LIC shares under pressure. What's hurting the PSU insurer stock
LIC shares struggled below the flatline amid choppy trade on Tuesday, after JPMorgan downgraded the state-run insurance giant to 'neutral' and reduced its target price by seven per cent. Here's what analysts suggest investors may do.
LIC share price news: State-run life insurance giant Life Insurance Corporation's stock faced selling pressure on Tuesday, after a downgrade and a reduction in target price by JPMorgan.
The brokerage downgraded LIC to 'neutral' from 'overweight'.
JPMorgan brought down its target for LIC to Rs 780 from Rs 840. Its latest target implies upside potential of 9.9 per cent in LIC shares.
TRENDING NOW
| Brokerage | Call | Target | Upside/downside vs Monday's closing price |
| ICICI Securities | Buy | 627 | -11.7% |
| Motilal Oswal | Buy | 870 | +22.6 |
According to Motilal Oswal Financial Services, LIC has all the levers in place to maintain its industry-leading position and ramp up growth in the highly profitable product segments, mainly protection, non-participating savings and annuity), but changing gears for such a vast organization requires a superior and a well-thought out execution.
The brokerage finds LIC's valuation multiple of 0.6 times its estimated embedded value for the year ending March 2024 reasonable, given the company's gradual recovery in margin and
diversification in the business mix.
Motilal Oswal's target for LIC is at embedded value-based multiple of 0.8 times.
ALSO READ: ICICI Prudential falls, ICICI Lombard General inches higher ahead of Q3 results
The LIC stock has lost 19 per cent of its value in the past one year, a period in which the Nifty50 benchmark has declined 1.9 per cent.
LIC shares have fared to command a premium over their issue price since the state-run insurance behemoth's debut in May 2022.
LIC's initial share sale -- India's largest IPO of all time -- concluded with an overall subscription of three times the shares on offer.
| Category | Subscription |
| QIB | 2.8x |
| NII | 2.9x |
| Retail | 2x |
| Employees | 4.4x |
| Total | 3x |
Anil Singhvi's view
Zee Business Managing Editor Anil Singhvi said last week that he would declare LIC the stock of the year of the government clears the Budget Insurance Amendment Bill. His remarks followed reports that the government is likely to introduce such a Bill.
The passing of the Bill will be a gamechanger for LIC, which has a great network of clients and agents across the country, Singhvi said.
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