LIC shares jump 9.7%, logs biggest intraday gain since listing; here's why

Shares of Life Insurance Corporation (LIC), India's largest life insurer, experienced a robust intraday surge of 9.7% during Friday's trade, hitting a 10-week high of ₹677.65 apiece and also marking the largest intraday gain since listing in May 2022. During the trade, the stock hit a high of ₹682 apiece. This notable upswing followed LIC's target of achieving double-digit growth in new business premiums for FY24.

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In an interview with PTI, LIC's Chairman, Siddhartha Mohanty, said, "We are projecting double-digit growth over the last year. We are going to achieve that because a recent trend is showing an uptick in individual retail business. In order to further reinforce our commitment, we are going to launch some new attractive products."

Mohanty told the news agency that as part of a new product, the company will provide assured returns, and after maturity, the policyholder will get 10 percent of the sum assured life long. 

He exuded confidence that the new product will create disruption in the market, as everybody wants to know how much he or she is paying and the returns one would get after 20–25 years, said the report.

"In addition, the loan facility and premature withdrawal would also be a feature of the new product," Mohanty was quoted as saying in the report.

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"Guaranteed return products are in the interest of policyholders and shareholders, as many shareholders are also policyholders. So, it is a dual benefit for policyholders. 2-3 more policies will be launched during the course of the year to achieve double-digit growth in new business premium," Mohanty told PTI.

According to the Insurance Regulatory and Development Authority's (IRDAI's) measurement of market share based on first-year premium income, LIC remains the dominant market leader in the life insurance sector, boasting an overall market share of 58.50%, it said.

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Its new business premium for H1FY24 jumped 2.65% to ₹25,184 crore from ₹24,535 in H1FY23. The assets under management (AUM) increased to ₹47,43,389 crore as of September 30th, 2023, compared to ₹42,93,778 crore as of September 30th, 2022, registering an increase of 10.47% year on year.

On May 17, 2022, LIC made a rough start on the exchanges as it was listed 8.62% below the issue price of ₹949. It closed at ₹875.25 on the same day, which is 7.75% less than the IPO price. Taking the current market price into consideration, the stock is trading 29% lower than its IPO price.

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Meanwhile, Rajesh Bhosale, Equity Technical and Derivative Analyst, Angel One, said," This upward momentum is likely to continue with the possibility of pieces headed towards 800 in the coming week, and a marginal dip towards 660 can be considered a ‘buy’."

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.