LIC stock in focus as anchor book lock-in ends today

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Shares of Life Insurance Corporation of India fell for the ninth consecutive session on June 10 as investors remained jittery over further selling pressure on the counter ahead of the end of the lock-in period for anchor investors in the company’s initial public offering.

The lock-in period for anchor investors is to end on June 13, which will allow such investors to sell their existing shares in the market.

The stock might see some selling pressure in today’s (June 13’s) trade.

Also Read: Why I gave the LIC IPO a miss

Prior to the life insurance giant’s IPO, anchor investors bought 59.3 million shares of the company at issue price of Rs 949 per share. The anchor investors, majority of whom were domestic mutual funds, are currently sitting on losses of more than 25 percent on their holding of the company.

Among the major investors who had participated in the IPO include Government of Singapore, SBI Mutual Fund, HDFC Mutual Fund and Axis Mutual Fund.

Domestic mutual funds were the heavy buyers in the public issue, which has had a disastrous start to life in the public market. As many as 99 schemes bought LIC’s shares worth Rs 4,000 crore in the anchor issue.

Overall, sentiment for the company has turned adverse with some brokerages suggesting that the company will continue to languish as the company faces challenges to scale-up its non-participatory policy business and its ongoing market volatility hurts its embedded value.

“Inherent volatility in Embedded Value (EV) is another big challenge given a substantial portion of EV constitutes marked-to-market (MTM) unrealised equity gains,” brokerage firm Macquarie Capital India said in a recent note.

Macquarie had initiated coverage on the stock with a ‘neutral’ rating and a price target of Rs 1,000.

Brokerage firm Emkay Global Financial initiated coverage on the life insurance company’s stock with a ‘hold’ rating aand a price target of Rs 875 suggesting that LIC’s large size may be its biggest drawback.

“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,” Emkay Global had said earlier this month.

The company’s March quarter earnings also did little to boost sentiment as net profit in the March quarter fell 17 percent on-year to Rs 2,409 crore while total income grew 11 percent.

At 10:12 am, shares of LIC were down 1.1 percent at Rs 713.55 after hitting a new all-time low of Rs 710 on the National Stock Exchange.

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