LIC stock trades 27% less than IPO price

Shares of Life Insurance Corporation LIC are trading 27 per cent less than their initial public offer IPO listing price. The stock of India's largest insurer has traded below its listing price for a majority of the period since its debut, as investors have lost nearly 1.5 lakh crore wealth in LIC since May 17th. There is a consensus that a majority of investors who bought the stock after listing are sitting on losses. On May 17 the stock saw a weak listing due to highly volatile market conditions. The LIC stock was priced at a discount of 8.62 per cent at Rs 867.20 against the IPO issue price. The company offered its shares in a price band of Rs 902 -- 949.

LIC stock hit a new all-time high on the listing day. It hit a high of Rs 920 on May 17 this year and has fallen since. On September 26th, the LIC stock hit a new low of 629.30 on the BSE. That translates into a 31.59 per cent decline from life-time high to life-time low. Since May this year, the LIC stock weakness can be attributed to highly volatile market conditions.

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The ongoing Russia-Ukraine war, economic slowdown and highly volatile global and domestic market conditions have dampened sentiment around the LIC stock.

The insurer reported a robust set of earnings for the quarter ended June 2022.

In Q 1 the net profit rose to Rs 682.88 crore against a 2.94 crore separate profit in the corresponding quarter of the last fiscal. Net premium income of LIC climbed 20.35 per cent YoY to Rs 98,351. There were 76 crore.

In Q 1 of FY 23 the income came in at 160.09 crore, compared to Rs 145.47 crore in Q 1 FY 22. During the quarter under review, the transfer of funds from shareholders' accounts was at Rs 799.24 crore. The stock gained 3 per cent in the next session after being boosted by the Q 1 earnings. Since the earnings were announced, it has been in a downward spiral. The stock, which closed on August 11 at Rs 683.65, fell to Rs 635.50 today, losing 7 per cent during the period.

The current session's share price was trading 0.70 per cent higher at Rs 635.20 against the previous close of Rs 630.80 on the BSE. The market cap of LIC was 4.01 lakh crore. There were 0.56 lakh shares of the firm that changed hands for a turnover of Rs 3.58 crore on the BSE. ALSO READ: LIC floats the New Pension Plus plan: Check out term, investment details here.

Manoj Dalmia, the founder and director of Proficient Equities believes that the stock can fall further and advises investors to stay away. LIC has crossed its support at 647. There can be more selling in the stock if investors don't buy it at current levels. Dalmia said that Rs 606 could be the target on the sell side.

Ravi Singh, head of research and vice-president, said Share India also sees more downsides in the stock. The world started to suffer from an inflection and food shock due to ongoing Ukraine tensions, huge foreign institutional investment outflows from India and a sliding rupee, which resulted in a not so favorable environment for the IPOs at the time LIC was listed. Since its listing, all these factors have taken a toll on the LIC share price. The LIC stock is down further as a result of the weakness in the market, taking cues from the current scenario. It could fall to 550 in the coming weeks. Before entering any new positions, investors must wait for consolidation in the stock. Abhijeet from Tips 2 Trade said: Poor timing of the IPO coupled with a strong bearish sentiment across global markets has resulted in a fall in LIC despite its fundamentals and size. Long-term investors should not exit now as the stock is already considerably down. A daily close above Rs 641 would lead to a recovery of 685 -- 698 where one can reassess strategy.