Modi effect? LIC shares zoom 9% to become 4th largest stock, bigger than ICICI Bank

A day after Prime Minister Narendra Modi highlighted the success of Life Insurance Corporation of India (LIC) openly in the Rajya Sabha, the PSU stock jumped 9.5% to a fresh all-time peak of Rs 1,144 on BSE. LIC's market capitalisation crossed the Rs 7 lakh crore mark for the first time on Thursday to become India's fourth largest stock by beating giants like ICICI Bank and Infosys.

The insurance behemoth, which has often been compared to a slow-moving elephant by investors, achieved the feat in the late morning session when its market value touched a peak of Rs 7.24 lakh crore.

On the other hand, the market value of both ICICI Bank and Infosys was around the Rs 7 lakh crore level. In the list of India's most valued stocks, LIC is now behind HDFC Bank (Rs 10.72 lakh crore), TCS (Rs 15.1 lakh crore) and RIL (Rs 19.5 lakh crore).


The value of LIC shares is now double that of its next 3 listed competitors - HDFC Life (Rs 1.3 lakh crore), SBI Life (Rs 1.49 lakh crore) and ICICI Prudential Life Insurance (Rs 76,000 crore).

Also read: Modi ki guarantee on PSU stocks! 22 multibaggers, Rs 24 lakh crore profit after PM speech
Shares of LIC, which have been on a strong bull run in the last 3 months, got fresh moral support from none other than Modi who told the Rajya Sabha that he can now say with his head held high that today LIC shares are at a record high.

"They (Opposition) used to make all kinds of statements on LIC. They said all negative things about LIC. The trick is if you want to destroy someone, spread rumours and false stories. In a village, if someone has a big bungalow and someone else wants to acquire it, people spread rumours that it is a 'Bhootiya Bungalow' (haunted house). When nobody else buys, they buy it," Modi said in his Rajya Sabha speech, while accusing the Congress of spreading fake news.

Last year in August also, PM Modi had told the Parliament that investors can take a bet on PSU stocks. His comments have been seen as an endorsement of the growth outlook and potential of public sector companies, many of which have been the subject of ridicule in the past.

LIC will report its December quarter earnings today and the numbers are likely to be subdued in all the key metrics for the PSU insurer. Along with the quarterly results, the company's board will also consider an interim dividend payout to shareholders.

In January, LIC reported a slow 6.6% Retail APE growth, while Group APE saw continued momentum at 107% which led to the total APE growing over 36.1%.

In FY24, Emkay Global expects LIC to deliver a muted show with low single-digit growth. The brokerage had recently raised its target price on LIC to Rs 975 per share, citing attractive valuation, revival of growth in FY25, and the possibility of a step change in dividend will continue to support its share price performance.

"With the worst, in terms of structural issues of growth differential and sticky cost, now likely to be behind, LIC shares have entered the outperformance mode since H1FY24 results, led by favorable valuation, strong EV growth on account of buoyant equity markets, hope of growth revival in FY25 owing to a favorable base and widening of product offering, and likely hope of a step jump in dividend," Emkay had said.

In November, Geojit raised its price target on LIC to Rs 823, based on 0.65x FY25E embedded value (EV) per share.

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