LIC's Shares Down 36% As Shareholder Lock-in Period Expires Today

The lock-in expiry of Life Insurance Corporation of India (LIC) shares, which will release approximately 126.50 crore shares, or 20 per cent of the outstanding shares valued at Rs 76,861.37 crore (over $9 billion), for trading on Monday morning will be the focus of attention.

On May 17, 2022, the LIC stock was floated on stock exchanges. The IPO was India's largest ever, raising Rs 21,008.48 crore after being subscribed to 2.95 times. On the other hand, the LIC share is currently selling 36 per cent below its issue price of Rs 607.60.

The biggest domestic life insurer said last week that a decline in premium income caused its earnings to drop to Rs 7,925 crore in the September quarter from Rs 15,952 crore in the corresponding quarter last year. According to LIC, net premium income decreased by 19 per cent to Rs 1.07 lakh crore from Rs 1.32 lakh crore during the same period the previous year. For the quarter, the first-year premium increased to Rs 9,988 crore from Rs 9,125 crore YoY.

LIC shares in focus as shareholder lock-in period expires; stock down 36% since listing

Motilal Oswal Securities told Business Today that "LIC has levers in place to maintain its industry-leading position and ramp up growth in the highly profitable product segments (mainly Protection, Non-PAR, and Savings Annuity). However, changing gears for such a vast organisation requires a superior and well-thought out execution plan. We expect LIC to deliver a 3 per cent CAGR (decline in FY24 and a sharp recovery in FY25) in APE over FY23-25, thus enabling a 9 per cent VNB CAGR."

However, considering its larger EV base and lower margin profile than private counterparts, it anticipates operating RoEV to be modest at 10.5 per cent.

Emkay Global stated that it still believes that structural issues would cast a shadow over LIC's future, including slower growth-driven market-share loss, sticky operating costs, and increased sensitivity to equity market-led EV volatility.