A year after listing, LIC trades at 40% discount to issue price

A year after hitting the markets with an initial public offering (IPO), shares of Life Insurance Corporation (LIC) are trading at ₹567, nearly 40 per cent below the issue price of ₹949.

Last May, the Centre, which owns majority stake in the insurance behemoth, offloaded over 22.13 crore shares or 3.5 per cent stake in LIC through the IPO at a price band of ₹902-949 per share.

The retail investors and eligible employees of LIC were offered a discount of ₹45 per equity share over the issue price, while policyholders got a discount of ₹60 per share. The government had raised ₹21,000 crore from the IPO.

LIC’s net profit grew multifold to ₹6,334 crore in Q3 FY23 against ₹235 crore logged during the same period previous year. However, on a sequential basis, the net profit decreased sharply as the net profit in the September quarter was ₹15,952 crore.

Also read: IOC likely to post better performance sequentially in Q4 FY23 

LIC’s net premium income grew 14 per cent in December quarter to ₹1.11-lakh crore from ₹97,620 crore in the same quarter of the previous year, while the new business premium grew to ₹9,725 crore from ₹8,749 crore in the December quarter of the previous financial year.

Gaurang Shah, Senior Vice President, Geojit Financial Services, said that the growth may be slower due to the recent Budget announcements.

“However, there is a huge market as far as ‘Insuring the Uninsured’ is concerned and this will not only create opportunities for LIC but also for the other related entities such as HDFC Life, ICICI Prudential and SBI Life,” he added.

The Union Budget for FY24 has proposed that proceeds from the insurance policies with premiums in excess of ₹5 lakh will be taxed. However, LIC has said that it sells more small and mid-sized policies, with the share of large-sized policies is being less than 1 per cent.