NEW DELHI: Life Insurance Corporation of India (LIC), India’s largest insurer and also largest domestic institutional investor of the equity market, owns over Rs 5 lakh crore worth of BSE200 stocks in its portfolio.
But five top holdings of LIC account for nearly 30 per cent its total equity exposure, while its top nine holdings – we call it the ‘navratna’ – account for over 43 per cent of the total.
The insurance behemoth earned a whopping 72 per cent more profit from its equity play in FY17 at Rs 19,000 crore. It seems most of the key holdings in LIC’s portfolio delivered handsome returns during the year.
Cigarette market ITCBSE 1.12 % alone accounts for one-tenth of LIC’s total holding. Around 10.9 per cent of LIC’s total corpus comprises ITC shares, a stock where foreign portfolio investors’ (FPIs) holding is just 2.8 per cent and that of domestic mutual funds (MFs) 2.6 per cent, brokerage Kotak Institutional Equities said in a report.
As of March 31, 2017, LIC was holding nearly 197 crore worth of ITC shares, with a market value of Rs 55,668 crore.
“Notably, 85 per cent of the gain in the ITC stock in last five years was backed by earnings growth. This is significantly higher than the 45 per cent growth averaged by the sector. Following the decision on GST tax rates, clarity on the levy should now drive a decisive re-rating in the ITC stock," brokerage JM FinancialBSE 0.57 % said in a note.
Reliance IndustriesBSE -1.01 % (RIL) accounts for 6.8 per cent of the LIC portfolio. FPIs hold a 4.3 per cent stake in the company and mutual funds 2.3 per cent. Analysts have been positive on RIL, since the launch of its telecom venture Reliance Jio and improvement in the core refining business. The stock has seen a 40 per cent surge in last one year.
Despite significant improvement in the domestic economy, capital goods is still not a theme investors are ready to lap up. But LIC remains confident on industry leader L&T, which accounts for 4.5 per cent of its total equity holdings.
SBI (4.1 per cent), TCS (3.4 per cent), ICICI BankBSE -1.47 % (3.3 per cent), NTPCBSE -0.12 % (3.3 per cent) and InfosysBSE -0.39 % (3.1 per cent) are among the nine stocks LIC is betting on. LIC’s total holding in BSE200 companies was worth $78 billion as of March 31.
Overall, 40 top holdings of LIC account for 83 per cent of its total equity portfolio, the Kotak report said.
