LIC’s stock rose 79% in 1 year, the insurance company earned a lot by investing in the infrastructure sector, investors’ wealth also increased

LIC Investment in Infra Sector:Public sector insurance company Life Insurance Corporation (LIC) remains the king of its sector. LIC has left behind private insurance companies like HDFC Life and ICICI Prudential Life Insurance in terms of performance in the stock market. The biggest reason behind this is LIC’s bet on infrastructure and similar growing sectors. LIC has earned a lot of money especially by investing in the infrastructure sector. LIC investors also benefited from this. LIC’s stock has given 79 percent return in 1 year, while it has strengthened by 28 percent this year. In 1 year, the share increased from Rs 620 to Rs 1110.

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Condition of insurance stocks

Compared to LIC, HDFC Life shares have declined. A year ago, HDFC Life’s share was at Rs 666.55 on BSE, but on the last trading day i.e. July 16, it closed at Rs 646.55 per share. However, ICICI Prudential Life Insurance’s share has been successful in giving 12 percent return during this period. Its share increased from Rs 582 to Rs 654 during this period. In the last one year, the share of SBI Life Insurance also increased from Rs 1314 to Rs 1621, which is a growth of 23 percent.

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How do insurance companies earn money

Insurance companies earn money in two ways. They earn by charging premium for the policy and then by investing that premium in different asset classes. This second method creates a big difference in their profits, which affects value creation and risk management. However, capital market analysts say that most Indian insurance companies have not yet benefited much from the boom in the country’s infrastructure sector. Domestic insurance companies have focused more on investing in BFSI, IT and consumer sectors. But in recent times, the performance of all these sectors has not been very good. Only 8 to 10 percent of their investment is in the infrastructure sector, which is very low compared to global standards.

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SBI got benefit in banking sector

Shares of State Bank of India (SBI), which has invested heavily in the infrastructure sector, have also gained 48 per cent in the last one year. However, shares of private sector HDFC Bank, Kotak Mahindra Bank, ICICI Bank and Axis Bank have gained only between negative 3 per cent and 24 per cent during this period. Kotak Bank and HDFC Bank, which have invested very little in the infrastructure sector, are performing the worst and their shares have given negative returns.

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Global companies focus on infrastructure sector

According to analysts, large global insurance companies such as Allianz, Nippon Life Insurance and MetLife, as well as other insurance companies such as Berkshire Hathaway, have a large exposure of 15 to 30 percent in the infrastructure sector. For India, the government’s focus on this sector along with large expenditure, support initiatives and incentive policies and improvements in governance have worked to infuse new life into the infrastructure industry. According to analysts, in such a situation, the performance of the infrastructure sector has been better than all other sectors.

(Input: Agency)