RIL, Tata firms top LIC's equity portfolio as insurer's valuation rises

The market value of Life Insurance Corporation’s stake in India’s top conglomerates has witnessed a sharp rise in the past year, with Reliance Industries and Tata group companies topping the valuation charts, according to data sourced from the stock exchanges. The value of investments in Adani firms more than double in the past year.
 

LIC’s stake in Reliance Industries was valued at Rs 1.09 trillion as on Wednesday versus Rs 95,292 crore a year ago (November 16, 2021); its stake in various Tata group companies was worth Rs 88,385 crore against Rs 84,127 crore a year ago. LIC’s investment in the Adani group of companies is valued at Rs 77,562 crore, benefitting from the rise in the value of the group companies’ shares in the past year. A year ago, its investments in Adani firms were valued Rs 31,665 crore.
 

The value of LIC’s stake in tobacco major ITC rose to Rs 66,393 crore on Wednesday, as compared to Rs 47,108 crore a year ago.
 

In the ongoing (December 2022) quarter, LIC increased its stake in Voltas, a Tata group company, from 6.86 per cent to 8.88 per cent. The corporation also increased its stake in Tata Motors marginally to 5 per cent, according to data submitted by LIC to the stock exchanges since October 1. It diluted its stake in Tata Chemicals from 7.09 per cent to 5.06 per cent.
 

The corporation reduced its stake in Adani Ports from 11.3 per cent in December 2019 to 9.3 per cent, thus booking profits in the company’s shares, according to an LIC notice to the stock exchange on November 14. Adani Ports total market capitalisation was Rs 1.95 trillion as on Tuesday.

“Insurance is a long-term investment and LIC has to see it from a very long-term perspective of as long as 20 years. We have to see their investments in top companies, keeping in mind the long-term horizon,” said J N Gupta, managing director of proxy advisory firm Stakeholders Empowerment Services.

The insurer, which reported 8.6 per cent YoY growth in its assets under management to Rs 42.93 trillion as of September this year, is the largest investor in Indian companies among local institutional investors. As much as 25 per cent of this corpus is invested in equity investments.
 

In the financial year ended March this year, LIC realised gains worth Rs 42,000 crore from its investment in the equity markets, an increase of 16.6 per cent from Rs 36,000 crore reported in the financial year ended March 2021.
 

According to LIC officials, as a long-term investor, the insurer cannot book profits in a single year in equity investments whatever is the marked-to-market gain in the equity markets. The LIC has to book profits over a longer period because it has to pass on benefits to policyholders as a bonus in participating policies and hence, the unwinding happens over 10-15 years.
 

“As a long-term investor, LIC keeps churning its portfolio to buy and sell shares in both listed and unlisted entities,” said an analyst with a local brokerage.