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    HomeBusinessLIC dives 20% from issue price, investors lose Rs 1.2 trillion

    LIC dives 20% from issue price, investors lose Rs 1.2 trillion

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    As of Tuesday’s close, LIC’s market capitalisation stood at Rs 4.76 trillion.

    Shares of Life Insurance Corporation (LIC) of India continued their downtrend for the sixth consecutive session on Tuesday. The stock declined over 3% on Tuesday to hit its all-time low of Rs 751.00 apiece. The stock is down 20.6% from its issue price of Rs 949 during its public offer. Investors who bought the insurer’s shares at the offer price have lost about Rs 1.2 trillion to date, showed Bloomberg data.

    As of Tuesday’s close, LIC’s market capitalisation stood at Rs 4.76 trillion. However, at the offer price of Rs 949, LIC’s market capitalisation was at Rs 6.02 trillion. The insurer, however, is currently the seventh most valued firm in terms of market capitalisation, followed by State Bank of India (SBI) with a market capitalisation of Rs 4.13 trillion.

    According to experts, lack of interest from foreign investors in LIC, volatility in the overall equity markets and the poor results released in the last week have impacted the stock performance. Speaking to FE, VK Vijayakumar, chief investment strategist, Geojit Financial Services, said, “LIC’s issue price at 1.1 times embedded value was fair, however, the poor market sentiments and poor Q4FY22 results have impacted sentiments for the counter.”

    In its maiden earnings after listing, LIC reported a 17.4% decline in its March quarter profit to Rs 2,409.39 crore against Rs 2,917.33 crore in the same quarter last year. However, the company management stated that the fourth quarter figures were not comparable with the numbers during the same period last year, as the company had started including quarterly numbers from September 2021.

    Additionally, the insurer did not disclose its embedded value along with its earnings last week — disappointing investors. “The Q4FY22 results of LIC did not induce investors (especially institutional) to buy the stock and the fact that the determination of embedded value of LIC was delayed was not taken well by the investors,” Deepak Jasani, head of retail research, HDFC Securities, told FE. The management had told reporters last week that the company is in the process of finalising the same and would disclose as soon as the exercise is completed.

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