LIC Stock Soars: Hits 20-Month High Amidst Market Rally

 

LIC Stock Soars: Hits 20-Month High Amidst Market Rally

Life Insurance Corporation of India (LIC) witnessed a robust 5% surge in its shares on the BSE, reaching a 20-month pinnacle at Rs 895 during Tuesday's intraday trading. This marked not only a new 52-week high but also the highest level since May 2022, inching closer to its record-high of Rs 918.95 recorded on its listing day in May 2022. Over the past two trading days, the state-owned insurer's stock experienced an impressive 8% rally, bouncing back by a significant 69% from its 52-week low of Rs 530.20 on March 29, 2023.

LIC had issued shares at Rs 949 each to qualified institutional buyers (QIBs) and high net worth individuals (HNIs). The issue price for policyholders stood at Rs 889, while retail investors and employees got shares at Rs 904. As of December 31, 2023, the President of India, who acts as the promoter of LIC, held an extensive 96.50% stake in the company. Public shareholding constituted 3.5%, with individual shareholders holding 1.97%, mutual funds 0.79%, and foreign portfolio investors 0.06%.

In a notable development, LIC received a tax refund notification of a substantial Rs 25,464 crore from the Income Tax Department. This refund, covering seven assessment years from 2012-13 to 2019-20 (excluding 2015-16), was linked to the interim bonus paid to policyholders during the specified assessment period.

Positioned as the premier statutory insurance and investment corporation in India, LIC boasts assets under management (AUM) exceeding Rs 47 trillion and investments spanning more than 270 listed companies. The company is actively diversifying its product portfolio, with a strategic focus on augmenting non-par products.

Industry analysts are optimistic about LIC's future, recognizing it as a market leader and a trusted entity among the populace. Despite initial concerns surrounding taxation changes in early CY23, the brokerage affirms that such worries were largely unfounded, with stock prices rebounding from their lows.

Looking ahead, analysts anticipate a buoyant future for LIC, projecting higher top-line growth in the range of approximately 14-19% for FY24 and FY25. The expectation is anchored in the stability of Value of New Business (VNB) margins, attributed to sustained high persistency and stability in capital markets. Noteworthy mentions in the brokerage report include coverage of HDFC Life Insurance, ICICI Prudential Life (IPRU), and SBI Life Insurance.