LIC fails its investors; m-cap down 40% in a year

On May 17, 2022, India’s biggest insurance player, the Life Insurance Corporation of India, enlisted on the stock exchange. With each share priced at Rs 949, the issue was 3x oversubscribed. It made sense, for LIC, which was valued at Rs 5.4 lakh crore, takes up about 70% of India’s life insurance segment. It managed to mop up Rs 21,000 crores on its debut.

Exactly one year later, LICs stock has taken a serious beating, trading at Rs 570. Down nearly 40% from its original price, reports suggest that it has managed to wipe off more than Rs 2 lakh crore worth of investor money.

Infact, the only listed entities that have eroded more value from the market than LIC are the Adani Group. Its enterprises, transmission and green energy segment had together rubbed off Rs 6 lakh crore worth of investor capital.

Despite LIC’s equity investments in Adani amounting to less than 0.1% of their total assets, Adani owed around Rs 6,183 crore to LIC as of March, 2023.

Sonesh Dedhia, who heads IFANOW, a personal finance centric social network, notes this to be a major reason for LICs lackluster performace. “LIC has always been a scapegoat when it comes to investing for companies in doldrums based on governments directive”, he says.

“Ideally the performance should have been good considering the earnings. But due to exposure in Adani group, the stock market could have harbored negative sentiments for it, leading to poor performance”, he continues.

On the financial end too, LIC hasn’t fared well. While it is scheduled to declare it’s quarterly results on May 24th, the company did register a consolidated net profit of Rs 8,334 crores in the last quarter (December 2022). It also saw a 14% Y-O-Y uptick in its net premium income.