LIC cuts stake in Mahanagar Gas by over 2% via open market sales, books healthy profit

LIC's shareholding in Mahanagar Gas has now dropped from 9.03 percent to 6.94 percent.

The Life Insurance Corporation of India (LIC) has reduced its equity stake in Mahanagar Gas Ltd. by 2.09 percent, selling 20.65 lakh shares between September 2023 and September 2024. LIC's shareholding in the company has now dropped from 9.03 percent to 6.94 percent, the insurance and investment giant said in a stock exchange filing.

PSU insurer Life Insurance Corp sold these shares through open market transactions, in the ordinary course of its investment function. The shares were offloaded at an average price of Rs 1,521.31 per share, which shows a substantial premium compared to the price levels during LIC’s earlier accumulation phase.

LIC did not share the total value of the sale, but calculation shows that the insurance giant may have sold the shares for an aggregate of Rs 314 crore.

LIC accumulated Mahanagar Gas shares at a lower price earlier

Earlier, between January 2022 and September 2023, LIC increased its stake in Mahanagar Gas from 7.02 percent to 9.03 percent, with those purchases done at an average price of Rs 918.87 per share.

The recent reduction is a partial exit from that position, with the remaining holding now at 6.94 percent. LIC’s profit from this sale is likely to have exceeded Rs 120 crore, per back of the envelope calculations.

Mahanagar Gas share price falls as LIC trims stake

Mahanagar Gas share price fell in the last half an hour of the trade, after holding flat for most of the day. The stock ended at Rs 1,940, down 1.3 percent from the previous close. The PSU share has jumped over 90 percent in the last one year, beating benchmark NSE Nifty 50, which has gained about 33 percent during the period.

Mahanagar Gas Ltd., a major player in India’s city gas distribution sector, currently has a market capitalisation of Rs 19,436.5 crore. LIC's sale of shares comes after holding a significant stake in the company for over a year. The insurer did not disclose any specific reasons for the stake reduction, other than calling it a regular ‘investment function’.

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