since May this year.
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The ongoing Russia-Ukraine war, economic slowdown and highly volatile global and domestic market conditions have also dampened sentiment around the LIC stock.
However, the insurer reported a robust set of earnings for the quarter ended June 2022.
Net profit climbed to Rs 682.88 crore in Q1 against a standalone profit of Rs 2.94 crore in the corresponding quarter of the last fiscal. Net premium income of LIC climbed 20.35 per cent YoY to Rs 98,351.76 crore.
Other income came in at Rs 160.09 crore in Q1FY23 against Rs 145.47 crore in Q1FY22. Transfer of funds from shareholders’ accounts stood at Rs 799.24 crore during the quarter under review. Buoyed by the Q1 earnings, the stock gained over 3 per cent in the next session. However, it has been in a downside since the earnings were announced. The stock, which closed at Rs 683.65 on August 11 fell to Rs 635.50 today, losing 7 per cent during the period.
In the current session, LIC share price was trading 0.70 per cent higher at Rs 635.20 against the previous close of Rs 630.80 on BSE. Market cap of LIC stood at Rs 4.01 lakh crore. Total 0.56 lakh shares of the firm changed hands amounting to a turnover of Rs 3.58 crore on BSE. Here’s a look at what analysts said about the outlook of the stock.
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Manoj Dalmia, founder and director, Proficient Equities believes that the stock can fall further and advises investors to keep away. “LIC has crossed its support at Rs 647. Investors can avoid buying it at current levels as there can be further selling in the stock. Rs 606 can be the target on the sell side,” Dalmia said.
Ravi Singh, vice-president and head of Research, Share India also sees more downside in the stock. “At the time LIC got listed, the world started facing inflation and food shock due to ongoing Ukraine tensions, huge foreign institutional investment outflows from India and a sliding rupee, resulting in not so favourable environment for the IPOs. All these factors took a toll on the LIC share price since its listing. In the current scenario, LIC stock is still down further taking cues from the overall weakness in the market. It may fall up to Rs 550 in the coming weeks. Investors must wait for consolidation in the stock before entering any new positions.”
Abhijeet from Tips2trade said, “Poor timing of the IPO coupled with a strong bearish sentiment across global markets have led to a fall in LIC despite its fundamentals and size. Long-term investors should not exit now as stock is already considerably down. A daily close above Rs 641 should lead to a recovery till Rs 685- Rs 698 where one can reassess strategy again.”
