LIC investors lose over ₹1.08 lakh cr since debut against the IPO issue price

  • June 7, 2022, 1:03 p.m.

Life insurance behemoth, LIC, was in a bloodbath on Monday, with shares even hitting a fresh all-time low. The insurer's investors have lost hefty to the tune of more than 1.08 lakh crore since its debut against the IPO's issue price. Bears have been dragging LIC shares broadly within less than a month of its listing, and its downside has been in double-digit percentage terms.

On the BSE, LIC shares closed at 777.40 apiece, down by 22.85 or 2.86%. The shares had touched a new 52-week low of 775.40 apiece earlier today.

LIC recorded a significant decline in valuation today, with the market cap dropping below 5 lakh crore. LIC continues to hold the seven largest company titles in terms of market cap on the BSE.

At the current closing price, LIC's market capitalization stood at 4,91,705.32 crore at the seventh rank, following ICICI Bank, which holds the sixth rank with a market cap of 5,19,344.06 crore, and HUL at the fifth rank with a valuation of 5,35,577.58 crore.

When LIC was listed at a discount on May 17 in the "A" Group category, the insurer had pushed FMCG giant HUL to the sixth spot and emerged as the fifth largest firm. However, LIC shares have corrected steeply in less than a month, with HUL and ICICI Bank taking back their

Due to fresh historic lows, investors have lost more than 1.08 lakh crore from May 17 to date against the IPO issue price.

The LIC IPO had an upper price band of 949 apiece, which took its market valuation to around 6,00,242 crore. LIC investors have lost about 1,08,536.68 crore so far since their debut against the IPO price.

Compared to the IPO price band, LIC shares have dropped by more than 18%. Meanwhile, the dive was more than 11% since May 17.
LIC remains the top insurer compared to listed peers ICICI Prudential, HDFC Life, and SBI Life.

The latest data from CARE Ratings showed that the first-year premium of life insurers increased to 17,940 crores in April 2022 compared to 9,739 crores in the same month last year, registering a robust growth rate of 84.2%. The growth in monthly numbers can be attributed to an increase in group single premiums, with LIC substantially outpacing its private peers. It can also be accounted for by a low base in April 2021, which saw subdued levels due to the pandemic-induced lockdowns.


Further, the data shows that LIC’s first-year premium jumped a whopping 141.2% in April 2022 compared to 50.6% in March 2022 and 35.4% in February 2022. The April 2022 growth also compares favorably versus the increase of 35.6% in April 2021 (base effect as there was a national lockdown in April 2020). Private insurers grew by 27.5% in April 2022, 12.9% in March 2022, and 55.2% in April 2021 (significant base effect). LIC maintains its dominant share in the first-year premium (65.3% vs. 34.7% share of private companies).

CareEdge expects the life insurance industry to continue to grow at around 12–14% over a three-to-five-year horizon. It also said that companies are expected to continue to focus on simplifying the life insurance purchase experience and overall digital enablement across the distribution channels while maintaining a razor-sharp focus on cost improvement to sustain margins.

LIC tracked a volatile market today as investors sat with bated breaths awaiting the RBI's monetary policy. The markets are preparing for a volatile week with the RBI's policy holding the major spotlight given the worsening condition of inflation.

Vinod Nair, Head of Research at Geojit Financial Services, said, "The domestic market moved in tandem with the global peers to open weak and gradually recovered its losses following a positive start in Europe." Oil prices rose after Saudi Arabia raised their selling prices, adding to the current global inflationary pressure. Better than expected US job data triggered worries on Wall Street as it gives the Fed more room to hike rates. This volatility is likely to continue in both global and domestic markets as investors await monetary policy decisions from major central banks, including the RBI."

The BSE Sensex closed at 55,675.32, down by 93.91 points or 0.17%. The Nifty 50 settled at 16,569.55, lower by 14.75 points or 0.09%.

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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