Life Insurance Corporation of India Ltd (LIC), India's largest insurance company and the largest Initial Public Offering (IPO) by size reclaimed the mark of ₹5 lakh crore in market capitalisation, which it had slipped below within three weeks of listing in May 2022.
LIC, the second-largest PSU by market capitalisation, surged another 7% on Thursday to hit a 52-week high of ₹800. It had surged 5% on Wednesday and another 7.2% on Monday as well.
With Thursday's surge, LIC's shares have rallied over 32% so far since November. The move has managed to narrow the gap from its IPO price of ₹949 down to 16%. The stock has never managed to retest its IPO price since listing. Gains have also come on substantial volumes, where 1.4 crore shares changing hands on Thursday, as against the 20-day average of 39 lakh shares.
In some not-so-positive developments, LIC reported a 33% drop in premium collection for the month of November, whereas its individual annualised premium equivalent (APE) declined 9% compared to the same period last year.
Brokerage firm Kotak Institutional Equities believes that the recent surge in LIC can be attributed to the hype around its non-par product Jeevan Utsav. "We believe that LIC has a strong marketing agency force, while most focus has been on par policies, the agency team is capable of selling non-par policies as well," the note said. The domestic brokerage is also in the view of that the next four months will determine the success of this product.
According to Kotak Institutional Equities, the valuation of LIC remains inexpensive, thereby providing big headroom. Therefore, it has retained its buy recommendation on the stock with a price target of ₹1,040.
For the first half of the current financial year, LIC's new business premium grew by 2.7%, to ₹25,184 crore from ₹24,535 crore last year. For financial year 2023, new business premium had grown by 6.9%. LIC's strong nodal agency network has a 49% market share and contributes 96% of the company's new business premium at the end of the first half of financial year 2024.
Out of the 19 analysts that track LIC, 15 have a "buy" recommendation, three say "hold," and one has a sell rating.
Shares of LIC are trading 4.8% higher at ₹781.55.
(Edited by : Hormaz Fatakia)
First Published: Dec 7, 2023 3:19 PM IST
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