The comeback of LIC India: Stock surges past listing price with a 3-month rally

On Tuesday, Life Insurance Corporation of India (LIC) witnessed a significant milestone as its shares surpassed the listing price of Rs 875.25 for the first time since its debut on May 17, 2022. The insurance giant had entered the Indian stock exchanges at Rs 875.25 per share, slightly below the issue price of Rs 949. However, in the subsequent year, the stock experienced a downturn, plummeting by 40% to Rs 530.05.

Following this low point, the stock embarked on a recovery trajectory, and as of today, it is trading above Rs 900. Notably, since November 2023, LIC’s stock price has recorded an impressive rally, surging by 53% from the listing price. This surge has translated into a substantial increase in the company’s market capitalisation, which has grown by Rs 1.84 lakh crore, reaching a commendable Rs 5.64 lakh crore.

As of the end of Q3 FY24, the government maintained majority ownership of LIC at 96.5%, while retail investors and domestic institutional investors held 2.4% and 1%, respectively. The strategic move to go public has evidently added substantial value to LIC’s market standing and financial performance.

Portfolio diversification

In a bid to diversify its product portfolio, LIC introduced a new non-par product named LIC Jeevan Utsav in November. This innovative product combines a restricted pay feature spanning 5-16 years with the promise of everlasting income. The inclusion of such non-par offerings is anticipated to enhance LIC’s overall profitability.

Financial performance

LIC’s financials for H1FY24 indicate a robust performance, with a net profit of Rs 17,469 crore, marking an increase from Rs 16,635 crore in the corresponding period of the previous year. The new business premium (individual) for H1FY24 also demonstrated positive growth, rising by 2.65% to Rs 25,184 crore, compared to Rs 24,535 crore in FY23. The new business premium represents the initial premium payment required in the first policy year of a life insurance contract.

Moreover, LIC’s assets under management (AUM) witnessed a commendable uptick of 10.47% during H1FY24, reaching Rs 47,43,389 crore, up from Rs 42,93,778 crore in the previous fiscal year. This growth underscores the company’s effective management of its investment portfolio and reinforces its position as a formidable player in the insurance and financial services sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.