As LIC hits a 52-week high, here are reasons why it can rise or fall in new year

LIC Share Price: The insurance segment leader Life Insurance Corporation of India (LIC) started off the first session of the new year on a high note as the insurance firm's stock hit a 52-week high of Rs 863.00 on BSE on Monday (January 01, 2024). 

The LIC stock closed at Rs 833.30 on Friday evening before starting the trading session on Monday at Rs 831.95. 

The stock ended the trading session higher by 3.01 per cent, or Rs 25.05, at Rs 858.35 on Monday.

As the LIC stock is scaling new heights, ZeeBiz takes you through the reasons why it can gather momentum or fizzle out as the new year begins on Monday.

Why it can rise in new year?

The first thing that goes in LIC's favour is the company is the market leader in its segment and holds the composite market share of 58.5 per cent.

With such a large stake, investors have reasons to put their money on it.

Not just on its regular business, the company is also focusing on non-participating segment since the margins are higher in this segment.

The company has launched three new products in the last six months, which shows the company is focused on growth of its business.

The company's valuation is cheap with a PE of 14.1. Because of that, it has the potential to expand.

The stock will get support from the recent relief in minimum shareholding from the government.

Renowned brokerage Citi has a buy opinion for the share with a target price of 1045.

Why it can fall in new year?

Though the company has the highest market share at 58.50 per cent, its overall share market has declined from 63.23 per cent in FY22. 

Despite the company is focusing expanding its non-participating segment, there is no major increase in the company's value of new business (VNB) margin.

Not just LIC, but a lot of its other competitor's are also launching products.

There is a continuous overhang over the sector.

The stock is still 14.6 per cent below the IPO issue price of May 2022.

The government will sell a stake worth about Rs 1.3 lakh crore in the next 10 years in LIC, which may trigger uncertainty.

Goldman Sachs has a neutral opinion on the LIC stock with a target price of Rs 660.