NEW DELHI: It seems there is no end to the selling in shares of Life Insurance Corporation () of India. The stock plunged further 2 per cent to its all-time low levels on Tuesday, which is the sixth straight day of selling in the counter.
On BSE, the stock plunged to a low of Rs 757.10, down about 20 per cent from the IPO price of Rs 949. With this fall, the market cap of the company declined to Rs 4.8 lakh crore. It is still the seventh most valuable company in the country.
Shares of LIC got listed on May 17, and since then there have been just four sessions when the stock has closed with a gain, data shows. For the rest of the days, it has crumbled under selling pressure.
“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. LIC has a number of competitive advantages, including a strong brand value, a massive network of agents, and an enviable distribution network. So, investors with a long-term view can buy this stock at CMP and follow a buy on dip strategy,” said Santosh Meena, Head of Research, Swastika Investmart.
The issue had come with much fanfare after a long period of anticipation and drastic cut in size. As many as 17 analysts had given subscribe ratings and had high expectations. It was justified to an extent as it is the biggest life insurer in India.
Most analysts are neutral on the counter and don’t see much growth potential in the stock.
Emkay Global, which initiated coverage on LIC last week, termed it as “the elephant that cannot dance” and said most of its growth is priced in. The broker added that its size, domination in the industry and the legacy will continue to be hurdles for the company to grow.
“Size and legacy are key hurdles in radically changing the product and distribution mix. LIC’s biggest strength has been its vast 13 lakh agent network, with materially higher productivity relative to private peers. However, this also has a cost in terms of a large branch network and higher opex, leading to a traditional par-heavy product mix,” it said in its report.
Emkay gave a ‘hold’ rating and set target price at Rs 875 on the stock.