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LIC Shares Surge Over 5% as Investors Buy at Lower Prices; Should you Invest for Now?


LIC’s short journey as a listed entity has been far from certain. After the Rs 21,000-crore share sale earlier this year, the stock has lost about a quarter of its value. After a huge sell-off, the stock saw some buying on Wednesday. Also, LIC increased its stake in Hindustan Unilever Ltd, Hero MotoCorp and non-banking finance company Capri Global Capital through open market purchases over the last few months, the life insurer said on Tuesday.

Shares of LIC zoomed more than 5 per cent to Rs 709.70, before pairing up their gains marginally. On Tuesday, the counter had risen over a per cent to Rs 674.20, snapping the 10-day losing streak.

On Wednesday, the total market capitalization of LIC stood close to Rs 4.45 lakh crore, which was about Rs 1.55 lakh crore below Rs 6 lakh crore at the time of listing.

LIC’s share price has fallen sharply since its listing on the stock exchange on May 17, 2022. LIC shares were allotted to the investors at Rs 949 apiece and got listed at the stock exchanges at discount. The stock is about 25 per cent down from its IPO issue price of Rs 949.

The Rs 20,557-crore public offer (IPO of LIC was subscribed just 2.95 times. While retail investors got the allotment at Rs 905 per share, LIC’s policyholders allotted shares at Rs 889 per share.

What Should Investors?

Domestic brokerage firm Emkay Global in its note ‘The Elephant That Can’t Dance’, said, “While 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 government on Friday said it is ‘concerned’ about the recent decline in the insurer’s stock price and that the management of the company will look into these aspects. “We are very concerned about the temporary blip in LIC share price. People will take time to understand (the fundamentals of) LIC. LIC management will look into all these aspects and will raise the shareholders’ value,” said Tuhin Kanta Pandey, secretary, DIPAM.

At around 02:40 PM, the shares of LIC were up over 2.5 per cent to Rs 691.75 per share on the BSE as against 0.1 per cent rise in the BSE Sensex at the same time.

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