LIC share price continues to spiral down, investors lose Rs 1.23 lakh crore. Should you buy?
LIC shareholders have lost around Rs 1,23,686 crore since its listing on May 17. The scrip is trading 20% lower than the IPO issue price.
LIC Share Price: Life Insurance Corporation (LIC) share has been tumbling since its market debut on May 17. Investors who had put their money in the initial public offerings of LIC are experiencing a heavy depreciation in their portfolio as the scrip is down more than 20 per cent from the issue price of Rs 949.
On Tuesday, LIC shares crashed more than 3 per cent on the NSE and BSE each. After a gap-down opening, LIC's share price made its intraday low of Rs 751.80 on the NSE. It closed at Rs 753 apiece after falling 3.13%. Likewise, the scrip made its intraday low of Rs 751 on the BSE and closed at Rs 752.90 after moving 3.15% southward.
Investors lose big
After today's fall, the market capitalisation of the public sector insurer fell to Rs 4,76,556 crore against a market cap of Rs 6,00,242 crore at the upper price band of the public offer that saw the government offloading its 3.5 per cent stake. It also means that LIC investors have lost more than Rs 1.23 lakh crore.
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The shares of the much-awaited LIC had listed on the stock exchanges at a discount of around 9 per cent at Rs 872 (NSE) and Rs Rs 867.20 (BSE). Now the share price is at its all-time low of Rs 753 which is a decline of a little over 20 per cent from its issue price.
Should you buy LIC shares?
Manoj Dalmia, founder and director, Proficient Equities Private Limited, said that investors should avoid heavy position as the stock may touch Rs 700 level in the coming days.
Ravi Singh, vice president and head of Research Share India, said that LIC share price is witnessing heavy selling pressure due to fresh shorts and long coverings.
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"The selling may continue and the stock can touch the levels of Rs 700 in coming trading sessions. High risk appetite investors may hold their positions and wait for the trend reversal," he said.
Tanushree Banerjee, co-head of Research at Equitymaster, said that LIC has significant investments in Indian equity markets. In fact, the gains from its stock market investments which is to the tune of Rs 42,000 crore allowed the company to report a higher embedded value before the IPO.
"In recent quarters, the insurance company's premium growth and persistency ratio have not been impressive. Therefore, market volatility impacting equity gains, low growth in premium income and relatively high IPO valuations have led to a poor short term outlook on the stock. "
Notably, the IPO of the state-run company had received a robust response from investors as the insurance major's offer has been subscribed 2.89 times. It received bids for 46.77 crore equity shares against the IPO size of 16.2 crore equity shares. To attract a large number of investors, the policyholders were offered a Rs 60 discount, while for retail investors, the discount was Rs 45.
India's largest IPO
LIC IPO was also India's largest to date. Paytm IPO in 2021 had mobilised Rs 18,300 crore, surpassing the state-owned Coal India's record of fetched nearly Rs 15,500 crore in 2010. Anil Ambani's Reliance Power had in 2008 mobilised Rs 11,700 crore through the public offer.
LIC was formed by merging and nationalising 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore.