The price of LIC shares on Friday fell to a new low as the regulatory lock-in period on allotted shares came to an end. On Friday morning, LIC shares prices dropped 1.62 percent to Rs 710 per share. The share price of LIC has fallen for nine sessions in a row. The stock's decline over this time has been 15%. The shares have fallen 34% below their initial public offering price. Market capitalization for LIC has decreased to Rs. 4.52 lakh crore from Rs. 6 lakh crore at the top of the price range of Rs. 949 per share at the time of listing.
Since their issue price of Rs 949, LIC shares have lost roughly one-fourth of their value. Data reveals that since May 17, when shares of LIC went public, the company has only finished with a gain four times. It has fallen apart over the past few days due to selling pressure.
On June 13, the anchor investor lock-in period is anticipated to come to an end, allowing these investors to sell their current shares on the market.
One intriguing finding is that a subsequent rise for quality companies may find significant support near the low set on the first trading day following the 30-day anchor investor lock-in period. Santosh Meena, Head of Research, Swastika Investment Ltd., advised investors to buy on such dips if the fundamentals are sound.
The Government of Singapore, SBI Mutual Fund, HDFC Mutual Fund, HDFC Mutual Fund, and Axis Mutual Fund were some of the significant investors who took part in the IPO.
The public issue, which has had a dismal start to life in the public market, was heavily purchased by domestic mutual funds. In the anchor issue, up to 99 plans purchased LIC shares totaling Rs 4,000 crore.
What Should Investors Do?
Overall, perception toward the company has changed, with some brokerages predicting that it will continue to sputter as it struggles to expand its non-participatory insurance business and contend with persistent market volatility.
Meena stated: "We think the vastly untapped life insurance market in India is still in its infancy and is well-positioned to take advantage of the tremendous development potential. LIC has several advantages over its rivals, including a solid brand value, a sizable agent network, and an impressive distribution network. Additionally, the business expects to address issues including poor VNB margins, market share loss, very much dependent on agency channels, etc. The company's issue was also priced at a Price to Embedded Value of 1.1x, which was already below that of its Indian and international counterparts, and the present dip offers additional valuation assurance. We also want to emphasize that investors should understand that since insurance is a long-term industry, wealth accumulation and compounding only happen over time.
Share India's vice president and head of research, Dr. Ravi Singh, stated: "Investors are encouraged earlier to sell their positions and wait for the recovery of the attitudes. LIC share prices may decrease further to 700 levels. Investors with a high threshold for risk may keep their positions. The LIC's business indicators are anticipated to steadily improve over time. The low-level investment will yield profitable results over time.