May 19, 2023By: BI India Bureau
In the last one year of listing since May 17, 2022, Life Insurance Corporation of India (LIC) has been through a rocky road from fifth largest company to now 13th as its stock tumbled down sharply.
Share price of LIC has slipped 31 percent in the last one year, massively underperforming benchmark index Sensex that surged 16 percent during the period. The stock of the insurance giant is known to reflect the market’s volatility, given LIC owns a meaningful pie of the equity market.
LIC owns 4 percent of the entire equity market and 2 percent of the bond market. So, every time the market or bond yields move, its fortunes change. But this seems to be changing.
LIC market cap has fallen down from ₹5.48 lakh crore on listing day to ₹3.59 crore now due to several headwinds like changes in tax policy, Adani Hindenburg and weak market sentiment.
“LIC is a market leader in an under-penetrated Indian life insurance market. The stock has been in free fall since its listing due to multiple headwinds like weak market conditions, the Adani-Hindenburg row and changes in tax policy,” said Cyril Charly, research analyst at Geojit Financial Services.
“The stock is currently trading at an appealing valuation, exhibiting a substantial discount compared to its industry peers. While near-term performance may be shackled by sectorial uncertainties, long-term investors can anticipate a favourable return,” added Charly.
LIC manages more than half of the life insurance policies of the country. As and when their premiums come in, it diverts these massive funds into various forms of investments be it in debt or equity.