 "LIC at 20-mth high, nears listing day-lifetime high; up 69% from March low")
The shares of the country’s largest life insurance company, Life Insurance Corporation of India (LIC), rallied 5.3 per cent on the BSE to hit a 20-month high of Rs 900 apiece during Tuesday’s intra-day trade.
It hit a 52-week high, the highest since May 2022.
The insurance behemoth closed in on its record high of Rs 918.95 a piece, which it touched on listing day on May 17, 2022.
The stock closed at Rs 892.5 with a 4.42 per cent gain, while the benchmark Sensex was down by a small margin.
Over the past three trading days, the stock of the state-owned insurer surged 8.5 per cent.
The stock has recovered 69 per cent from its 52-week low level of Rs 530.20 on March 29, 2023.
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The LIC IPO price was in the Rs 902-Rs 949 per share band with retail shareholders getting a Rs 45 discount (Rs 904) while policyholders got a Rs 60 discount (Rs 889).
The price for qualified institutional buyers and non-institutional investors (HNIs) was at the upper price band of Rs 949.
As of December 31, 2023, the President of India, the promoter of LIC held a 96.50 per cent stake in the company.
Of the 3.5 per cent public shareholding, individual shareholders held 1.97 per cent stake, followed by mutual funds (0.79 per cent) and foreign portfolio investors (0.06 per cent), as per shareholding pattern data.
Avinash Singh and Mahek Shah of Emkay Research in a report last week highlighted that risk-reward for life insurers remains favourable. Read report
“While the noise around a host of regulatory changes, the margin compression, and the moderate growth will all weigh on life insurance stocks in the near term, the medium-to-long-term structural growth story remains intact. Relative to historical numbers as well as to other sectors, valuations for life insurance stocks remain attractive, given the risk-to-reward proposition.” We maintain our preference for SBI Life, HDFC Life, and Max Life. LIC remains our valuation pick, says the brokerage.
In December 2023, the company posted a 2.1 per cent growth in retail annual premium equivalent (first-year premiums) and lagged behind the sector’s 8.7 per cent growth. Over the nine months that ended December (9MFY24) too, the life insurance major posted a 0.2 per cent growth while the private sector registered a growth of 11.3 per cent.
On an overall APE basis, LIC registered a strong 22.6 per cent APE growth for December on the back of an 82 per cent y-o-y growth in group APE.
KR Choksey Research says that the company has been focusing on product mix improvements, with a stronger focus on the non-par segment.
LIC will capitalise on the industry's growth opportunities, aided by its significant assets under management and geographical expansion, it adds.
Life insurance density and penetration age continue to be lower in India vis-à-vis other developing economies. With a gradual rise in domestic household savings, the share of life insurance in incremental household financial savings is expected to increase steadily.
LIC, as the market leader and a trusted name among the populace, is best positioned to benefit in the long term, according to Geojit Financial Services.
The company recently received a notification for a tax refund worth Rs 25,464 crore from the Income Tax Department for 7 Assessment Years (AYs) from 2012-13 to 2019-20 except for 2015-16. This is related to the interim bonus paid to policyholders during the assessment period.
LIC is the country’s leading statutory insurance and investment corporation with assets under management (AUM) of over Rs 47 trillion and investments in more than 270 listed companies.