LIC shares fall nearly 40% in first year of listing; investors' wealth erode by Rs 1.93 lakh crore

The stock of LIC is down 39.92% as against the issue price of Rs 949 on the BSE

Shares of the country's largest insurer LIC have tumbled nearly 40 per cent from its issue price in the first year of trade, with investors' wealth eroding by Rs 1.93 lakh crore.

LIC had listed at over 8 per cent discount on May 17 last year after a successful Initial Public Offering (IPO) which fetched Rs 20,557 crore to the exchequer. Shares of LIC had listed at Rs 872 on the BSE and at Rs 867.20 on the NSE.

The stock of LIC is down 39.92 per cent as against the issue price of Rs 949 on the BSE.

On the NSE, it has tumbled 39.93 per cent from the issue price.

On Wednesday, LIC shares ended with a gain of 0.48 per cent at Rs 570.10 on the BSE. On the NSE, shares of the firm ended at Rs 570, an increase of 0.44 per cent.

In the first year of trading, shares of the company have hit a 52-week high of Rs 920 and a 52-week low of Rs 530.20. It has failed to surpass the issue price of Rs 949 during the past one year.

In comparison, the 30-share BSE Sensex has jumped 7,242.17 points or 13.33 per cent during the period under review while the broader NSE Nifty has rallied 1,922.45 points or 11.82 per cent.

On its listing day, LIC got into the list of top-five most valued companies with a market capitalisation of nearly Rs 5.54 lakh crore.

At the close of trading on Wednesday, the company commanded a market capitalisation of Rs 3,60,588.12 crore. This is down by Rs 1,93,411.88 crore from the valuation it commanded on the listing day.

The company now stands at the 13th position in the overall ranking of top domestic companies by market valuation.

Reliance Industries is the country's most valued firm with a market capitalisation of Rs 16,49,996.39 crore, followed by TCS (Rs 11,74,226.18 crore), HDFC Bank (Rs 9,15,678.59 crore), ICICI Bank (Rs 6,56,439.98 crore) and Hindustan Unilever (Rs 6,25,449.45 crore).

They are followed by ITC (Rs 5,31,484.18 crore), State Bank of India (Rs 5,23,428.49 crore), Infosys (Rs 5,17,612.27 crore), HDFC (Rs 4,98,825.68 crore), Bharti Airtel (Rs 4,41,745.99 crore), Bajaj Finance (Rs 4,06,125.96 crore), Kotak Mahindra Bank (Rs 3,79,253.52 crore) and Life Insurance Corporation (Rs 3,60,588.12 crore).

LIC had fixed the issue price of its shares at Rs 949 apiece after a successful initial public offering, which was over subscribed nearly 3 times when it closed on May 9, 2022.

"There are several reasons why LIC could not live up to expectations, even as analysts remained upbeat about its IPO, Girish Sodani, Head of Equity Market at Swastika Investmart Ltd, said.

One of the reasons the IPO failed to get a good listing was the dampening market environment in 2022. Though LIC's business fundamentals remain strong, the stock has been in a free fall ever since its listing, he added. Despite the year-long setback, several analysts remain confident that the stock will bounce back. And there is a reason to cheer as well.

LIC has shown decent business performance and the stock’s embedded value looks good. But, the shares need a major trigger in terms of strong earnings growth and significant improvement in profitability, Sodani noted.

"LIC's IPO listed at a discount and has never seen the IPO price since then. It has massively underperformed the Nifty as well as its peers over the past year," Deepak Jasani, Head of Retail Research at HDFC Securities, said.

As LIC marked one year of listing on the stock exchanges, the Congress on Wednesday attacked the government over the fall in the firm's market capitalisation.

Congress general secretary Jairam Ramesh sought to link the decline in the market capitalisation of the firm to the investment in Adani companies, a charge rejected by the BJP which accused him of misleading people with "half information".