The mega Rs 21,000-crore share sale of LIC took place amid challenging condition that has seen the stock lost about a quarter of its value. Investors have no reason to worry as the outlook on returns on investment remains strong in the mid-to-long-term, chairman MR Kumar said.
Investors in LIC shares will have to be patient. Those who thought to make a quick buck from the much-anticipated IPO have been disappointed but long-term investors may reap some benefits, Kumar told ET.
Pointing out the headwinds, Kumar said that since the market is down due to factors such as the war, global risk-off in financial assets, and monetary tightening the share prices have been dipping continuously. He further stated that as the market improves, LIC share price will also improve. Investors should be patient, he added.
“We are positioning ourselves as the insurer of choice and that’s the reason we have 65 per cent of the market share. With the product mix changing, investors will definitely get good returns in the medium to long term. Overall, we have gained more than 3 per cent market share between December and May,” LIC top boss said.
He further said that LIC is targeting growth rates in excess of what the company normally gets from the non-par (non-participating policy) segment and were confident that whatever the circumstances, they will be able to deliver according to the needs of the market.
Speaking about the IPO process during a recent interview with ET, Kumar said that “Being a listed entity has its challenges. We have another regulator looking at us and we have to make more disclosures than before. We also have shareholders who want good returns on their investments.”
“Again, we have had to transform ourselves. We have recruited a CFO, and a head of investor relations from the market, and are in the process of recruiting a chief digital officer. We are committed to creating value – whether it is for a policyholder, a new shareholder, or an institutional investor,” he told ET.
LIC’s share price has fallen sharply since its listing on the stock exchange on May 17, 2022. LIC shares were allotted to the investors at Rs 949 apiece and got listed at the stock exchanges at discount. The stock is about 28 per cent down from its IPO issue price of Rs 949.
Explaining the long-term strategy that the insurance behemoth has, Kumar said that in five years, the company would like to retain its market share. Talking about growth, he said that it will be ‘fallacious’ to talk about growth when everyone in the industry is growing at 60 per cent plus. The insurance giant also aims to further penetrate to tier II & tier III towns and expand its presence. “At the end of it, I will still have the same market share, but the product mix will change. Currently, by premium, non-par is just 7 per cent. We aspire to take it to 25 per cent over a five-year period,” he added.
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