LIC overtakes SBI to become the most valuable PSU

In a significant turn of events, the Life Insurance Corporation of India (LIC) has not only staged an impressive comeback but has also surpassed the market capitalization of the State Bank of India (SBI). This article explores the recent surge in LIC’s share price, its journey since listing, and the factors contributing to its remarkable revival.

Milestone Achievement

LIC’s share price gained over 2% in morning trades, propelling its market capitalization to cross the ₹5.8 Lakh Crore mark. Touching 52-week highs of ₹919.45 a piece, LIC’s market cap now stands higher than that of the State Bank of India (SBI), signalling a significant milestone for the insurance giant.

Resilient Uptrend Since November

Post-listing, LIC faced downward pressure until March 2023, reaching an all-time low of ₹530. However, a remarkable turnaround occurred from November, witnessing a gain of over 50%. December saw an impressive surge of 22.66%, and the positive momentum continued into 2024, with a gain of over 10%.

Analysts’ Conviction Picks

LIC remained a favoured pick among analysts, trading at a discount to its Embedded Value, providing substantial value comfort. Despite its colossal size, LIC’s market share is on the rise, and regulatory changes in the participating (PAR) and non-participating (Non PAR) businesses are expected to enhance profitability in the long run.

Strategic Moves

The PAR and Non-PAR business segments have been strategic focus areas for LIC. The participating life insurance plan (PAR) allows policyholders to share in the company’s profits, enhancing overall margins. Analysts believe that an increase in the Non PAR segment’s share can further contribute to LIC’s profitability.

Financial Performance Highlights

In the first half of FY24, LIC reported a net profit of ₹17,469 crore, showcasing a growth from ₹16,635 crore in the same period the previous year. The new business premium (individual) for H1FY24 witnessed a 2.65% jump to ₹25,184 crore, reflecting the company’s resilience and growth trajectory.

Market Perception and Future Outlook

LIC’s recent achievements and robust financial performance have reinforced its standing as a stalwart in the insurance sector. Market analysts and investors are closely watching the stock, which is now just around 4% away from its IPO price. The positive momentum and strategic initiatives position LIC favourably for sustained growth in the foreseeable future.

Important Questions Related to Exams

1. What recent milestone did LIC achieve in terms of market capitalization?

2. What percentage gain did LIC’s share price witness in December 2023?

3. What is the strategic focus area for LIC in terms of business segments?

4. What does the participating life insurance plan (PAR) allow policyholders to do?

5. How much did LIC’s net profit grow in the first half of FY24 compared to the same period the previous year?

6. What is the percentage jump in the new business premium (individual) for H1FY24?

7. What is LIC’s standing in the insurance sector, according to recent achievements and financial performance?

8. How far is LIC’s stock currently from its IPO price?

Kindly share your responses in the comment section.

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