Shares of Life Insurance Corporation of India (LIC) extended its losing streak for the tenth straight session on Monday, slipping nearly 29% below its initial public offering (IPO) price of ₹949. The ten-session correction has eroded investors’ wealth by ₹1.71 lakh crore as market capitalisation dropped to ₹4.29 lakh crore as compared to the valuation of around ₹6 lakh crore during the market debut on May 17.
On Monday, LIC shares opened lower at ₹690.65 against the previous closing price of ₹709.70 on the BSE, in line with the broader market. During the session so far, the stock declined as much as 4.5% to hit its lowest level of ₹676.05, driven by sustained selling as the lock-in period for anchor investors is scheduled to end today. The stock hit a 52-week high of ₹920 on its listing day, i.e. May 17.
On the volume front, 3.75 lakh shares worth ₹25.7 crore changed hands over the counter as compared to the two-week average volume of 2.95 lakh stocks.
Meanwhile, the BSE benchmark Sensex also witnessed sharp selling, with the index falling 1,367 points, or 2.52%, lower at 52,936 levels at the time of reporting.
Anchor investor lock-in ends today
Traders fear that the stock may see further correction as anchor investors might sell their shares in the insurance major as the lock-in period on all its allotted shares ends today. The state-owned insurer had raised around ₹5,627 crore from anchor investors ahead of its mega initial public offering (IPO), with more than 70% coming from domestic mutual funds. As per the offer document, LIC had allotted nearly 59.3 million shares to 123 investors at ₹949 apiece.
The state-owned insurer had raised ₹20,557 crore in the country’s biggest-ever IPO last month after the government offloaded a 3.5% stake in the company at an offer price of ₹902 to ₹949 per share. The IPO had received a tremendous response from investors, with the issue oversubscribing 2.95 times. The policyholder portion of the IPO has been subscribed 6.11 times, while the portion reserved for employees was subscribed 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.
LIC slips to 7th rank in terms of m-cap
At the time of listing, LIC was the 5th biggest listed firm in terms of market capitalisation after Reliance Industries, Tata Consultancy Services (TCS), HDFC Bank, and Infosys. Due to its dismal performance, its ranking has slipped to the seventh position, with the likes of Hindustan Unilever Ltd (HUL) and ICICI Bank surpassing its market cap.
On the financial front, LIC reported net profit of ₹2,371.55 crore in Q4 FY22, 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 a year ago. Net income from investments improved marginally to ₹67,498.15 crore in Q4 FY22 from ₹67,435.29 crore Q4 FY21. 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.
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