LIC Surpasses Issue Price Of Rs 949, Market Cap Nears Rs 6 Lakh Crore To Become Most Valuable PSU

Life Insurance Corporation of India (LIC) reached a significant milestone on January 30 by surpassing its issue price for the first time since its initial public offering (IPO) in May 2022. The surge came after the central bank granted LIC permission to increase its stake in HDFC Bank.

LIC's IPO had set the issue price between Rs 902 and Rs 949 per share. However, post-listing, the shares faced a downturn, falling 26% below the issue price to Rs 867 on the National Stock Exchange. Despite the initial setback, the tables turned dramatically in the last two months, witnessing a gain of 55%.

HDFC Bank revealed that the central bank greenlit LIC to acquire a 9.99% stake in the bank within a year, ending by January 24, 2025. As of Q3FY24, LIC already held 34 crore HDFC Bank shares, constituting a 5.19% stake. With the latest approval, LIC can now add another 4.8% to its stake in HDFC Bank.

Market analysts suggest that LIC's decision to acquire an additional 4.8% stake aligns with the recent attractive valuation of HDFC Bank, which faced a significant dip before regaining stability. The move reflects LIC's confidence in the long-term prospects of the banking giant.

In the financial realm, LIC faced a dip in net profit, with a 50% year-on-year decline to Rs 7,925 crore in Q2FY24, compared to Rs 15,952 crore in the same period of the previous year. However, it is crucial to note that the fall in profits is attributed to a change in accounting policy made by LIC in September 2022 concerning the transfer of amounts (Net of Tax). This policy shift rendered year-on-year profit figures non-comparable.

LIC's shares displayed resilience, trading with gains of over 2% at Rs 936 per share on the National Stock Exchange (NSE) at 3 pm. Over the past year, the stock has yielded returns exceeding 37%.

The stock has added more than Rs 2.2 lakh crore in the last three months and is now the most valuable PSU company in India, while the 7th most valuable company in the Indian market.

The positive momentum is seen as a testament to LIC's adaptability and strategic decision-making. Investors are closely watching as LIC further solidifies its position in HDFC Bank, anticipating the potential ripple effects on the insurance giant's overall financial performance.