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LIC Share Price: LIC stock down over 21% since listing, Share under selling pressure as anchor investor lock-in period ends today | India Business News

NEW DELHI: Shares of Life Insurance Corporation of India fell for the tenth consecutive session on June 13 as investors remained jittery over further selling pressure on the counter as the lock-in period for anchor investors in the company’s initial public offering ends today.
At 10 am, the stock was trading down 2.89% at Rs 689.20 on the BSE. The stock is down 21.31% since it listed on May 17. The stock hit a life low of Rs 682 in opening trade.
According to Sebi’s rules for anchor investments in IPOs, investors had to hold the shares for at least one month since allotment in the offer, which was on May 13. So, anchor investors, who bought over 59 million shares, can sell their shares in the open market from Monday. Anchor investors are institutional investors that are allotted shares before the subscription opens for retail and other investors, and have to commit to holding their shares for a certain period after listing.
LIC’s shareholders have already lost more than Rs 1. 5 lakh crore in less than a month since its listing on May 17.
Life Insurance Corporation (LIC) listed on the bourses on May 17 at Rs 872 a share. The government had fixed the issue price of LIC shares at Rs 949 apiece after a successful Initial Public Offering (IPO) which was over-subscribed nearly 3 times.
Since the day of listing, LIC shares have remained below the issue price and had touched a low of Rs 708.70 and a high of Rs 920.
“We are very concerned about the temporary blip in LIC share price. People will take time to understand (fundamentals of) LIC. LIC management will look into all these aspects and will raise the shareholders’ value,” DIPAM secretary Tuhin Kanta Pandey said.
A day before its IPO opened on May 4, LIC had allotted shares worth Rs 5,627 crore to a large number of domestic investors like mutual funds and insurance companies, and to some foreign funds. The shares were allotted at Rs 949, the final IPO price.
Over 70% of LIC’s anchor investors were domestic mutual funds. At the time of the IPO, retail investors were allotment shares at Rs 905 apiece, while policyholders received allottment at Rs 889 per share.
“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,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
According to Meena, 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,” he said.
LIC is the only public sector life insurance company in India and primary competitors are private life insurance companies in India.
Brokerage firm Emkay Global Financial initiated coverage with a ‘hold’ rating and a price target of Rs 875.
“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,” Emkay Global had said earlier this month.
In its first earnings release post shares listing, LIC posted a 17% decline in consolidated net profit to Rs 2,409 crore for the fourth quarter ending March 2022 from Rs 2,917 crore in the year-ago period.

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