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While LIC has a direct stake in more than 300 listed companies – with a stake of at least 1% or more – there are at least 24 entities in which it has a stake of over 10%, as per the shareholding data available on the BSE. Most of these companies have seen a significant erosion in their share price in 2018. The Sensex, however, has gained a little over 2% till date this calendar. Among the listed companies, LIC has the largest stake of 40.31% in LIC Housing Finance, which has fallen about 24% in 2018. Among LIC’s top holdings, only Axis Bank and ITC have managed to post marginal gains in 2018.
Market participants, however, say that the insurance company, which typically invests $7-8 billion in equities every year, is a long-term investor and so the interim falls should not be a major cause for concern. Some of its notable investments have been made years ago, and so, it would still be sitting on notional profits amid the ongoing fall in the market, they say. “One may have concerns while looking at some of the recent bets of LIC but the fact remains that this strategy has worked for it for many years,” said Sudip Bandyopadhyay, Group Chairman, Inditrade Capital. “LIC has a steady flow of fresh money and a huge surplus too apart from being the first port of call for the government. It is a long- term investor and buys shares whenever the market dips,” said Mr. Bandyopadhyay. Interestingly, data shows that many of the companies in which LIC has a very minor stake have become penny stocks post the recent sell-off in mid-cap and small-cap universe. Shares of Jaypee Infratech, Orchid Pharma, ISMT, Suzlon Energy, Ballarpur Industries and Digjam have fallen between 60% and 90% in CY18 and are currently in single digits.
Source : https://www.thehindu.com/todays-paper/tp-business/lic-owned-stocks-hit-hard/article25185513.ece
