LIC To Invest 10-15% More In Equities In FY23, Says Chairman

India’s largest insurer will invest 10-15% more in the equities market in the ongoing fiscal.

“As the premiums and profitability grows, we will continue to be bigger in the fixed income and equity,” MR Kumar, chairman at Life Insurance Corporation of India, said during an interaction post the listing of the insurer. “We will continue to be major player in the markets… We are contrarian. We have been selling when the market is high and buying when the market is low and that strategy has paid off very well.”

LIC targets to invest 10-15% more than it invested in FY22 and book 5-10% more profit, Kumar said.

Shares of LIC declined on listing after the nation’s biggest initial public offering was subscribed 2.65 times. The stock listed at Rs 867.2 apiece on the BSE, a discount of 8.6% to its IPO price of Rs 949.

Demand for its shares in the IPO was led by retail, policyholders and employees. The government raised nearly Rs 20,500 crore by selling a 3.5% stake.

“Markets are in a very bad shape; we know that and it’s going to continue to like that for some time,” said Kumar. “In spite of that, the listing price is improving as we speak; and more than the discounted price given to the policyholders is a good thing,” he said. “Maybe, we are not looking at Rs 1,000-1,200 [per share] but we are still looking at a range above the policyholders have put in money.”

To retail investors and policyholders who have bought shares in LIC IPO, Kumar as one thing to say: “The time in the market is more important than timing the market.” Many investors know that and those who are new may not know but please hold on to the shares, Kumar said in a response to weak listing.

Brokerage Macquarie in an initiation note rated the company ‘neutral’ with a price target of Rs 1,000. Any investor who’s taking an exposure to LIC is “indirectly taking an exposure to equity markets and its inherent volatility”, it said.

“The issue with LIC is that a large part of the EV (embedded value) as per our calculations is constituted by equity MTM (mark-to-market) gains and hence any fall in equity markets can significantly affect EV,” the brokerage said in the report.

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