After nearly two years, investors who bought shares of Life Insurance Corp. of India in the country's largest initial public offering are virtually back to where they started, thanks to a 75% rise since late March.
Tuesday saw a 1.9% increase in the state-owned life insurer's stock, which closed at its highest point since its May 2022 IPO. The increase in the last ten months has brought around a $30 billion increase in the market value of LIC, coinciding with a wider rally in Indian equities.
The government of Prime Minister Narendra Modi raised a record $2.7 billion by selling investors, including millions of families who own the company's policies, shares in the largest life insurance company in the nation. At one point, the shares dropped more than 40% below its offering price due to worries about LIC's size, low profit margins, and rigid sales methodology in comparison to its more flexible private peers.
Gains in the larger Indian equities market have benefited LIC, which holds the position of the nation's largest investor with over $100 billion in assets. Analysts claim that increased interest in the shares has been sparked by an improved outlook for the company's premium segment as well as potential increases in dividend payout.
"The surge in the stock appears to be predominantly propelled by an extremely appealing valuation, which has already exceeded the pricing of the underlying difficulties," stated Avinash Singh, an analyst at Emkay Global Financial Services Ltd., who recommends purchasing the shares. He went on, "A growing cash pile also implies a higher dividend payment is possible."
However, Antique Stock Broking Ltd. predicts that the stock would remain below an anticipated embedded value of 7.1 trillion rupees ($85.73 billion), which is a measure of the company's shareholder value, due to the company's slow growth, expensive costs, and loss of market share.
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