LIC lock-in expires today: Anchor investors sitting at nearly 28% loss as shares fall to a fresh low—What should you do?

LIC share price: Shares of India’s largest IPO ever, Life Insurance Corporation, declined as much as four per cent in early trade on Monday, the day LIC anchor investors’ lock-in ends. LIC shares touched the fresh low of Rs 681.70 per share on the BSE in Monday’s intraday trade. Around 10 am on Monday, the shares were trading with nearly three per cent discount to Rs 689.45 per share.  

Anchor investors had bought 59.3 million shares of the company at issue price of Rs 949 per share. The Government of Singapore, SBI Mutual Fund, HDFC Mutual Fund and Axis Mutual Fund were among the major investors who had participated in the IPO. 

Rs 1.65 lakh cr m-cap gone in a month 

At the IPO price of Rs 949 per share, the stock has dipped around 28 per cent so far. The stock has corrected over 11% in the last five sessions alone. Not just that, at market cap of Rs 4.35 lakh crore on Monday morning, the national insurer has also eroded over 1.65 lakh crore since its debut. LIC shares were listed with a market capitalization of Rs six lakh crore on May 17.  

What should investors do? 

Santosh Meena, Head of Research, Swastika Investmart Ltd. had said that traditionally the low made on the first day of trade after the 30-day anchor investor’s lock-in period may act as strong support for a further rally for quality stocks.  

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, the expert said on Friday.  

“If fundamentals are strong, it is a good time to buy on such dips,” Meena suggested.  

Global brokerage firm Emkay had also initiated coverage on LIC with a ‘hold’ rating for a target price of Rs 875 per share. On today’s low price of Rs 681, it is still an upside of nearly 28% for a period of 12 months.  

“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 brokerage had said in its note. 

LIC share tepid listing 

Earlier, LIC shares made a tepid debut on the exchanges (NSE, BSE) on May 17, and have been declining since then.  

Shares of Life Insurance Corporation of India were listed at Rs 867.20 on the BSE, a discount of 8.6 per cent discount against issue price of Rs 949 per share. On the National Stock Exchange (NSE), the stock debuted at Rs 872, er by 8 per cent against its issue price.