LIC sinks 15% from highs, market value dips briefly below Rs 5 lakh crore

Life Insurance Corporation of India's shares have fallen close to 15 percent from their post-IPO high in less than 3 weeks.

On June 6, the stock fell 2% to hit a new low of Rs 785 and the market cap fell below Rs 5 lakh cr.

Since their listing, the company's shares have been under pressure due to concerns over its ability to compete with private sector rivals and the impact on its embedded value.

Emkay Global Financial Services started coverage on the stock with a hold rating and price target of Rs 875 per share.

LIC's valuation on price-to-embedded value appears cheaper when compared with listed private players; this is due to the fact that LIC adds just 1.0- 1.5 percent of EV each year from VNB, as against 8-11 percent in the case of private life insurers.

The operational challenges posed by LIC were brought to the attention of the broker. The company was valued by the firm at less than its one-year forward embedded value.

The life insurer's embedded value is vulnerable to downturns in the domestic stock market due to the high portion of equity marked to market gains.

The Nifty 50 and BSE-Sensex have fallen more than 5 percent in the year to date.

At 10:50 am, shares of Life Insurance Corporation were down 1.7 percent at Rs 786.6 on the National Stock Exchange.

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