What Should Investors Do After LIC Shares Reach a New All-Time Low and a 32 Percent Drop in the Stoc
Shares of Life Insurance Corporation (LIC) fell by almost 2% on Friday morning, reaching a new low. At roughly 9:40 am, the stock was down 1.71 percent at Rs 657.90. Following an IPO for Rs 21,000 crore, the stock was listed on May 17. (IPO). The insurance giant's market worth, which was around 6.5 lakh crore when it went public, is currently Rs 4.17 lakh crore. Since being listed, LIC's share price has dropped 32% from its initial issue price of Rs 949.
Following the conclusion of the anchor's lock-in period, the selloff in LIC shares accelerated. In the Rs 21,000 crore IPO, the biggest in the country, they cornered shares valued at Rs 5,627.3 crore, buying ahead of an IPO to create demand.
Among the anchor book's subscribers were the Government of Singapore and the Norwegian wealth fund Norges Bank Investment Management. Along with other international funds, domestic mutual fund companies like HDFC Mutual Fund, SBI, ICICI, and Kotak participated in the LIC IPO as anchor investors.
Stock market experts claim that since LIC shares are currently trading at a favorable value, one can buy them now, but long-term investment horizons are required.
Chief Investment Officer at Axis Securities Naveen Kulkarni stated: "LIC has corrected sharply as a result of weak market sentiments and selling after the anchor investor lock-in period ended. Shortly, the stock is probably going to experience some pressure due to market volatility and worldwide weakness. LIC's lower share of Non-PAR products will affect profits even though it is still the undisputed market leader and valuations following the recent drop are comfortable. They currently fall far short of their counterparts in the private sector. As the business works to allay these worries and improve the share of subpar items, Margin and profitability improvements for LIC are expected. Given the under-penetration of the life insurance market over the long run, LIC has substantial growth potential. Valuations for LIC should be driven by improvements in product mix, margins, and overall profitability. The stock is suitable for medium- to long-term holding by investors.
Mohit Nigam, Head - PMS, Hem Securities, said: “LICI made a new 52-week low today and is trading around its all-time low. At these levels, the stock is available at 103 PE which still seems to be expensive though the Insurance sector trades at a high valuation overall. We believe that existing investors can hold this stock in their portfolio for the long run & new investors can take small exposure on further dips, again for a longer run. Stock is likely to be a slow-mover with a lack of immediate triggers & strong competition from SBI Life, ICICI Prudential, and HDFC Life. But because of severe under-penetration, India's overall insurance market is anticipated to grow. Consequently, it is advised to hold a modest portion of a portfolio for a longer period.
Last week, the government expressed its "alarm" about the brief decline in the stock price of the world's largest insurer and assured that the management of the insurer will look into these issues and increase shareholders' value.
"We are concerned about the brief dip in the price of LIC shares. People will need some time to comprehend the basics of LIC. According to DIPAM secretary Tuhin Kanta Pandey, LIC management would take into consideration each of these factors and works to increase shareholder value.
Speaking about LIC's stock market performance, which continues to be a source of concern for its shareholders, MR. Kumar "The market is declining, which is impacting stock price. Investors shouldn't be concerned and should wait patiently over the next few months. In a recent interview with ET Now, he said, "We are very cautious about the migration of shareholders after getting listed.