Insurance behemoth Life Insurance Corporation of India (LIC), which will soon announce its initial public offerings (IPO) soon, increased stake in a number of firms in the final quarter of the financial year 2021-22 (Q4FY22). As per the latest shareholding data, the life insurer raised its stake in over 40 firms in the BSE 500 index.
Markets, back home as well as globally, were pretty volatile in the January and March period on the back of the COVID third wave, the Russia-Ukraine War, the resulting surge in crude oil prices and overall inflation. The Indian indices rose only around half a percent in the quarter under review. Further, the consistent outflows by foreign institutional investors added to the weakened sentiment.
LIC increased its stake in companies from across the sector in the March. In the oil sector, the life insurer raised its stake in Bharat Petroleum Corporation (BPCL) to 7.46 percent in the March quarter from 4.78 percent in the December quarter. Meanwhile, in the banking space, it upped its stake in ICICI Bank to 7.92 percent in Q4FY22 from 7.77 percent in Q3FY22 and Union Bank of India to 5.63 percent in Q4FY22 from 5.34 percent in Q3FY22.
Among IT stocks, it raised its stake in HCL Tech, Wipro, TCS, and Mindtree, while among financials, it upped its stake in HDFC, SBI Cards, and Shriram Transport Finance. In the pharma and healthcare space, Apollo Hospitals, Biocon, Aurobindo Pharma, Pfizer, Divi’s Labs, Dr Lal Pathlabs, were picked by LIC.
The shareholding data further showed that LIC also raised its holdings in companies including Adani Enterprises, Vedanta, JSW Steel, Pidilite Industries, Balkrishna Industries, Deepak Nitrite, Astral, Tata Communications, P&G Hygiene, among others.
Other stocks LIC increased its stake in include Info Edge, Adani Transmission, HUL, Capri Global Capital, Britannia, Shree Cement, PI Industries, Glenmark Pharma, Aarti Industries, CESC, Ramco Cement, Kansai Nerolac Paints, Endurance Technologies, Sanofi India, and Sterlite Technologies, etc.
The LIC IPO, which was supposed to be launch in FY22 is now expected to be launched by May 2022. As per the papers filed with Sebi, the issue is a 100 percent offer for sale for around 31.6 crore shares or a 5 percent stake of the firm. No fresh shares will be issued for the IPO. The DHRP, however, does not indicate the offer size of the IPO.
According to Angel Broking, LIC is expected to be valued around ₹13-15 lakh crore, with the insurance behemoth raising about ₹70,000 crore- ₹1,00,000 crore from its initial stake sale. LIC is one of the largest corporations in India, so its IPO launch would be the largest public offering ever in the history of the Indian financial markets.
Meanwhile, experts at Religare Broking noted that the brand loyalty for LIC is exponential and the IPO will bring a large number of new retail investors to the markets. The company has very strong fundamentals and it the pricing is not very expensive, a number of retail investors will flock to the IPO, they added.
The DRHP added that the embedded value (a metric used for life insurance firms that represent the sum of the present value of all future profits from the existing business and shareholders’ net worth) stands at around ₹5.39 lakh crore as on September 30, 2021.
Life Insurance Corporation of India is a statutory insurance and investment corporation, incorporated in 1956 and headquartered in Mumbai. It is a government-owned company in India. Since its incorporation, LIC has been selling and soliciting life insurance and is the largest life insurer in India.
It has a market share of 66.2 percent in New Business Premium, 74.6 percent in the number of individual policies issued and 81.1 percent in the number of the group policies issued. The AUM of LIC also increased from ₹16.8 lakh crore in FY20 to ₹36.7 lakh crore in FY21 on a standalone basis.