NEW DELHI: The government is concerned about the recently-listed Life Insurance Corporation (LIC) shares touching new lows every day, and it is planning to hold consultations with large investors to convince them to stay in the stock for a long term.
With LIC share price dipping to an all-time low of Rs 708.70 on Friday, disinvestment secretary Tuhin Kanta Pandey said on Friday the disinvestment department of the finance ministry is concerned about the fall in the insurance behemoth’s share prices. He said the LIC management would do everything possible to increase shareholders’ value.
“We are concerned about a temporary blip in LIC share prices. LIC management will look into the issue and discuss shareholders’ benefits. Investors have lost money in LIC due to temporary demand and supply. We need a wide range of investors who stay invested in LIC looking at its strong fundamentals” Pandey said. There seems to be no end to the misery for LIC investors as this week alone the stock has fallen 10%. On Friday, share prices of LIC touched a new low of 708.70 on the BSE and closed the session at Rs 709.70, lower 1.70% than the previous day’s closing.
To date, LIC has wiped out over 1.50 lakh crore of investors’ wealth, becoming one of the largest wealth guzzlers of recent times. At the end of Friday’s trading session, LIC’s market cap came down to Rs 4,48,886 crore against an m-cap of Rs 6,00,242 crore based on the upper end of its IPO price (`949). LIC, which had launched India’s largest IPO on May 17 got listed on the bourses at a discount of 8%.
Since then the stock has plummeted nearly 19% even as few brokerages have maintained a neutral view on the stock. Brokerage firm Emkay in a recent report titled “the elephant that can’t dance” initiated coverage on LIC with a hold rating and a June 2023 target price of Rs 875 while foreign brokerage Macquarie had earlier initiated coverage on LIC with a ‘neutral’ rating and suggested a target of Rs 1,000.
Deepak Jasani, Head of Retail Research, HDFC Securities, said the latest quarterly results did not excite investors (especially institutional) to buy the stock and the fact that the determination of embedded value of LIC was delayed was not taken well by the investors.