Moneycontrol Pro Panorama | Will this elephant dance?

One may argue that LIC’s large size inhibits its growth rates.

Dear Reader,

Life Insurance Corp (LIC) has been a dud on the stock markets. The stock dropped below the IPO price in its first year of trading and is up less than one-fifth from its listing level. Shares of fellow public insurer SBI Life Insurance did exceptionally well during the period—up 36 percent.

The underperformance can be explained by lacklustre showing of the LIC. The company lagged private peers on growth rates and ceded market share, as my colleague Aparna Iyer points out in this piece.

One may argue that LIC’s large size inhibits its growth rates. But note that LIC has unique advantages—deep industry understanding, brand recall, a large sales force and unparalleled reach in villages and towns.

Companies in the private sector put to work their competitive advantages to reap benefits and remained on top of their games. Tata Consultancy Services (TCS) and Hindustan Unilever (HUL) are some of the examples.

TCS adopts new technologies, uses its deep contextual knowledge, wide range of services and cost advantages to drive business in tough times. The company is expected to do better than its peers in FY25. Similarly, HUL leverages its parent’s know-how to innovate product portfolio and modernise its distribution practises. HUL is still one of the highly valued stocks in the consumer staples sector.

LIC is trying to regain its growth mojo. Profit margins, business mix improved in FY24 and the company is aiming for double digit growth in business in FY25. The company plans to sell health insurance products once the proposed composite licensing is introduced. “LIC will be one of the biggest beneficiaries if a composite licence that enables an insurer to offer both life and non-life insurance products,” writes Neha Dave in this piece.

Regaining lost market share will not be easy. However, if executed well, LIC can improve its growth rates and then reward its patient shareholders. Hindustan Aeronautics, a large PSU in defence sector, is a case in point. After languishing below its IPO price, shares of the company gained steam in the last one year as the company gained a grip on business growth.

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R Sree Ram

Moneycontrol Pro