LIC investors lose Rs 94,116 crore crore as stock falls

NEW DELHI: Shareholders of Life Insurance Corporation (LIC)  have lost Rs 94,116 crore in the past 14 trading sessions as its shares hit a new low in the highly volatile market. Its market capitalisation (m-cap) fell to Rs 5,06, 158 crore (Friday closing) against an m-cap of Rs 6,00,242 crore based on the upper end of its IPO price. 

This is a big setback for investors who in recent times have lost big money in companies such as Paytm, Zomato, and Nykaa. Share prices of Life Insurance Corporation (LIC) on Friday closed at a fresh low of Rs 800 on the BSE as against its issue price of Rs 949, a fall of about 16%. Following this, LIC’s ranking in the most valuable publicly listed company has slipped from 5th place to 7th place. The company’s m-cap now stands below Hindustan Unilever and ICICI Bank.

LIC hit the exchanges on May 17 at Rs 867 apiece (on the BSE) as against its issue price of Rs 949, a discount of 8%. The stock since then has fallen by around 8% or `67 even as benchmark indexes- Sensex and Nifty- witnessed recovery from the lows of Mid-May.  

Brokerage firm Emkay in a report titled “the elephant that can’t dance” initiated coverage on LIC with a hold rating and a June 2023 target price of Rs 875 (+8% upside), based on 0.9x June’23 expected EV (embedded value).

Emkay said its “neutral” view is underpinned by three factors including the low value of new business relative to embedded value; low annual premium equivalent growth and margin prospects; and inherent volatility in the embedded value of the company. The brokerage said they prefer private peers over LIC.
Earlier this week, managing director of LIC Raj Kumar said in the next five years LIC’s value of new business margin will be on par with private players.

Investors lost money in Paytm, Zomato, Nykaa
LIC stock fall is a setback for investors who have lost money in companies such as Paytm, Zomato and Nykaa. LIC listed on May 17 at Rs 867 (on the BSE) as against its issue price of Rs 949, a discount of 8%.