Disappointing thousands of investors, the share of Life Insurance Corporation of India (LIC) made a lackluster debut on the stock market. LIC share listed at Rs 867.20, a discount of 8.5 per cent to its issue price of Rs 949 on Monday. At close of trade, LIC scrip settled at Rs 872.70 on BSE, down 8.04 per cent. During the first day of trading, LIC stock touched a high and low of Rs 920 and Rs 860.10, respectively. The listing price of LIC was non-profitable even for the policyholders and employees. The insurance behemoth had offered a discount of Rs 60 to eligible policyholders and a rebate of Rs 45 to retail investors and employees.
LIC Share: Should you Buy LIC Stock Now?
Analysts pointed out the sentiment across the global and domestic market behind the tepid listing of LIC. The mounting inflation, rate hikes by the central banks, supply-chain disruptions and an unabated war between Russia-China are the main culprits. However, market observers are positive on LIC for the long term.
If you want to buy share of country’s largest insurance company, this may be the perfect time. The dip on the price has given a chance to the new investors to accumulate their share for the long term. “This is a solid opportunity for investors who want to make a fresh entry in the counter or add more shares if they have an investment horizon of more than one year,” said Ajit Mishra, VP- research, Religare Broking.
LIC is trading at a P/EV (embedded value) of 1.08x which is at a significant discount to other listed private life insurance companies like HDFC Life, ICICI Prudential Life, and SBI Life Insurance, explained Yash Gupta — equity research analyst, Angel One Ltd.
“The listing price has fallen in tandem with the fall of insurance sector valuations, maintaining the discount of about 70 per cent to the industry’s average. Positively, the stock was brought at the dip,” said Vinod Nair, head of research at Geojit Financial Services. LIC can perform well when we have a bounce in the market and positive performance of the insurance sector, he added.
LIC Stock: Solid for Long-term Bet?
“We believe LIC continues to be a solid bet in the long run as it is a play on the growth story of the under-penetrated life insurance industry. Its sustained market leadership position, robust pan-India distribution network, and shifting focus towards profitable products, thus supporting margins and improving persistency ratios, will collectively make LIC an attractive pick from a long-term perspective,” said B Gopkumar, managing director and chief executive officer, Axis Securities.
“LIC is synonymous with insurance in India and enjoys a phenomenal brand recall. We believe India’s highly underpenetrated life insurance space is still at a nascent stage and is attractively positioned to capture the huge growth opportunity. The insurer enjoys many competitive advantages like strong brand value, extremely large scale of operations, a huge network of agents, and an envious distribution network,” said Parth Nyati, founder, Tradingo.
“New investors can take advantage of the dips to accumulate this share for the long term,” she mentioned adding, “The company’s further downside will be limited due to low float post listing.”
LIC Share Listing: What Should Existing Investors Do?
Market experts advised the existing investors to not panic after LIC had listed at a steep discount. “While LIC debuted at a slight discount to its issue price, investors should not look to exit at current levels and hold the stock from a medium to long-term perspective,” Axis Securities MD added. “We suggest investors to stay with the company for the long term despite the negative listing. Those who applied for listing gains can maintain a stop loss of Rs 800,” Tradingo founded suggested.
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