LIC shares hit fresh low; down 24% from issue price

Share of Life Insurance Corporation of India (LIC) continued its losing momentum for the eighth straight session on Thursday, with stock price hitting a new low of ₹720.05 in intraday trade on the BSE. The share of the country’s largest insurer has fallen 24% below its initial public offering (IPO) price of ₹949 after it made a weak market debut last month. The stock has wiped out nearly ₹1.4 lakh crore of investors’ wealth as market capitalisation dropped to ₹4.57 lakh crore as compared to the valuation of around ₹6 lakh crore at the time of listing.

Extending its losing streak for the eighth session, LIC shares opened lower at ₹730.50 against the previous closing price of ₹738 on the BSE. During the session, the largecap stock declined as much as 2.4% to hit a fresh all-time low of ₹720.05. Finally, the stock settled day’s trade at ₹721.90, down 2.18%. In contrast, the BSE Sensex closed trade at 55,320, up 428 points.

The state-owned insurer had raised ₹20,557 crore in the country’s biggest-ever IPO in May, becoming the fifth biggest listed firm in terms of market capitalisation. Post listing, the company’s stock performance has been in complete doldrums, thanks to weak March quarter earnings, strong competition from private players, and overall volatility in the market.

LIC shares have dropped 14% during the last eight sessions, while it has fallen 17.5% since its market debut on May 17. The company’s shares were listed at ₹867.20 on the BSE, down 8.6% from the upper end of the IPO price band of ₹902 to ₹949 per share.

The stock performance has failed to match the strong response to its IPO, which was oversubscribed 2.95 times. The policyholder portion of the IPO was subscribed 6.11 times, while the portion reserved for employees was booked 4.39 times. Retail investors bid 1.99 times the allocated bucket, and non-institutional investors’ portion was subscribed 2.91 times. The issue raised a ₹43,933 crore demand against the intended offer size of ₹21,000 crore.

For January-March quarter of 2022, LIC reported net profit of ₹2,371.55 crore, compared to ₹2,893.48 crore in the year-ago period, registering a decline of 18%. The net premium income increased to ₹1,43,745.92 crore, compared with ₹1,21,626.06 crore. Net income from investments improved marginally to ₹67,498.15 crore in Q4 FY22 from ₹67,435.29 crore Q4 FY21. Net commission during the quarter also saw marginal growth at ₹7,742.56 crore from ₹7,476.20 crore in the year-ago period.

For the entire fiscal, net profit stood at ₹4,043.12 crore, boosted 39% by lower tax provisions against ₹2,900.57 crore in FY21. Net premium income for FY22 stood at ₹4,27,419.21 crore, compared with ₹4,02,844.34 crore.

The board of LIC has also recommended a dividend of ₹1.50 per equity share with face value of ₹10 each for the year ended March 31, 2022, subject to shareholders’ approval in the upcoming annual general meeting.