Over two lakh small investors have exited from Life Insurance Corporation of India (LIC) within 45 days of its listing, as the stock continued its slide. Despite the number of retail investors dwindling in absolute terms, percentage-wise, their stake increased to 1.88 per cent from 1.66 per cent.

The stock has been on a downtrend since its listing on May 18, and slipped to a low of ₹650 (on June 20) as against the IPO price of ₹904 (for retail investors) and ₹889 (for policyholders). The stock is currently ruling at ₹696.

According to the latest shareholding pattern (June quarter) available with the stock exchanges, as many as 37.65 lakh retail investors hold 1.88 per cent or 11.86 crore shares of the insurance behemoth. On the other hand, 39.86 lakh investors had invested in the IPO, garnering 1.66 per cent stake or 10.51 crore shares.

Non-Resident Indians (NRIs) seem to be betting on LIC, as nearly 4,000 new NRIs entered LIC during the quarter. Currently, as many as 21,268 NRIs hold 0.03 per cent stake.

FPIs, DIIs reduce stake

Both domestic institutions and foreign portfolio investors (FPIs) have reduced their holding in the stock. While FPIs’ holding reduced from 0.22 per cent to 0.12 per cent, MFs cut it down to 0.74 per cent (0.80 per cent). However, the number of MF schemes holding LIC has increased to 100 as against 19. The number of FPIs holding LIC shares, on the other hand, declined to 47 from 59.

Additionally, the number of QIBs — anchor investors in the IPO — almost doubled to 35 (18) but their holding decreased marginally to 0.19 per cent (0.20 per cent).

Embedded value

Recently, the country’s largest insurer reported an embedded value (EV) of ₹5,41,492 crore as of March 2022, marginally higher than ₹5,39,686 crore six months ago. It also reported the Value of New Business (VNB) for FY22 at ₹7,619 crore — 83 per cent higher than the previous financial year — aided by an improvement in the VNB margin to 15.1 per cent for FY22 from 9.9 per cent.

Emkay Global Reserach, in a recent report, said, “Owing to the lack of clarity regarding the EV growth trajectory, the higher inherent volatility of EV due to the material equity in non-par investments and a likely sub-par RoEV, we maintain our neutral view on the stock.”

“We value LIC at 0.8x Sep-23E P/EV to arrive at our target price of ₹800. Although we appreciate LIC’s market-leading position and comfortable valuations, we prefer private sector peers that have better growth, profitability and therefore, higher RoEV prospects,” the report added.

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