The total market value of LIC’s investment

Where does the biggest local investor stand when the market is at a new peak? At the end of last Friday, the total market value of LIC's investment in listed companies is worth Rs 167,000 crore (or $42 billion). In the last one year, the market value of LIC's portfolio has grown by 42% while in the last three years, it has jumped three-fold.

This makes LIC, India's single biggest institutional investor, ahead of mutual funds and any FII. The total cumulative value of all FII investment is estimated to be around $200 billion, while the country's largest mutual fund has nearly $18 billion worth of assets under management.

Besides capital gains, LIC also earned a cool Rs 2,000 crore as dividends in FY07 from its investments in these companies. LIC has been accumulating investments in the stock market for decades now and today owns over 1% in 438 companies. The data for companies with less than 1% stake by LIC is not available.

LIC portfolio includes some of the biggest names in corporate India — Reliance Industries, Larsen & Toubro, Reliance Energy, Grasim, Infosys, ITC, Tata Steel, Bharti Airtel and ONGC among others.

Though the LIC portfolio accounts for less than 10% of all companies listed on BSE, their share in total market cap is over two-third. Reliance Industries is its top holding with a market value of over Rs 14,000 crore followed by L&T at Rs 13,000 crore and ITC over Rs 9,000 crore.

Though exact data on the cost of these investments is not available, according to LIC annual report for FY06, the total cost of LIC investments in equities is around Rs 52,000 crore, representing 15% of all its long-term investments. Given this, LIC dividend yield works to be nearly 5%, compared with less than 2% that of the NSE Nifty. Impressive when you combine it with 200% capital appreciation over the life of the investment.

It may be mentioned that LIC normally puts 8-10% in equities out of new income from traditional policies; the figure, however, is significantly higher for earnings from ULIP

 

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Source: ET