Dip in LIC share price, a temporary blip: DIPAM Secretary

Shishir Sinha | | Updated on: Jun 10, 2022
Tuhin Kanta Pandey, Secretary, DIPAM

Tuhin Kanta Pandey, Secretary, DIPAM | Photo Credit: KAMAL NARANG

Embedded value as of March-end may give a better picture of the insurer

The government on Friday expressed concern over fall in share prices of Life Insurance Corporation of India (LIC) and hoped that the insurer’s management would look into it.

Meanwhile, the government is likely to invite preliminary bids for privatising IDBI Bank by next month.

“We are very concerned about the temporary blip in LIC share price. People will take time to understand (fundamentals of) LIC. LIC management will look into all these aspects and will raise the shareholders’ value,” DIPAM (Department of Investment and Public Asset Management) Secretary Tuhin Kanta Pandey said in an event organised as part of Azadi ka Amrit Mahotsav.

LIC’s IPO is considered the biggest with 72 lakh applications and mobilisation of around ₹22,000 crore. It was listed on the bourses on May 17 at ₹867 on the BSE and ₹872 on NSE as against the issue proce of ₹949 a piece. Since then, LIC shares have remained below the issue price and and had touched a low of ₹708.70 and a high of ₹920.

Shares of LIC closed at ₹709.70 on the BSE on Friday.

Explaining the upside potential in LIC scrip, an official said the embedded value (EV) at the end of March will give a better picture of the insurer.  “LIC would update its EV by June end,” the official said.  As per the draft papers filed with Sebi, LIC’s EV was over ₹5.39 lakh crore as of September 2021.

“The market has not got March EV hence it is conjecturing. Rate of future growth of insurance companies can only be assessed via EV. The increased EV at the end of March will give a forward looking view to the market as it will also include the number of new customers,” the official added.

IDBI privatisation

Meanwhile, an official said the Government is likely to invite preliminary bids for privatising IDBI Bank next month. DIPAM is currently holding road shows in the US for the sale and after a few more such potential investor meets, it will finalise the contours of the sale.

“We may need one more round of discussion with the RBI on IDBI strategic sale. The Expression of Interest may be invited by July end,” the official said.

The government holds 45.48 per cent stake in the bank, while LIC holds 49.24 per cent. The official said while the quantum of stake dilution of both Government and LIC is yet to be decided, the management control in IDBI Bank will be passed on in the strategic sale.

The Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May last year. Necessary amendments to the IDBI Bank Act have already been made through the Finance Act 2021, and transaction advisors have been appointed.

Published on June 10, 2022
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