In intra-day trade on Monday, shares of Life Insurance Corporation of India (LIC) fell 4% to Rs 681.70 on the BSE, with the lock-in period for anchor investors expiring on Monday, June 13.
The share price of the state-owned insurance behemoth has dropped by 28% from its IPO price of Rs 949 per share. Retail investors were given shares for Rs 905 each at the time of the IPO, while policyholders were given shares at Rs 889 each.
The stock was trading at its lowest level since its initial public offering on May 17, 2022. It fell for the tenth trading day in a row, down 19% since the beginning of the year. Since its IPO, LIC’s market capitalization has dropped by Rs 1.2 trillion. The stock was down 3% at Rs 688.20 at 09:44 a.m., vs a 2.7 percent drop in the S&P BSE Sensex.
LIC raised Rs 5,627 crore from anchor investors, with domestic mutual funds accounting for 71% of the total (MFs). The state-owned insurance company distributed almost 59.3 million shares to 123 individuals for Rs 949 each.
Anchor investors are well-known institutional investors who are given shares in a company before it goes public (IPO). Anchor investors will be able to sell their current shares on the market after the lock-in period expires. Nearly 1% of LIC’s 3.5 percent free float is held by anchor investors.
LIC is India’s sole public sector life insurance business, with private life insurance firms as its main rivals.
Analysts say that private sector insurance businesses have grown quicker and gained market share than LIC, with no guarantee that LIC would not lose market share in the future. Emkay Global Financial Services analysts commenced coverage on LIC with a ‘hold’ rating and a target price of Rs 875, which is up roughly 12% from current levels.
LIC’s market leadership and comfortable valuations remain attractive to analysts, but they favor private-sector counterparts with greater growth and profitability prospects, resulting in higher EVs.