Life Insurance Corporation of India Ltd. (LIC) shares saw a gain of almost 20% during the previous month, and they are now positive for 2023. On Monday, the stock finished 7% higher.
Following a year of range trading and a 52-week low of ₹530 on March 29, LIC’s shares had their largest one-day increase since its May 2022 IPO on November 24.
The 10% increase followed Chairman Siddhartha Mohanty’s statement to news agency PTI that he expects new business premiums to soar by double digits in the fiscal year 2024.
The premium that is required in the first year of a life insurance contract or as a single lump sum payment from the policyholder is known as the new business premium (NBP).
Following its increase on November 24, LIC’s market capitalization surpassed ₹4 lakh crore. At present, it is valued at ₹4.54 lakh crore.
The shares of LIC were listed in May 2022 at a price lower than 8.5% of their ₹949 issue price. It hasn’t been able to reach its IPO price since then.
Some of the largest trading volumes for the stock since it went public were during the spike on November 24 and December 4. On November 24, 1.9 crore shares were traded; however, after Monday’s 7% increase, 1.34 crore shares were exchanged.
On November 29, LIC also introduced Jeevan Utsav, a unique program. According to sources, the policy is designed to provide policyholders with an additional layer of financial protection by offering an obligatory survival benefit of 10%.
Can LIC Retest the Price of the IPO?
Shares of LIC are still trading 25% below their IPO price as of Monday’s close.
Brokerage company Kotak Institutional Equities feels that the excitement surrounding their subpar product, Jeevan Utsav, is what caused the current spike in LIC.
“We believe that LIC has a strong marketing agency force, while most focus has been on par policies, the agency team is capable of selling non-par policies as well,” the memo stated.
The success of this product will be determined during the next four months, according to Kotak Institutional Equities.
The firm feels that there is significant headroom because LIC’s valuations are still low. As a result, it continues to advocate buying the stock, with a ₹1,040 price target.
By the way, the only two brokerages with LIC price targets higher than their IPO price are Kotak Institutional Equities and Citi. Citi has set a price target for the stock at ₹1,045 as well.