LIC Shares Surge Over 4%, Know Why the Stock is Rallying

LIC Bonus Dividend, Shares:Shares from the Life Insurance Corporation (LIC) rose 4.1 percent to reach the price of Rs 617.1 during Monday’s intraday trading on BSE following reports that the company was planning to transfer around $22 billion of the funds of policyholders into an account for dividends, or to issue bonus shares.

In this Reuters article, LIC is planning to transfer about $22 billion of the money of policyholders into an account to give bonuses or dividends. This move is intended to boost its own financial assets and boost investor confidence.

LIC has been listed on Indian markets in May. However its stock price has since plummeted by more than 30%.

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The surplus of the fund that is not part of the LIC’s participation is set aside for shareholders and could be transferred into the shareholder’s fund upon approval from the board of LIC that has not yet requested, Reuters reported.

If it is successful will boost the net worth of LIC by around 18 times the current value of Rs105 billion. It will also be the top of the list of net worth among insurers, such as SBI Life and HDFC Life It added.

Based on Trendlyne’s data the stock’s highest price target is $1,000, while the average estimate of 853.9 indicates an upside of approximately 44.1 percent from today’s prices.

The stock has dropped around 10 percent over the last three months as it has plummeted over 30 percent since the state-owned insurance company was listed in the Indian stock exchanges in May.

LIC stock debuted at a price of 8.62 percent at the price of 867.20 in May, this year. The stock closed at 595.45 on the 27th of October which is a drop of more than 31 per cent from the price of listing. In comparison to the record peak of Rs 920 an auction day and a decline of 35.65 percent as of.

The ongoing conflict between Ukraine and Russia along with a slowdown in economic growth and volatile domestic and international market conditions have reduced optimism regarding the LIC stock.

Some analysts have blamed the decline in the price of the stock due to its high price of the initial public offering price for the insurer. The company also offered its shares for sale in a between Rs 902 and Rs 949 in the IPO.

It has yet to announce its earnings for September quarter.

LIC has reported a dazzling income report for the period ending June 2022. Net profits climbed to approximately 682.88 million in the first quarter compared to the standalone loss of 2.94 million in the same quarter in the previous fiscal. The net premium income of LIC rose 20.35 percent YoY, to 98,351.76 crore. Other earnings were around 160.09 millions in Q1FY23 as compared to the figure of Rs 145.47 million in the Q1FY22.

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