Posted on February 28, 2025, by Niftynews
The LIC share price took a sharp 2% dip on February 28, 2025, reaching a fresh 52-week low of ₹729. This significant drop in LIC shares followed the announcement that the company had received a demand order for GST, interest, and penalty from Maharashtra state, totaling approximately ₹480 crore for the financial year 2020-21.
Details of the GST Demand Order Affecting LIC Shares
LIC disclosed the demand order in an exchange filing, stating that the total amount involved includes:
- ₹242.23 crore for GST
- ₹213.43 crore for interest
- ₹24.22 crore for penalties
Despite this substantial demand, LIC reassured its investors by confirming that the order is appealable before the Joint Commissioner of State Tax (Appeals), Mumbai. The company further emphasized that while the demand is significant, it will not cause a material impact on LIC shares or its overall financial operations.
Impact on LIC Financials and LIC Share Price
While the GST demand could lead to a short-term fluctuation in LIC share price, the corporation reassured its investors that there will be no major impact on its core operations. LIC’s recent Q3 results indicated strong performance, with a 17.1% increase in net profit to ₹11,056.47 crore compared to ₹9,444.4 crore in the same quarter of the previous year.
Additionally, while LIC’s net premium income fell by 8.7% to ₹1,06,891 crore in Q3FY25, the corporation remains a dominant force in the Indian insurance market. Despite challenges, LIC is well-positioned for long-term growth.
LIC Shares: Appeal Process and No Material Impact
LIC clarified that the demand order related to GST, interest, and penalty for FY 2020-21 is appealable and will not cause any material disruption to its day-to-day operations. Investors need not be overly concerned about the long-term prospects of LIC shares as the company has also demonstrated strong profit growth despite recent setbacks.
As per LIC’s statement, the corporation is committed to handling the matter in the appropriate legal forum, which includes the Joint Commissioner of State Tax (Appeals) in Mumbai. Therefore, while the LIC share price may experience volatility in the short term, the corporation’s financial stability remains intact.
LIC Share Price Declines Amidst Market Conditions
LIC shares have faced a series of challenges in recent months, with share prices falling to a 52-week low of ₹729 on February 28, 2025. The GST demand order adds to the downward trend witnessed by the company’s stock price since the beginning of the year.
At 10:32 AM IST, the LIC share price stood at ₹738.20, reflecting a 0.39% drop, compared to the BSE Sensex 1.13% decline. These market conditions have made LIC shares one of the most volatile stocks in the market in recent weeks.
Is the Decline in LIC Shares a Cause for Concern?
The LIC share price drop could raise concerns among investors, but the company has reassured that the GST demand will have a minimal impact on its operations. Despite this temporary setback, LIC remains a key player in the Indian insurance market, with a market capitalization of ₹4,66,278 crore, as per BSE data. Its status as the largest public-sector insurer in India ensures that LIC’s fundamentals remain strong.
Investors should consider the long-term performance of LIC shares, as the corporation has strong earnings and a dominant market presence, even though it faces temporary headwinds in the form of tax-related issues.
What’s Next for LIC Shares and Investors?
While the GST demand has caused a sharp decline in LIC share prices, the corporation’s strong financial results and appeal process for the demand order suggest that the issue may be resolved in the future. Investors will need to monitor the appeal process closely, as the resolution of this matter could help stabilize LIC share price.
LIC shares remain a key asset in India’s insurance sector, and despite the current challenges, the company’s dominant market position ensures it remains a trusted investment option.
Conclusion: A Temporary Setback for LIC Shares
The LIC share price has been hit hard due to the ₹480 crore GST demand, which led to a 2% drop and a 52-week low. However, the company’s strong financial performance, coupled with its ability to appeal the demand, means this setback may only be temporary. The LIC shares may recover once the appeal process progresses, providing long-term investors with opportunities to capitalize on potential growth.
Key Takeaways for LIC Shareholders:
- LIC share price declined 2% after a ₹480 crore GST demand order.
- The demand is related to the 2020-21 financial year and is appealable.
- Despite the decline in LIC shares, the company remains financially strong with a 17.1% increase in net profit for Q3FY25.
- The impact on LIC shares is non-material and may stabilize in the coming months.
