Adani-Hindenburg saga: State Bank of India (SBI) and Life Insurance Corporation of India (LIC) are under scrutiny after the Hindenburg Research report asked 88 questions to Gautam Adani-backed Adani group companies as they have exposure to Adani group companies. While SBI shares remained volatile after the Hindenburg Research report, LIC shares witnessed heavy selling after the row erupted and slumped from 702 to 702. 582 level in the last 12 sessions, a decline of about 17 percent in this time. However, SBI has already made it clear that the Adani group companies account for only 0.88 per cent of its total loan book.
Like SBI, LIC also declared that it is sitting on huge profit on investment of approx. 30,000 crore in the company. In fact, LIC has posted strong results for the third quarter as well. However, for a bottom finisher, WHO Believes in long-term investment, LIC shares can be an attractive stock as it recently made its 52-week low and after its low, it has also seen buying interest.
According to stock market watchers, LIC’s margin remains stable and LIC is transferring the surplus in non-par account to shareholders’ account every quarter. He said that LIC shares created an area of good demand since 580 585 and bounced back from there. LIC share price is currently facing hurdles since 670 Could be extremely bullish once 680 levels hold and above 680 each level. Experts believe that after closing up At 680 level, LIC stock may go up 800 per share level in the long term.
Speaking on LIC’s investment in Adani group companies, Avinash Gorakshkar, Head of Research, Profitmart Securities said, “LIC’s investment in Adani group companies is approx. 30,000 crores while it has cash in hand 26,000 crores. If we add the unclaimed cash to our account, which is approximately 21,000 crore, so LIC has more than net cash in hand 45,000 crores. Therefore, LIC is in full capacity to handle investment in Adani shares. However, the entire investment will not come to naught.”
Speaking on LIC share price outlook, Anuj Gupta, Vice President – Research at IIFL Securities said, “LIC has reported an increase of Rs 8334 crore in consolidated net profit as premium income increased. Premium income improved by 14.5%. 97620 cr in Q3FY22. Hence, the fundamentals of the company are in good shape as are its margins.
Technically, it is showing a V shape recovery from the recent low 582.35 level. We’re hoping it can go up here and test since 670 680 level very soon. if violated 680 level then it can go higher for testing 750 more 800 level,” said Anuj Gupta of IIFL Securities.
Highlighting findings from LIC Q3 Results 2023, Avinash Singh, Senior Research Analyst MK Global Financial Services said, “LIC’s Q3FY23 APE growth was 7.4% YoY (Retail: 0% YoY; Group: 32% YoY), led by Spicy Moderation in 9MFY23 APE growth to 25.5% YoY from 36.7% YoY in H1FY23. The slowdown reflects a continued market share loss in the retail sector. VNB margin for 9MFY23 was at 14.6%, which was in H1FY23. Q3FY23 PAT was strong at ~63bn, mainly due to the change in accounting policy adopted from FY23, where LIC is transferring surplus on non-equity account to shareholders’ account every quarter.
The MK Global expert said that in terms of one-offs, tax reversal in policyholders’ account due to lower effective tax rate, interest on refund of income tax, and provisions for retirement benefits due to salary revision were large, but their impact on PAT Most of these will not materialize as they are part of the participating account.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.
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