LIC hits lowest level since listing; shares down 32% from issue price – Business Standard

life

Topics
Buzzing stocks | LIC IPO | Life Insurance Corporation
SI Reporter  |  Mumbai 
https://mybs.in/2b0fe7L

Shares of of India (LIC) hit a new low of Rs 648, down nearly 1 per cent on the BSE in Thursday's intra-day trade. The stock of the state-owned insurance company has fallen below its previous low of Rs 650, which it had hit on June 20, 2022.
LIC now trades 32 per cent below its issue price of Rs 949 per share, and is at its lowest level since market debut on May 17, 2022. Since its listing, LIC continued underperforming the market with wide margin. In the past one month, the stock has shed 4 per cent, as compared to 0.41 per cent rise in the S&P BSE Sensex. Further, in the past three months, it declined 3 per cent, as against 14 per cent rally in the benchmark index.
On a year-on-year basis, LIC reported slower growth of 5.2 per cent in retail annualized premium equivalent (APE) for August 2022 as against 8.9 per cent for the private sector; on a three-year CAGR basis. LIC's growth of 0.66 per cent was materially lower than that of the private sector at 12.6 per cent.
"LIC posted a satisfactory performance in August 2022 (Retail APE: 5 per cent YoY; 3Y CAGR of 0.7 per cent) on a favorable base, but the structural divergence in growth between LIC and the private sector is clearly visible in the ~4.4ppt retail APE market-share loss for LIC over the past 3 years," analysts at Emkay Global Financial Services said in insurance sector update.
For FY23, the brokerage firm expects total Retail APE growth of 12-13 per cent YoY, with the private sector growing in the mid-to-high teens and LIC seeing a high single-digit growth. Considering their product diversification, distribution mix and better cost efficiencies, listed private players are expected to grow, with higher margins, the brokerage firm said with ‘hold’ rating on LIC.
"The structural factors challenging the industry growth are persistent low interest rates and pricing pressures aggravated by price comparison websites. Though many insurers have undertaken cost savings programs, the aggregate results are not very encouraging. Industry-wide, productivity improvements have been limited," LIC said in its FY22 annual report.
Insurers need to begin the hard core process to improve productivity by establishing the trajectory and full performance potential of the business across the value chain-including sales and distribution, product development, operations, technology, and corporate functions- rather than mere piecemeal attempts at improvement. Only a transformative approach will allow an insurer to survive and thrive in a post COVID-19 world, the company said.
Exclusive Stories, Curated Newsletters, 26 years of Archives, E-paper, and more!
Insightful news, sharp views, newsletters, e-paper, and more! Unlock incisive commentary only on Business Standard.
Download the Business Standard App for latest Business News and Market News .
PREVIOUS STORY
NEXT STORY
Copyrights © 2022 Business Standard Private Ltd. All rights reserved.
Business Standard
Upgrade To Premium Services
Business Standard is happy to inform you of the launch of “Business Standard Premium Services”
As a premium subscriber you get an across device unfettered access to a range of services which include:
Business Standard
Premium Services
In Partnership with Fis Logo
Dear Guest,
Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard

source

Leave a Reply

Your email address will not be published.