NEW DELHI: In a year since its high-profile debut on the exchanges, the share of Life Insurance Corporation of India (LIC) has plunged 35% from the listing price and over 40% from the upper band of the IPO issue price.
This makes the state-owned insurer one of the largest destroyers of investors’ wealth in recent times.
LIC had entered bourses as India’s 5th most valuable company with a market capitalisation (m-cap) of Rs 5.48 lakh crore. LIC’s m-cap at the end of Tuesday’s session stood at Rs 3.59 lakh crore, a colossal erosion of Rs 1.89 lakh crore.
Owing to its sheer size, the company’s m-cap has devalued more than new-age firms such as Paytm, Zomato and Nykaa. The only listed entities that have erased wealth greater than LIC in recent times belong to the Adani Group.
LIC shares closed at Rs 568 apiece on Tuesday. The scrip hit its 52-week high of Rs 918.95 a year ago and rock bottomed at Rs 530.05 when its Rs 30,000 crore plus investment in Adani Group stocks took a big hit after the Hindenburg Research report.
Despite the company’s market-leading stature, solid quarterly numbers and widespread reach, LIC stock
has remained under pressure because of the new tax regime, which doesn’t favour exemption to individuals seeking insurance schemes and the ongoing Adani-Hindenburg saga.
“We expect LIC to have minimal impact on the tax implications because of its versatile client mix. The stock is currently trading at an appealing valuation, exhibiting a substantial discount compared to its industry peers. While near-term performance could be shackled by sectorial uncertainties, long-term investors can anticipate a favourable return,” said Cyril Charly, Research Analyst at Geojit Financial Services.