The sharp correction in the share prices of LIC post its discounted listing on May 17 has dealt a major blow to its investors as the market capitalisation of the state-run insurer has come down to Rs 4.19 lakh crore from Rs 6 lakh crore (based on the upper end of its IPO price (Rs 949)), wiping a total of Rs 1.81 lakh crore.
Amid this gloom and doom, what should those investors, who are stuck with LIC shares at IPO price of Rs 949, do? According to equity market analysts, while this sharp decline is a big disappointment, investors should remain patient as the stock may stage a comeback. VK Vijayakumar, chief Investment Strategist at Geojit Financial Services said that LIC stock’s performance post IPO has been a big disappointment. He, however, says that it is too early to conclude that the share price won’t reach the IPO price in the next one year. If the Q1FY23 results of LIC are good, the stock may stage a comeback but it is likely to underperform if there is a rally in the market.”
In the fourth quarter of 2021-22, LIC reported a profit of Rs 2,409 crore (17% lower YoY) on May 30, which by no means is a small number. However, this could not lift the investor sentiments amid weak global cues and the stock’s downfall escalated afterward. Even MD Rajkumar’s commentary that they would be working to increase the share of non-participatory products in their portfolio to improve profitability and that they are now working on determining the crucial Indian Embedded Value (IEV) for March 31, 2022, that would be ready by June quarter could not arrest the downfall.
