Shares of the Life Insurance Corporation (LIC) concluded Tuesday’s trading session roughly 1% higher at Rs 629.20 per share on the BSE. The insurance giant’s stock is currently down 33.7% from its IPO price while selling at a 31.6% discount to its 52-week high.
Following a shaky launch on the markets, LIC shares traded at a 52-week high of of Rs 920 in May 2022. LIC’s shares were listed on the BSE for Rs 867.20 per share, a nine percent decrease from the IPO price of Rs 949.
The stock of the major insurance company has consistently reached 52-week lows and recently struck a new low of Rs 617 on September 29.
Since its lacklustre IPO, LIC has turned into a wealth-destroyer. The insurance company was initially listed with a market capitalization of 6 lakh crore, but as of October 4, that figure had dropped to 3.97 lakh crore. It suggests that the investors in LIC shares have lost more than Rs 2 lakh crore. After Reliance Industries Ltd (RIL), Tata Consultancy Services (TCS), HDFC Bank, and Infosys in terms of market capitalization at the time of the IPO, LIC was the fifth-largest business.
Should you purchase this insurance stock, despite the fact that it has lost more than 33% of its value from its IPO pricing and still trades in a volatile manner?
LIC Share Price
Yes Securities, a brokerage firm, estimates that the counter will rise by more than 35% from its present level.
The firm started coverage on the company and gave LIC a buy recommendation with a target price of Rs 850 per share.
Five justifications were provided by Shivaji Thapliyal, Head of Research & Lead Analyst at Yes Securities, for its recommendations:
The agency force that LIC has developed is far more productive than its colleagues in the private sector.
LIC has built the largest bancassurance network in the sector, despite the fact that the contribution of bancassurance is still very small.
Focusing on the Par business up to now gave LIC 4 significant advantages in terms of its business strategy. LIC has a sticky client profile, which is shown in excellent persistency and surrender results.
As LIC diversifies into higher-margin industries, it is demonstrating a turn toward shareholder interest. Non-Par segment and (b) surplus distribution have already undergone minor changes to the shareholders’ benefit.
LIC has displayed reasonable expense control outcomes.
