LIC jumps 7%, tops Rs 1,000 mark for the first time on government's value push

LIC stock has surged over 55 percent in the past 3 months

Life Insurance Corporation of India’s share price rose 7 percent to Rs 1,011 on February 5, surpassing the IPO price of Rs 949 yet again, pushing the market capitalisation of the insurer above the Rs 6-lakh crore mark.

In mid-January, LIC overtook the State Bank of India and became the most valued public sector undertaking. The SBI share price on Monday fell 1.11 percent to Rs 643.2 and its market cap stood at Rs 5.77 lakh crore.

The LIC stock has surged more than 55 percent in the past three months.

The digital transformation of Life Insurance Corporation of India (LIC) could "really spur... (it) into becoming a very smart organisation", Tuhin Kanta Pandey, secretary to the Department of Investment and Public Asset Management, told Moneycontrol.

Pandey said LIC is "improving very fast on all fronts" and working hard to retain its market share in a profitable manner. This includes closing some products, even if they were high growth, and issuing a number of non-par products.

The country's largest insurer, LIC listed on the exchanges on May 2022. The government sold over 22.13 crore shares, or a 3.5 percent stake, in the company through an offer-for-sale. The price band for the issue was fixed at Rs 902-949 a share.

After the IPO, The government holding in LIC stands at 96.5 percent.

Also Read: LIC's proposed stake buyout in HDFC Bank 'well-timed', has limited downside

Following the listing, the LIC stock, however, went on downward spiral and by November 2023, it had declined 26 percent from the listing price.

LIC launched a special scheme, Jeevan Utsav, on November 29. The recent surge in the stock is attributed to the buzz around this non-par product, Kotak Institutional Equities said in a report in January.

Also Read: LIC may get 'smarter' with digital transformation, says DIPAM Secretary Pandey

The brokerage believes LIC's marketing force is capable of promoting non-par policies and anticipates the next four months to determine the success of this product. Kotak Institutional Equities retains a "buy" tag on LIC, citing inexpensive valuations and a price target of Rs 1,040.

Recently, the Reserve Bank of India allowed LIC to acquire a 9.99 percent stake in HDFC Bank by January 24, 2025. Currently, LIC owns a 5.19 percent stake in the private bank.

The state-run insurer also has plans to launch three to four products in the coming months to achieve double-digit growth in new business premiums, the company has said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.