Can cross Rs 40K cr investment target if H2 mirrors Q2: LIC

SK Roy, chairman, Life Insurance Corporation (LIC) is highly optimistic that the second half of FY14 will be very good for the company after it delivered a fantastic Q2. According to him, in both July and August, the company did exceptionally well with phenomenal performance in September. “We did Rs 6,000 crore of new business premium for the month which is 100 percent more than what we did in September 2012, he says in an interview to CNBC-TV18.

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Going ahead, Roy believes the equity target of the company may be raised from the current Rs 40,000 crore, if they get growth opportunities similar to Q2. Speaking to CNBC-TV18, he says LIC has invested in IT and pharma and finds banking sector attractive with a longer-term perspective. LIC has also been looking at the auto sector and will continue to have interest there, he adds. Below is the verbatim transcript of SK Roy’s interview on CNBC-TV18   Q: LIC’s Q1 premium collections were below year-ago levels, how have you faired in Q2 as far as premium collections are concerned?
A: The Q1 of the current financial year wasn’t as good as we thought. However, Q2 of the current year has been fantastic for LIC. In both July and August, we did exceptionally well. September was a month of phenomenal performance by LIC. We did Rs 6,000 crore of new business premium for the month i.e. 100 percent more than what we had done in September 2012. So, I feel very encouraged that second half of the current financial year will be good for us. Q: What would your internal targets be as to how much will you collect this year and how much will you invest in gilds as well as equities?
A: Our equity target for the year was Rs 40,000 crore when we started the year. First two quarters gave us good opportunities to invest in equity markets and we have been very active in the last six months. We have done a fair amount of our budgeted amount of Rs 40,000 crore. I will not be able to give estimate of where we shall be when this financial year ends but we will be taking advantage of all the equity investment opportunities that will come to us in the remaining 5.5 months of the current year.

Q: What has been your net investment in the current year from April to September?
A: About Rs 31,000 crore. Q: Would the gross be more?
A: Yes. When we started the year, we started with an assumption that we will reach Rs 40,000 crore. But during the last few months we got very good opportunities to invest in the equity market. Whenever the markets were down, we took advantage.

_PAGEBREAK_ Q: If your target was Rs 40,000 crore and you have already bought Rs 31,000 crore, is there a chance that you may end up raising this target?
A: It depends. In the second half of the financial year, if we get similar opportunities as we got in the first half, definitely. Q: How much have you possibly earmarked for investments in public sector undertaking (PSU) divestments?
A: We don’t earmark amounts for that. Every disinvestment opportunity is an investment opportunity for us. So, it is assessed on merits at the time when government decides to disinvest in PSU. We don’t set aside any amount for that purpose. We assess the opportunity when it arises and take a call accordingly. Q: What are your views on markets? Does this big rally in the market have more legs?
A: I don’t want to comment specifically on levels. That is not what we do. I can foresee that there would be very large number of opportunities in the foreseeable future, when we shall be getting similar profit booking opportunities. Q: Most of the gains, however, have gone to the IT as well as to pharmaceutical sectors in terms of equities, what is LIC’s sectoral preference?
A: We have invested in IT and pharmaceuticals. We look at banking sector with great deal of interest especially in context of our long-term perspective on the investment side, the banking sector looks very attractive. Also, we are looking at infrastructure and housing sector with some interest. We have also been looking at the automobile sector and will continue to have interest there. Q: LIC Housing, your associate or subsidiary company and applicant for new bank license, did your board desired to have a bank in the group?
A: Yes, but we must appreciate that LIC Housing Finance is a separate board run company. It has taken a decision to apply for banking license. I am sure they will respond to the queries that the Reserve Bank of India (RBI) will ask them and would comply with all the requirements. LIC doesn’t have a role to play as far as banking license application of LIC Housing Finance is concerned. Q: IT stocks are at huge valuations, are you likely to book profits in this sector or do you think these stocks are good for more gains?
A: It has been a driver of growth in the country and worldwide and is the best performing sectors of the Indian economy today. Q: In which sectors do you see profit taking opportunities after this big surge in the market since past couple of days?
A: We don’t look at it from the sectoral point of view. It is company specific and so, we wouldn’t have a view as far as sector is concerned.