LIC on shopping spree: Stakes go up in these 45 stocks in Q3

The Economic Times 25/01/2018

Life Insurance Corporation (LIC), India's largest domestic institutional investor, was busy shopping on Dalal Street all through December quarter and handpicked shares from across the sectors such as banking and financial services, FMCG, upstream and downstream oil and gas, ports as well as IT.

Among the largecaps, LIC increased its holding in IT major Tata Consultancy ServicesBSE -1.79 % (TCS) to 4.17 per cent as of December 31, 2017 from 4.03 per cent as of September 30, 2017.

TCS posted 1.3 per cent quarter-on-quarter (QoQ) increase in net profit at Rs 6,531 crore for the quarter ended December 31, 2017, largely meeting Street estimates.

LIC also increased holdings in Sun PharmaBSE -0.92 % (from 4.36 per cent to 5.53 per cent) and Punjab National Bank (from 12.20 per cent to 13.94 per cent).

In the FMCG space, it bought into Britannia and Hindustan Unilever (HUL), raising its holdings in the two firms from 3.53 per cent and 2.08 per cent to 3.79 per cent and 2.55 per cent, respectively.

HUL reported a 27.74 per cent jump in December quarter profit at Rs 1,326 crore on volume growth and margin impr ..

Abhimanyu Sofat, VP-Research, IIFL, says HUL's volume growth number was better than Street estimate as there was a pick-up of close to 6 per cent in realisations. The brand extension of Ayush as well as Indulekha can yield results in terms of new brands being created, and the market rewarding it.

"If you look at competition vis-a-vis Patanjali, the intensity is reducing. On the detergents side, one can see margin improvement. So, there has been some kind of price improvement. We would recommend an 'add' rating on HUL with a target of close to Rs 1,450," Sofat said.

Overall, LIC hiked its stake in 40 companies in Q3. From the listed universe, it has investments in more than 200 companies from those listed on the National Stock Exchange (NSE), data available with corporate database Capitaline showed.

Among the upstream and downstream oil companies, LIC took its stake in BPCL to 3.46 per cent at the end of Q3 from 2.43 per cent in Q2FY18. It also increased holdings in ONGC and Oil India to 9.23 per cent and 11.27 per cent, respectively, from 9.20 per cent and 11.07 per cent in the year-ago period.

On January 20, ONGC announced the acquisition of government's entire 51.11 per cent stake in refiner HPCL for Rs 36,915 crore, paying a premium of over 10 per cent. Shares ONGC surged more than 3 per cent on the bourses on January 22.

Brokerage firm Motilal Oswal Financial Services believes this acquisition will bring synergies in terms of larger balance sheet to take on overseas assets, better funding for HPCL's projects, lesser volatility in ONGC's earnings and most to fend off possible competition from private players in marketing of auto fuels if there is any threat to margins.

"The lower-than-expected premium also does not put any overdue pressure on ONGC's balance sheet. We continue to recommend 'Buy' rating on HPCL with a target of Rs 576. There is no significant change in valuation of ONGC eigher. We reiterate 'Buy' rating with a target price of Rs 234," Motilal Oswal said in a report.

Rating agencies ICRA, CARE and Crisil too remained LIC's favourites. Its stake in ICRA jumped to 7.45 per cent at the end of October-December 2017 from 6.75 per cent in the July-September period. It hiked stake in CARE Ratings and Crisil to 9.85 per cent and 5.45 per cent from 9.78 per cent and 4.68 per cent earlier.

Adani Ports, Asian Ports, Bajaj Finserv, Bharat Forge, Castrol India, Rajesh ExportsBSE -0.17 %, Marico, Lupin, Zydus WellnessBSE -3.23 %, Union Bank, Syndicate Bank and UltraTech Cement were other companies that managed to attract LIC investment in Q3 FY18.

On the other hand, LIC dumped shares of Bajaj Auto, Bank of Baroda, Balrampur Chini, Cipla, ICICI Bank, MMTC, NBCC, Mastek, Indian Oil Corporation, Hindustan Copper, Volta, Vijaya Bank, Welspun Enterprises and Videocon Industries.