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Is LIC share Price expected to rise?

 

By Daniel Asikpo Feb 08, 2024

 

In the world of investment, India has not been behind showing strides of emerging as the next possible economic giants. Speaking of which, a  financial behemoth known as the LIC (Life Insurance Corporation of India) has been playing a crucial part to push the Indian economy beyond reach.

 

 

The passage of the Life Insurance Indian Act in 1956 served as a lime light to promote the emergence of an insurance industry which till date  has been driving the economic direction of India in the green direction.

 

 

A brief history of LIC

 

Gaining existence immediately after the 1956 insurance act, LIC emerged by joining the forces of 154 life insurance companies to provide the best of service in the insurance sector. It was also accompanied by 75 and 16 provident and foreign companies. There is nothing to doubt here, LIC is a financial giant in India with their head office in Mumbai. It has indeed spread its tentacles to the world through shares selling in the stock market. So yes, the company boasts to be one of the largest financial institutions in India with asset value of more than Rs 2,500,000 Crores.

 

LIC Listing in the stock market

 

The LIC stocks went public on May 17, 2022 at an initial price of Rs 949 per share although there was a discount for investors and employees in the process. The share price of LIC at the time of writing is swinging above Rs 1000, a positive move after entering the stock market two years ago.

 

LIC financial performance

 

Being a government owned life insurance company, it has a hedge in India's financial markets proving to be the largest of its insurance bodies. LIC has helped play a crucial role through a globalized investment of investors' funds in diversified projects both internally and externally. With government projects leading the way of their top investment, the assurance of investment returns is high and at the same time with a reduced risk. The corporation is known to invest 75% of generated funds into government securities. It in the process has functioned as;

 

● Loan provider to various sectors and projects both for small and large businesses with affordable interest rates.

 

● A reliable shield of investors capital by also investing into government known projects and several other external opportunities.

 

● Exchanging savings for affordable insurance government policy.

 

Adding to this LIc is known to have a reputable network of agents in the country. According to business standard, there was report last year that kept LIC at the fourth position as one of the best and largest insurer in the world. LIC lined up among reputable insurance companies like Allianz SE, China life insurance company and Nippon life insurance company boasting of reserves worth $503.7 billion dollars. It has a brand awareness that easily draws investors to their products and services. Their brand symbol is enough to promote trust anywhere it is seen, especially in the country.

 

Their product portfolio also helps stand them out in offering reliable and trustworthy services to different age ranges of people in the country with portfolios like money back and endowment plans still being part of the service they render.

 

A look at LIC since 2022

 

It has been following a downward trend after its launch on May 17, 2022 into the stock markets. The reason behind this market decline can be crafted from two major sources; first, it is the competition that several private insurance companies are mounting on LIC after it went public. We all know the market continues to be competitive and lots of effort must be put to stay ahead to impress shareholders. Secondly, the Adani group fraud that was related to a market price manipulation affected their huge stake in the company. 

 

You should recall how Adani group was charged for illegal acts early January of last year which brought about a $105 billion decline in their shares. LIC is indeed a huge investor and fell victim. Adding to that, market speculation and investors inconvenience dipped the market further last year as we saw an all time low of Rs 531.81 on March 29,2023. Nevertheless, since that final dip, it has shown a lot of resilience and continued a gradual bounce back thanks to several companies LIC invested in getting back to winning ways.

 

Currently, LIC share price is experiencing a bull run which has been attributed to several factors;

The November launch of the non-par product; Market experts and analysts believe the new non-par product that features a combination of limited pay (5-16) with a life long income (LIC Jeevan Utsav) has been the forefront of this market boost. Since its introduction, we have seen an over 12% increase that November and it has continued and the price has soared by over 90% when calculating from the March 29 all time low this date. 

 

The government's one-time exemption by the ministry of finance to extend their minimum public shareholding(MPS) of 25% for ten years is also another talking point which gives breathing space for the company and its investors. It was at first expected to occur in 2027 but now will last till 2032.

 

With opportunities readily on ground, lots of companies are securing more positions in the companies shares and are currently driving the price upward. LIC's strong investment team is likely to reinvest into reputable companies with potential return on investment. The LIC shares seem to be a smart choice for investors who know how to do their financial homework diligently. 

 

Where the LIC price stands in FY25 will be determined by investors' trust and reliable companies in which investor funds are properly leveraged to secure good returns. The market is full of ups and downs, LIC being a government monitored institution may have a hedge over private insurance entities in times of market difficulties.