Life Insurance Corporation of India (LIC) is not only the largest insurance company of India but it is also the biggest institutional investor in the Indian stock markets – much bigger than the biggest foreign portfolio investors (FPIs).
The insurance behemoth has been grabbing headlines for its exposure in the Adani Group, whose valuation has almost halved in the last few trading sessions on account of the scathing report released last week by Hindenburg Research.
Incidentally, the issue has become a political one as well with many parliamentarians demanding a probe into the decision of the insurance major to invest in the shares of the diversified business conglomerate founded by Gautam Adani.
But it might come as a surprise to many that Adani Group is not the only exposure of LIC that has been in the doldrums as there are many other investments of LIC as well that have seen massive erosion in their valuation in the last six months even as the benchmark Sensex has gained 2.7 per cent in the same period.
In all, there are 36 companies in which LIC has a stake and whose respective stock prices have fallen more than 20 per cent in the last six months.
To be sure, stock price fluctuations could be on account of various external factors as well and need not always be linked to the company fundamentals as such. Market participants also believe that LIC’s investments should not be judged over a short-term period or seen in the light of immediate corrections as LIC is a long-term investor and typically holds the shares for many years.
Meanwhile, data from Ace Equity shows that the value of LIC’s investments in companies – apart from Adani Group entities — like Future Lifestyle Fashions, Piramal Enterprises, Omaxe, Indus Towers, Laurus Labs, Jet Airways (India), Sunteck Realty, Bombay Dyeing, GTL Infrastructure, Aurobindo Pharma and Jaypee Infratech among others have all fallen between 58 per cent and 28 per cent in the last six months.
Within the Adani Group, LIC has a stake in Adani Green Energy, Adani Transmission, Adani Total Gas, Adani Ports and Special Economic Zone, and Adani Enterprises. Given their recent battering, all these firms feature among the top losers within the LIC portfolio if the last six months performance is taken into account.
Adani Group entities, however, do not feature among the top holdings of LIC in terms of shareholding percentage as well. LIC has a stake of 9.14 per cent in Adani Ports while in the rest of the pack it is still lower – Adani Total Gas (5.96 per cent), Adani Enterprises (4.23 per cent), Adani Transmission (3.65 per cent) and Adani Green Energy (1.28 per cent).
LIC’s biggest 10 stakes are in companies like IDBI Bank (49.24 per cent), LIC Housing Finance (45.24 per cent), Standard Batteries (19.99 per cent), Modella Woollens (17.31 per cent), ITC (15.29 per cent), NMDC (13.67 per cent), Mahanagar Telephone Nigam (13.25 per cent), Gloster (12.85 per cent), Larsen & Toubro (12.50 per cent) and Simplex Realty (12.38 per cent).
Incidentally, shares of seven of these 10 companies have gained ground in the last six months with as many as five moving up in double digits.
Meanwhile, LIC has clarified that its exposure in the Adani Group stocks is only 0.975 per cent of its total assets under management of ₹41.66 lakh crore as on September 30,2022.
As per LIC, its total exposure in Adani Group by way of equity and debt is Rs 35,917.31 crore as on December 31, 2022 while the total purchase value of equity – bought over the last many years — is Rs 30,127 crore and the market value at close of market hours on January 27 pegged Rs 56,142 crore – though this number has taken a huge hit since then.
“… it may be appreciated that the credit rating of all of the Adani debt securities held by LIC are AA and above which is in compliance with the IRDAI investment regulations as applicable to all the Life Insurance companies,” LIC had said as part of a stock exchange statement on January 30.
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