LIC's Record-Breaking IPO: A Curse or an Opportunity?

LIC's Record-Breaking IPO: A Curse or an Opportunity?

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After completing the largest initial public offering (IPO) in the nation, worth Rs. 21,000 crores, the Life Insurance Corporation of India (LIC) shares were listed on domestic stock exchanges one year ago. The largest IPO in India was listed, but it was cursed because the stock debuted at an 8% discount and has never again traded at that level. The price of LIC shares has decreased by about 35% from their IPO price and by almost 40% from their listing price. On the BSE, LIC shares are now trading at about Rs. 567 each on Wednesday.

 

LIC's Struggling Shares: Factors Behind the Decline

 

The latest company news is all about the decline in shares over the past year contrasting with increases in the benchmark Sensex of 13.3% and the Nifty50 of 11.8% over the same period for LIC. On May 17, 2022, LIC shares were listed on the BSE for Rs. 867.20, a discount of 8.62% from the issue price of Rs. 949 per share. Investor interest in the LIC IPO was high, as evidenced by the public offering's three-fold oversubscription.

 

The market capitalization of LIC at the time of IPO was around Rs. 5.48 lakh crores, ranking it as the sixth most valuable firm in India. The company's worth has decreased by around Rs. 2 lakh crores and is now at Rs. 3.58 lakh crores, moving it down to position 13. The largest insurer in the nation, LIC, saw its shares drop as a result of several factors, including the Adani-Hindenburg dispute, shifting tax laws, and weak market circumstances.

 

The business performance of LIC has been respectable, and the stock's embedded value appears to be high. Avinash Gorakshakar, Head-Research, Profitmart Securities, stated that the shares "need a major trigger in terms of strong earnings growth and significant improvement in profitability." Gorakshakar predicts that LIC shares would trade sideways unless there is a clear indication of an earnings increase. Long-term investors can stay on to the shares "where there can be near-term volatility in the LIC stock," he continued.

 

The increase in premium income helped drive LIC's consolidated net profit for the third quarter that ended FY23 up from Rs. 235 crores to Rs. 8,334 crores. As per stock market news now, at 11:55 a.m., the market capitalization of LIC was Rs. 3,58,500 crores, with its shares trading 0.11% lower at Rs. 566.80 per share on the BSE.

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