LIC Share Price Drops: Shares of Life Insurance Corporation of India (LIC) plunged on Tuesday for the seventh straight session. LIC’s share prices on both the Sensex and Nifty dropped over two per cent. The LIC share price on BSE fell 2.36 per cent or 18.35 points to Rs 759.05. The share price on NSE dropped by 2.27 per cent or 17.65 points to Rs 759.70. With this fall, the market cap of the company declined to Rs 4.8 lakh crore. It is still the seventh most valuable company in the country.
Shares of LIC got listed on May 17, and since then there have been just four sessions when the stock has closed with a gain, data shows. For the rest of the days, it has crumbled under selling pressure.
Most analysts are neutral on the counter and don’t see much growth potential in the stock.
Global brokerage house, Emkay Global, which initiated coverage on LIC last week, termed it as “the elephant that cannot dance” and said most of its growth is priced in. The broker added that its size, domination in the industry and the legacy will continue to be hurdles for the company to grow.
“Size and legacy are key hurdles in radically changing the product and distribution mix. LIC’s biggest strength has been its vast 13 lakh agent network, with materially higher productivity relative to private peers. However, this also has a cost in terms of a large branch network and higher opex, leading to a traditional par-heavy product mix,” it said in its report.
Emkay gave a ‘hold’ rating and set a target price of Rs 875 on the stock.
Ravi Singh-vice president and head of research-ShareIndia, said: “LIC share price is witnessing heavy selling pressure due to fresh shorts and long coverings. The selling may continue and the stock can touch the levels of 700 in coming trading sessions. It’s advisable to exit the stock at current levels, however, high-risk appetite investors may hold their positions and wait for the trend reversal.”
Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “The insurance giant, LIC Ltd. is currently trading below its IPO price. The issue was priced at a price to the embedded value of 1.1x, which is a discount compared to its domestic as well as global peers. This valuation discount concerns the company like losing market share to private players, lower profitability & revenue growth compared to private players, lower VNB margins, and short-term persistency ratios. However, we believe India’s highly underserved life insurance market is still in its infancy and is well-positioned to capitalize on the enormous growth potential. LIC has a number of competitive advantages, including a strong brand value, a massive network of agents, and an enviable distribution network. So, investors with a long-term view can buy this stock at CMP and follow a buy on dip strategy.”
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