India's largest domestic institutional investor, Life Insurance Corporation of India (LIC) invested Rs 23,000 crore in equities for the financial year 2013, informs Chairman DK Mehrotra. “We have not rushed into it in Q4 to buy more stocks…but it has been smooth and uniform participation for us in 2012-13,” he told CNBC-TV18 in an interview.
India's largest domestic institutional investor, Life Insurance Corporation of India ( LIC ) invested Rs 23,000 crore in equities for the financial year 2013, informs Chairman DK Mehrotra. “We have not rushed into it in Q4 to buy more stocks but it has been smooth and uniform participation for us in 2012-13,” he told CNBC-TV18 in an interview.
LIC has booked a profit of Rs 20,000 crore by selling equities this year so far, against Rs 9,000 crore last fiscal. Mehrotra says, it was a “completely commercial decision” and the FY13 profit is the highest for the state-owned insurer in the last seven-eight years.
LIC has invested Rs 30,000 crore this financial year so far, most of it in public offers of state-run companies as it had to bail out the government's share shale programme that was threatened by lukewarm investor response in the first half of the year.
Going forward, Mehrotra says, the insurance firm plans on investing Rs 2.15 lakh crore in equities in FY14. “We have not earmarked investment amount of the first quarter of FY14,” he says.
Below is the verbatim transcript of DK Mehrotra's interview on CNBC-TV18
Q: To set the landscape out for what is happening with Life Insurance Corporation (LIC), what is your current exposure to equities and did that change a lot through the course of Q4?
A: Last year we had put in about Rs 23,000 crore in equity. We are a regular investor. Therefore, total for the year is Rs 23,000 crore that we did last year.
Q: Was there was a lot of change in terms of various sectors or stocks that you had exposure to through the course of Q4?
A: Not much, but it is not that we rushed into it in Q4 to buy more stocks. It’s a continuous process for us and we keep on doing it throughout the year. We have a strong research team that keeps us giving the reports. We also scan the market considering the movement of the market, considering the availability of the stocks and scrip, we keep on participating. So, I won’t say there was a big change in Q4. It has been a very smooth and uniform participation in the market for the year ‘12-13.
Q: There was quite a bit of selling by LIC through the course of Q4. What was that sensibly towards, was it basically to raise money for some of the government offerings, was it a call that you were taking on the condition of the market at that point?
A: We never sell anything to raise money for any other purpose. It was absolutely a commercial decision, we wanted to book profit. The profit that we booked last year has been the highest in the last almost seven-eight years because we did get good opportunities. I know that we are at times contradicting our view also and that has paid us, we made good profit last year.
Q: What about Q1 in that case, at this point what has LIC set aside in terms of money that you want to deploy into equities?
A: We do not earmark any amount for Q1 because we have an annual figure. This year we are proposing to put about Rs 2.15 lakh crore in the market and it will again depend on the opportunities when we get them. If we get good opportunities in Q1, we will definitely participate in that but presently we have a thumb rule of putting 10-15 percent in equity and the rest in the other instruments. So, we are planning to put about Rs 2.15 lakh crore in this fiscal.
Q: We were speaking with Som Mittal of NASSCOM about the pressure that IT companies have faced. What is your call on IT, something that LIC had exposure to in the past?
A: In IT space we have seen little stress. This is because it is one industry, which is not in demand, maybe it is a temporary phenomenon. But going by the demand for the industry, going by the demand in IT technology and especially with the growth story, which is very much intact in the country, the industry will definitely bounce back.
Q: Specifically on Infosys though you sold quite a large chunk, 70 lakh shares through the course of Q4. Would you be concerned about the kind of fall this stock price has seen and the impact on your portfolio?
A: There is no matter of concern for us. We will take a call when matters get worse. But presently, we are very comfortable and have no immediate cause of concern with them.
LIC Housing Fin stock price
On December 19, 2014, LIC Housing Finance closed at Rs 422.30, up Rs 1.25, or 0.30 percent. The 52-week high of the share was Rs 463.30 and the 52-week low was Rs 186.55.
The company's trailing 12-month (TTM) EPS was at Rs 26.95 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 15.67. The latest book value of the company is Rs 149.26 per share. At current value, the price-to-book value of the company is 2.83.
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