NEW DELHI: Improving business prospect, shift towards digitisation, ongoing bull-run in public sector undertaking (PSU) stocks and other favourable factors has pushed the shares of Life Insurance Corporation of India (LIC) to over Rs 1,000 mark for the first time on Monday.
The stock hit an all-time high of Rs 1,027.95 during Monday’s intraday session. The scrip close higher by 5.33% at Rs 995 on Monday.
This is a remarkable feat given LIC shares took a big beating since its listing in May 2022 and fell to a low of Rs 530.20 on March 29, 2023. A rally of over 90% from this point has also made the insurance giant as the most valuable PSU company in India.
Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy, said the rally was due for long time as the insurer was trading at a much lower valuation compared to its peers. “LIC has seen growth in its new business premium as well as in its assets under management (AUM). It is undergoing digital transformation and that is expected to cut costs and propel business growth.
Recent surge can mainly be attributed to the launch of new products that can enhance the growth of its new business premiums. Despite this rally, its P/E ratio is only 20% when compared to other private insurance stocks,” added Gupta.
Pravesh Gour, senior technical analyst, Swastika Investmart, said new market entries like health and micro insurance can diversify revenue streams and attract new customer segments. LIC’s leading position in life insurance, attractive valuation, and tailwinds like rising domestic savings and growing life insurance awareness paint a positive outlook. As the largest domestic institutional investor in India, holding stakes in over 260 companies, LIC could further benefit from the recent rally in PSU stocks, added Gour. The further movement may depend on its Q3FY24 earnings, which will be announced on February 8, 2024.