LIC surges 10%; storms into top-5 most-valued club as m-cap tops Rs 7 trn

LIC with a market cap of Rs 7.24 trillion overtook Infosys to break into the top-5 club; Stock has gained 38 per cent in the last one month.

Life Insurance Corporation of India (LIC) on Thursday for the first time ever crossed the Rs 7 trillion market capitalisation, as the stock price of state-owned insurer hit a new high of Rs 1,144,45, on rallying 10 per cent on the BSE.

The board of directors of the Corporation are scheduled to meet today i.e. February 8, 2024, to consider a proposal for declaration of interim dividend for the financial year 2023-24 (FY24). The board will also consider and approve the unaudited financial results for the quarter and nine-month period ended on December 31, 2023.

LIC’s market cap hit Rs 7.24 trillion in intra-day trades today. It surpassed information technology (IT) major Infosys to enter into the list of top five most valuable companies. At 11:19 am; LIC’s market stood at Rs 7.20 trillion, while Infosys market cap at Rs 6.99 trillion, the BSE data shows. In comparison, the S&P BSE Sensex was down 0.89 per cent at 71,512.

In past one month, LIC outperformed the market by zooming 38 per cent, as against 0.18 per cent gain in the benchmark index. In past three months, the market price of LIC has zoomed 85 per cent. The stock has been more than doubled or skyrocketed 114 per cent from its 52-week low level of Rs 530.20 touched on March 29, 2023.

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.

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.

Life insurance density and penetration age continue to be lower in India vis-à-vis other developing economies. With a gradual rise in domestic household savings, the share of life insurance in incremental household financial savings is expected to increase steadily.

Last month, LIC had 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. This is related to the interim bonus paid to policyholders during the assessment period.

Meanwhile, the recent recommendations by the parliamentary committee on finance for the insurance sector are positive, if implemented, according to analysts at HSBC Global Research.

Overall, the brokerage firm said it remains positive on the sector and expect growth to improve in FY25e. Key drivers would be positive regulatory environment, improving savings landscape, healthy product pipeline, and strengthening of distribution capacities.

The current GST rate on the insurance product is fixed at 18 per cent, which was increased from 15 per cent in 2017. The quantum of the rate cut would be a key indicator for the sector. Lower indirect taxes would improve the affordability of the insurance product, driving up the demand, in our view, analysts said.

Another important development could be around the 'Composite' license, which would increase the ability of the insurers to launch innovative products that can provide life, health, property/motor coverage in a single affordable policy. Other suggestions could help improve stability and increase consumer confidence in the sector, in our view, the brokerage firm said in insurance sector update.