LIC IPO was the largest ever public issue in India with an issue size of Rs 21,000 crore, and oversubscription at three times the issue size. The investors had high hopes from the much-hyped IPO, but LIC stock’s downfall started with its debut. LIC stock listed with an 8% discount at Rs 865 on May 17, 2022. One year has passed since then, but LIC shares are still down 34% from the listing price and 40% from the upper band of the IPO.
The pressure still remains on the stock as Finance Minister Nirmala Sitharaman in the Union Budget this February provided a higher impetus for individuals to shift to the new tax regime, which does not favour tax exemptions on investments in insurance schemes. The proposal has come as a big blow to the insurance sector and has caused investors to reconsider its growth prospects, forcing them to stay side-lined. However, analysts believe that LIC remains a sound investment from a long-term perspective.
Stock call: Should you buy, sell or hold LIC shares?
“We had a BUY recommendation during the IPO Subscription and after that, we have a standalone recommendation to Buy with a long-term time horizon and we believe there is a huge market as far as ‘Insuring the Uninsured’ is concerned. This will not only create opportunities for LIC but also for the other related entities like HDFC Life, ICICI Prudential and SBI Life,” said Gaurang Shah, Senior Vice President at Geojit Financial Services. Shah was not overly concerned about the deceleration in insurance growth that may be caused by the Budget proposals. “Considering the long-term perspective, it remains a sound investment,” he said.
In Q3FY23, LIC reported over 40 times on-year growth in consolidated net profit to Rs 8,349 crore in the fiscal third quarter of FY23, up from Rs 211 crore in the same quarter last year. The company is expected to report its Q4 results later this month. LIC stock has fallen nearly 20% year to date while NSE Nifty 50 has increased 0.67% in the same period.