LIC shares record third straight day of downturn, plummet 25% from peak


Life Insurance Corporation (LIC), India’s largest life insurer, witnessed a further 2.80% decline in its share price during today’s trading session, settling at 879.50 per share. This drop marks the stock’s third consecutive decline, resulting in an accumulated decrease of nearly 8.2% over the past three days. 

The decline comes amidst the announcements of plans to increase wages by approximately 17% for its one lakh employees. On Friday, the company announced that it had received government approval for the wage hike, effective August 1, 2022. 

This raise is expected to have significant financial implications for the company, with an estimated annual impact exceeding 4,000 crore for LIC. Post-hike, LIC’s wage bill is anticipated to surpass 9,000 crore.

Also Read: LIC’s journey so far: A muted debut, a long rough patch and a stellar rebound, this stock has seen it all 

Moreover, if the arrears for the current fiscal year amounting to 7,000 crore are included, the total wage payout for FY24 could reach 32,000 crore. Apart from the financial concerns, the selloff in PSU stocks has also fueled the stock downturn. 

So far this month, the stock has experienced a significant decline of 14% and is currently trading at a level approximately 25% below its all-time high of 1,175. Between November and February, the stock underwent a substantial one-way surge, resulting in gains of nearly 70%. 

Also Read: PSU Banks vs Private Banks: Here’s what 5 experts have picked

This year has proven to be a milestone for LIC since its listing in May 2022. In January, the stock surpassed its IPO price for the first time post-listing and also emerged as the most valuable PSU firm, surpassing SBI. 

Additionally, in February, LIC’s market capitalization reached the 7 lakh crore milestone, reclaiming its status as the fifth most valuable Indian listed company.

In terms of financial performance, the company posted a 49% jump in its standalone net profit of 9,444 crore in Q3FY24 crore as against a net profit of 6,334 crore in the corresponding quarter of the preceding fiscal. The improved performance was mainly driven by an increase in net income from investments and growth in net premium income.

The net premium income grew by 4.6% YoY. Its net income from investments during the December quarter rose by 12% YoY to 95,266.8 crore from 84,869 crore in Q3FY23.

Also Read: LIC stock hits new life-time high, outshines CY23 performance in just 27 sessions

Furthermore, the assets under management (AUM) expanded to 49,66,371 crore as of December 31st, 2023, marking a notable rise from 44,34,940 crore recorded as of December 31st, 2022, indicating a year-on-year increase of 11.98%.

Interestingly, the current AUM of LIC now equals the total assets under management of the entire Indian mutual fund industry. At the end of Q3 FY24, the government maintained a 96.5% stake in the company, while retail investors and domestic institutional investors held stakes of 2.4% and 1%, respectively.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.

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Published: 19 Mar 2024, 05:20 PM IST


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