Shares of Life Insurance Corporation (LIC) of India hit fresh record lows on Monday amid sustained decline in Adani Group stocks. Its stock finished at Rs 567.8, down 2.9 per cent over its previous close.
The state-owned insurer’s market value is now down Rs 2.4 trillion, or 40 per cent, compared to initial public offering levels.
In the past month, shares of LIC have plunged 15 per cent — the most among mega caps. LIC’s market capitalisation ranking has now slipped to 12, from 6 at the time of listing.
Even though Adani Group stocks account for less than 1 per cent of LIC’s equity portfolio, the market has severely battered its stock. As on January 31, LIC’s equity and debt holding in Adani scrips stood at a little less than Rs 36,000 crore. The value of its equity purchase was Rs 30,127 crore. After a precipitous fall in Adani shares, the value of its holdings slipped below the cost of acquisition, stoking concern.
Analysts say investors are worried about the impact on LIC’s business due to the negative sentiment created by its exposure to Adani Group. Besides, there is a constant overhang of misuse of LIC as a white knight for government disinvestment.
Currently, the government holds a 96.5 per cent stake in the insurance behemoth and close to 2 per cent in retail. Overseas funds hold just 0.17 per cent. Hence, LIC’s value erosion is hurting the exchequer and citizens more than anyone else.
