ET Intelligence Group: India’s largest insurance company, the Life Insurance Corporation (LIC), has been continuously investing in consumption stocks, anticipating buoyancy in both urban and rural spends on items such as cookies, soaps, packaged foods, and homecare products.
Accordingly, LIC has raised its stake in prominent consumption companies such as Gillette India, Asian Paints, Britannia IndustriesNSE -0.61 %, and P&G Hygiene, and proxy consumption companies such as Castrol India and Indraprastha Gas by 0.8-2.2 per cent in the March 2018 quarter on a sequential basis, show the data released by Kotak Institutional Equities.
On the other hand, the insurer sold 1.7-4.1 per cent stake in the publicsector banks such as Bank of India, Union Bank, Central Bank of India, Bank of Baroda and Punjab National Bank in the March 2018 quarter.
LIC holds on an average 21.7 per cent in the consumer companies of the BSE 200, the second highest holding among all sectors after media. The most significant holding of the LIC in consumer space is ITC, where it holds 16.2 per cent, accounting for about 9.2 per cent of its total AUM.
By the weighting of the consumer sector in the BSE 200 companies, LIC is overweight by 3.6 per cent. Of 15 industries of the BSE, the country’s top insurer has an overweight position in only five sectors.
For many consumer companies selling soaps, toothpaste and other personal-care items, India’s traditionally under-served villages are becoming increasingly more exciting for the growth opportunities they offer.
The leading FMCG companies have indicated that their rural sales have been recovering at a brisk pace, while the same-store-growth at quick-service restaurants shows that urban consumption has been quite encouraging.
