Dividend-paying LIC stock extends rally for fourth straight session
Premium- Dividend-paying stock: LIC share price has surged nearly 6 per cent in last four sessions
Dividend-paying stock: Shares of Life Insurance Corporation (LIC) extended the rally for the fourth straight session today. LIC share price has been surging since Friday and in the last four sessions, the dividend paying stock has shot up from around ₹674 to ₹713 apiece levels, logging around 6 per cent rise in this rally. The stock on Wednesday opened higher and rose further to hit intraday high of ₹713.60 apiece levels, recording near 1 per cent surge in early morning deals.
LIC shares have been in focus recently as the insurance behemoth has announced the record date for its dividend payment. In its recent exchange communication, it informed about the record date citing, "With reference to the above we hereby inform that the Board of Directors of the Corporation at its meeting held today, has, inter alia, considered and approved record date for dividend payment." The LIC board of directors has fixed 26th August 2022 as record date for dividend payment.
After weak listing in May 2022, the dividend paying stock has remained under the sell-off heat and the insurance stock is still near 25 per cent below its upper price band of ₹949 per share. It recently made its 52-week low of ₹650 per share on the NSE. However, after this 52-week low, the stock has taken support here and has been trying to come out of the consolidation phase.
Recently Motilal Oswal has given initiation coverage with 'buy' tag to LIC shares. The brokerage house believes that LIC share price may go up to ₹830 apiece levels in long term.
Motilal Oswal estimates LIC to deliver around 10% CAGR in NBP during FY22-24E while the Value of New Business (VNB) margin is likely to improve to 13.6% on improving product mix and higher profit retention. However, it estimates LIC’s operating RoEV to remain modest at about 9.7% on lower margin profile than private peers.
“LIC reported a sharp spike in its 1HFY22 Embedded Value (EV) as it split the fund between PAR and Non-PAR segments and benefitted from the transfer of MTM gains on its equity portfolio to the Non-PAR business. However, lower margin and modest premium growth will nevertheless keep operating RoEV under pressure," the brokerage concluded.