LIC Shares Continue To See The Pain As Anchor Lock-In Ends

LIC shares continue to be in focus and in trade on Monday (June 13, 2022) when the markets are seeing excessive pressure are again seen trading with a sharp cut. At the time of writing this copy, the shares of Life Insurance Corporation of India slumped to a fresh record low of Rs. 682 per share.

LIC Shares Continue To See The Pain As Anchor Lock-In Ends

The losing streak in the stock in particular as of today is as the anchor lock-in in the stock ends today. This means that the mandatory lock-in period requirement for the anchor investors end today. Typically anchor investors are marquee institutional investors to whom shares are allotted on a confirmed basis ahead of the IPO. These usually make bids for a minimum of Rs. 10 crore.

Lock-in period for anchor investors who enjoy the benefit of confirmed allotment of shares ahead of the IPO, they cannot offload their holdings in the company before the lock-in period ends. Typically the lock in period is 30 days after the share allotment i.e. institutional investors cannot square off their positions in the IPO company shares before the 1-month period from share allotment date ends.

So, this is the reason why there is seen indeed more pressure on the LIC stock.

Ahead of the public issue, anchor investors bought 59.3 million shares of the company at issue price of Rs 949 per share. Typically a bulk of anchor investors in the issue comprised of domestic mutual funds who are sitting on heavy losses in the scrip.

LIC's stock price move from its listing

Since the time of listing at a discount, the scrip of LIC is facing acute pressure. From the IPO issue price of Rs. 949, the scrip has declined over 29%.

Brokerages and analysts view on the stock

There is a view that the company is confronting problems in scaling up its non-participatory policy business. And further the current volatility in the company's stock is having a cascading impact on its embedded value.

The company's coverage has been intiated by both domestic and international brokerages with a maximum target price of Rs. 1000 by Macquarie that gave it a 'Neutral' rating.

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