LIC’s journey so far: A muted debut, a long rough patch and a stellar rebound, this stock has seen it all
LIC's shares have surged 80% in the past three months, making it India's most valuable PSU company and the fifth most valuable Indian listed company. In today's trading session, the stock soared to another record high of ₹1,175 with a gain of 6.3%.
LIC investors are currently basking in a wave of euphoria, especially those who participated in the IPO and have steadfastly held onto their investments. Their unwavering confidence in the company is now bearing abundant fruits, as LIC's shares have been soaring to unprecedented heights in recent sessions.
In a staggering rebound of growth, the stock has surged by an impressive 80% over the past three months alone. During this period, the company's market cap jumped from ₹3.9 lakh crore to ₹7 lakh crore.
With this remarkable ascent, LIC has claimed the coveted title of India's most valuable PSU company, unseating the country's largest public sector bank, SBI, from its throne. But the accolades don't end there; LIC has also reclaimed its status as the fifth most valuable Indian listed company.
To put achievement into perspective, LIC now commands a higher market capitalisation than major banking giants like ICICI Bank and Axis Bank, as well as FMCG stalwarts such as HUL and ITC.
Furthermore, it outpaces prominent IT players including HCL and Wipro, as well as NBFC juggernaut Bajaj Finance. Even though the stock is not a part of the Nifty 50 index, LIC's market capitalisation exceeds that of 45 companies listed within the Nifty 50.
Against this backdrop, let's look at LIC's journey from its IPO to its current standing in the market.
Navigating volatility
In 2022, LIC garnered significant attention as its highly anticipated Initial Public Offering (IPO) was launched in May, marking the largest IPO in the country's history. The government of India raised about ₹21,000 crore by offering 221,374,920 equity shares, or a 3.5% stake in the company.
LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India and also the largest asset manager in India as of December 31, 2023, with an AUM of nearly ₹50 trillion on a standalone basis, which is equal to the entire Indian mutual fund industry’s AUM.
The Life Insurance Corporation of India ("LIC") was established on September 1, 1956, under the LIC Act by merging and nationalising 245 private life insurance companies in India.
The journey of the company's shares commenced on May 17, 2022, when they debuted on Dalal Street at an 8.62% discount to the issue price of ₹949. On that same day, the stock closed at ₹875.25, marking a 7.75% decline from the IPO price. Subsequently, the stock exhibited subdued performance, never exceeding a 4% increase on an intraday basis for nearly a year.
As the listing year drew to a close, the stock experienced a substantial drop of almost 22%, with additional selling pressure witnessed during the initial three months of 2023. Notably, in February, concerns among investors mounted regarding LIC's significant investment in various Adani Group stocks, particularly amidst allegations raised by Hindenburg. This led to a correction of nearly 12% in the stock's value in February alone.
Following the downturn, the company's shares faced a further 8% correction in March and also touched an all-time low of ₹531 apiece. Concerns about the company's losing market share and new taxation regulations targeting large-ticket savings life insurance companies have also contributed to the downward trajectory of the company's shares during the first half of CY23.
On the other hand, the Indian market rebounded strongly in May on the back of robust FPI inflows, and to capitalise on the rising momentum, LIC began diversifying its investments across various markets, including shares of locally traded companies. These investments have also acted as a crucial pillar of support for the market during the calendar year 2023.
According to recent media reports, LIC amassed a significant profit of ₹2.3 lakh crore in its portfolio during CY23. Currently, LIC holds a 6.2% stake in Reliance Industries, valued at approximately ₹1.2 lakh crore, and has investments of over ₹78,000 crore in ITC. Additionally, it holds stakes in TCS, Infosys, SBI, L&T, HDFC Bank, and ICICI Bank.
The life insurance giant is currently invested in 260 Indian-listed companies. The substantial investments and profits generated by LIC have boosted confidence in the stock, with expectations that they will bolster the company's profitability.
Resounding comeback
Following a period of consecutive underperformance, the insurance behemoth awoke in November, exhibiting a substantial gain of 12.83%. This positive momentum carried forward into the subsequent months, witnessing impressive increases of 22.52% in December and 14% in January.
On January 23, a significant milestone was achieved as the company's shares surpassed the IPO price of ₹949 per share for the first time post listing. Further underscoring its robust performance, the stock surged past the ₹1,000 mark during trading on February 5, maintaining this threshold thereafter and showcasing the sustained strength of its resurgence.
The recognition of LIC's success was underscored by Prime Minister Narendra Modi during a session in the Rajya Sabha on February 7. On the following day, the company's market capitalisation surpassed ₹7 lakh crore.
In today's trading session, the stock soared to another record high of ₹1,175 with a gain of 6.3%, propelling the company's market capitalisation to nearly ₹7.5 lakh crore.
Robust performance in Q3
LIC posted a 49% jump in its standalone net profit of ₹9,444 crore in Q3FY24 crore as against a net profit of ₹6,334 crore in the corresponding quarter of the preceding fiscal. The improved performance was mainly driven by an increase in net income from investments and growth in net premium income.
The net premium income grew by 4.6% YoY. Its net income from investments during the December quarter rose by 12% YoY to ₹95,266.8 crore from ₹84,869 crore in Q3FY23.
In terms of market share measured by First Year Premium Income (FYPI) (as per IRDAI), LIC continues to be the market leader by market share in the Indian life insurance business with an overall market share of 58.90%.
The assets under management (AUM) increased to ₹49,66,371 crore as of December 31st, 2023, compared to ₹44,34,940 crore as of December 31st, 2022, registering an increase of 11.98% year on year.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
- Top Gainers
- Top Losers
- 52 Week High