LIC shares surpass issue price mark for the first time, stock soars 4%

Life Insurance Corporation of India (LIC) achieved a significant milestone as its shares surpassed the issue price for the first time. The surge was attributed to the recent permission granted by the central bank for LIC to increase its stake in HDFC Bank.

The issue price for LIC shares ranged between Rs 902 and Rs 949 per share during its initial public offering in May 2022. However, the stock was listed at a discount on the National Stock Exchange, opening at Rs 867.

Following its listing, LIC shares experienced a downward trend, facing a decline of 26 percent until November of the previous year. However, a notable reversal occurred post-November, resulting in a remarkable gain of 55 percent in just two months.

HDFC Bank disclosed that the central bank had granted LIC permission to acquire a 9.99 percent stake in the bank within a one-year period, ending on January 24, 2025. As of Q3FY24, LIC already held 34 crore HDFC Bank shares, constituting a 5.19 percent stake. With the approval, LIC now has the opportunity to acquire an additional 4.8 percent stake in HDFC Bank.

Market experts view LIC's proposed additional stake buyout as well-timed, coinciding with a period when the lender's stock valuation became attractive after a significant decline. LIC's net profit for Q2FY24 fell by 50 percent year-on-year to Rs 7,925 crore, compared to Rs 15,952 crore in the corresponding period of the previous year. This decline was attributed to a change in accounting policy in September 2022, affecting the comparability of year-on-year profit figures.

As of 13:45 pm on January 30, LIC shares were trading 2.89 percent higher at Rs 942.05 on the National Stock Exchange. Market participants are advised to consult certified experts before making any investment decisions.