Shares of Life Insurance Corporation of India (LIC) rallied 5 per cent on the BSE to a 20-month high of Rs 895 in Tuesday’s intra-day trade. In comparison, the BSE Sensex was nearly flat.
Today’s level was also its new 52-week high and the highest level since May 2022. The stock was thus approaching its record high of Rs 918.95, which it touched on its listing day on May 17, 2022.
In the past two trading days, the stock of the state-owned insurer has surged 8 per cent. The stock has recovered 69 per cent from its 52-week low level of Rs 530.20 touched on March 29, 2023.
The government had issued shares at Rs 949 apiece to qualified institutional buyers (QIBs) and high networth individuals (HNI). The issue price was Rs 889 for policyholders and Rs 904 for retail investors and employees.
As on December 31, 2023, the President of India, the promoter of LIC held 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.
Meanhwile, LIC 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.
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.
The company continues to diversify its product mix with a focus on enhancing the non-par share of products.
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Life insurance density and penetration age continues to be lower in India vis-à-vis other developing economies. With gradual rise in domestic household savings, the share of life insurance in incremental household financial saving 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.
Meanwhile, according to analysts at BNP Paribas, the changes to taxationin early CY23 were seen as a material risk to Life Insurance total addressable market (TAM) by many market commentators and drove deep corrections in stock prices post the event.
The business outcomes in the next nine months of the year backed our early conviction that such concerns were largely misplaced, they note.
It ignored the advantage relative to fixed-income investment products that remained for large-ticket traditional insurance savings products as well as the incremental loss of relevance of 80C tax benefits as a driver of insurance demand. Stock prices accordingly rallied from their lows, the brokerage said.
Given the relatively low base analyst expect in FY24, FY25 should deliver higher top-line growth (c14- 19 per cent for its coverage).
VNB (value of new business) margins should remain steady, as persistency remains high and capital markets stable. The brokerage covered– HDFC Life Insurance, ICICI Prudential Life (IPRU) and SBI Life Insurance in the report.
First Published: Jan 16 2024 | 11:57 AM IST