LIC stock under pressure as the anchor lock-in period ends today

13 Jun 2022 , 09:31 AM

What would you do if you bought a share for Rs949 and saw it move to Rs709.7 within a month, and on top of this you couldn’t sell? Well, this is what anchor investors of LIC have endured.

The 30-day lock-in period for anchor investors ends on Monday, thus shares of Life Insurance Corporation (LIC) are likely to stay under pressure this week. The stock has already lost a fourth of its value since its IPO.

Anchor investors, who bought approximately 59.3 million shares a day before the IPO opened for subscription at $949 per share, will be able to sell their shares on the open market starting Monday.

The stock has dropped for nine trading days in a row, from Rs837 to Rs710 on Friday. Analysts predict that the stock will continue to decline and that the low reached on the first day of trading after the lock-in period will serve as support for a fundamentally good firm.

The market capitalization of LIC on Friday was Rs4.49 lakh crore, which is significantly lower than its embedded value (EV) of around Rs5.4 lakh crore as of September 30, 2021. HDFC Life Insurance, SBI Life, and ICICI Prudential Life, all listed private sector counterparts, are currently trading at a valuation multiple of 2 to 3.5 times FY22 EV. On May 17, 2022, LIC shares were launched on the BSE at a price of Rs865. This was a significant discount from the IPO price of Rs949.