Shares of Life Insurance Corporation of India fell for the ninth straight day and closed 1.7 per cent lower at ₹709.7 apiece on BSE on Friday. On NSE, too, the scrip ended the day 1.7 per cent lower at ₹709.4.
The 30-day lock-in period for anchor investors of LIC is set to end in a few days, which would enable them to sell shares in the open market.
LIC shares are down 25 per cent from their issue price of ₹949 apiece. The market capitalisation of the insurance behemoth has also fallen to just ₹4.48-lakh crore on BSE against its market capitalisation of ₹5.53-lakh crore on the day of its listing on May 17.
Slide to continue?
Naveen Kulkarni, Chief Investment Officer, Axis Securities, said LIC is likely to witness some more selling pressure as the anchor investor lock-in ends even though the stock has already corrected sharply, owing to weak market sentiments.
“Though LIC remains an undisputed market leader and valuations, especially post the correction are comfortable, its lower share of non-PAR products will hurt margins that are currently significantly below its private sector peers. However, the company is looking to address these concerns and focusing on improving the share of non-par products, thereby supporting its margins and profitability,” he said, adding that improving product mix, margins, and overall profitability should drive valuations for LIC.
Jump in new premiums
According to IRDAI data, LIC reported a 99.63 per cent jump in its new business premium for the first two months of the fiscal to ₹27,557.34 crore from ₹13,804.4 crore a year ago.
A note by Emkay Global Financial Services said that LIC’s year-to-date Retail APE growth of 46.8 per cent year-on-year compared with 70 per cent for the private sector and three year CAGR of 6.5 per cent versus 14.6 per cent for private sector reflects a continuation of slower growth for LIC vs. the private sector.